Can You Finally Open a Dollar General Franchise Store? (Cost Analysis)
Due to Dollar General’s extensive domestic reach and track record of successful expansion, it has come up for debate as to whether or not investors can actually own and run a Dollar General franchise
The word “dollar” on a store sign always tends to draw attention and draw in clients who are looking for good value.
Given this mentality and the fact that everything in the store is reasonably priced, it is not surprising that dollar stores are well-known throughout the country.
One of these $1 stores that have gained popularity around the nation is Dollar General.
Since its founding in 1939, the company has expanded to 17,426 locations, and the discount retailer is currently rated 91st on the Fortune 500’s 2021 list.
Overview of the Company
Dollar General was established in Kentucky in 1939, and since then, it has grown to encompass the entire country using a straightforward business strategy: offering consumers the necessities of daily life at competitive costs in small-box stores.
With its selection of basic goods, Dollar General hopes to help customers complete the majority of their shopping in a single trip.
How Much Does it Cost to Open a Dollar General Store?
If running a Dollar General is your ideal business, let us set the record straight. Unfortunately, franchising is not currently permitted.
Although you cannot operate a Dollar General store, you can franchise other dollar stores.
Franchise costs can range from $20,000 to $50,000, with a first investment costing between $75,000 and $150,000.
Additionally, you would definitely want more than $200,000 in liquid capital.
Financial Requirements and Fees
Dollar General is a privately owned company. Since they don’t accept franchising, their financial criteria for operating one of their stores under a franchise are unknown.
However, you can also be considering whether there is actually no chance at all to conduct business with Dollar General.
Joining their affiliate network is one way to sell Dollar General goods and make money from it.
Dollar General Affiliate Program
The affiliate program of Dollar General is for online merchants who want to sell the store’s goods on their website or social media profile.
On all of their items, you can receive a 5% referral bonus. Imagine it as a commission for recommending Dollar General and its products.
For someone with a website or a social media influencer who specializes in sharing offers or discounts, this online opportunity might be great.
Include a simple link to the merchandise that directs customers to the Dollar General store’s website. The banners and logos from the store will also be used on your website.
Average Sales / Revenue Per Year
Being listed among the Top 100 on the Fortune 500 list is significant. And if Dollar General manages to get there, you know they’ve performed at the highest level possible.
Dollar General reported $33.7 billion in net sales for the year 2020. The business had an almost 22% growth in sales over the previous year.
As it turns out, selling inexpensive goods in a retail setting can still be incredibly lucrative.
Dollar General Franchise Facts
J.L. and Cal Turner founded Dollar General in Scottsville, Kentucky, in 1939. The family-run company was formerly known as Turner’s Department Store before the idea and name were altered.
Initially, Dollar General only offered things with a price tag of $1. They were well known for selling men’s pink corduroy pants for $1 and two-for-one greeting cards.
These days, Dollar General carries a wide variety of goods, including food and drink, toys, electronics, pet care, office, and home supplies, pharmaceuticals, toys, and toys.
Prices also changed as a result of the advancement of time. Still available for $1 at Dollar General. However, the majority of their offerings are under $10. In a Dollar General store today, only 25% of the items are $1 or less.
More Facts About Dollar General Franchise
Big-name brands including Energizer, Coca-Cola, Unilever, Clorox, PepsiCo, Hanes, Nestle, Procter & Gamble, Kellogg’s, Mars, General Mills, and Kimberly-Clark are known to be carried at Dollar General.
A food store that is bigger than a typical Dollar General is owned by Dollar General as well.
Compared to their smaller stores, which sell more general stuff, the market division sells more vegetables, meat, and other grocery items.
The retail business has also begun opening DGX, a concept store for quick-to-grab things like sandwiches, salads, electronics, household cleaners, and more. In Nashville, Tennessee, the first of its sort debuted in 2017.
At the moment, Dollar General employs over 158,000 people under the direction of CEO Todd J. Vasos. In Tennessee’s Goodlettsville, the business is headquartered.
How Much Does Dollar General Make in Profit
The company Dollar General reported a gross profit of $10.719 billion for the calendar year 2021. Their profit has increased by 26.27% compared to 2020.
Given that the majority of businesses suffered during the epidemic last year, this is regarded as fairly good.
The consumer demand that is shifting from mall to online retail has been difficult for many shops to adjust to. But in the current context, Dollar General has thrived and done even better.
However, Dollar General appears to have made it through the year with greater profits.
We may anticipate that the company’s future sales may just match or surpass its current totals given that it has continued to grow up to this point.
Advantages of Dollar General Franchise
Now imagine that you can franchise a Dollar General. Let’s imagine you are given permission to manage a branch of their company nearby. Are there any benefits to owning a Dollar General franchise?
Here are a few that you should be aware of:
Big Company
Despite being a small convenience store, Dollar General has developed into a sizable corporation. As was previously reported, the firm’s footprint has increased to more than 17,000 locations and is still expanding.
The company is constantly considering new opportunities to grow beyond Dollar General Market, DGX, and Popshelf.
Therefore, if you possess a Dollar General, you can rest assured that you’re in good hands as an investment. The business is always coming up with new ideas and reinventing itself.
Affordable Items
The fact that Dollar General sells reasonably priced goods is implied by its name.
You can find a laundry detergent that is less expensive than at Walmart even if not everything in the store will be a dollar.
Detergent at Dollar General costs around 4.4 per half ounce, but it costs roughly 7 at Walmart.
No Frills Shopping Experience
A Dollar General store provides customers with a straightforward shopping experience. There is no need for you to stress over creating an elaborate exhibit or advertising campaign.
Additionally, from a business standpoint, changing out the merchandise and creating banners for seasonal promotions to advertise all sales all require marketing cash.
People visit the business to look at what you’re selling because it only offers products for less than $10.
Additionally, shoppers frequently come in looking for a specific item but leave holding other items. People are more likely to buy more if you can get them into the store for just one item.
Viewed as an Essential business
Some firms have had to temporarily close down over the previous two years as a result of health issues.
However, businesses like dollar stores that offer basics like food, soap, and other important products have been permitted to survive because they were considered to be “essential businesses.”
You must objectively assess the danger of the idea before launching any kind of retail store.
You can feel more secure in your decision to open a dollar store that sells food items by knowing that the local government or health authorities are unlikely to temporarily close the business.
Challenges of a Dollar Franchise
It’s not all sunshine and butterflies when you’re running a business. Even though we’ve covered every benefit of owning a Dollar General franchise, there are still difficulties in running any business.
Before opening any kind of dollar shop concept, you should be aware of the following.
Minimal Staffing
There have been complaints about understaffed Dollar General locations.
This appears to be a component of the business plan for the organization and is one of the reasons they are able to grow swiftly and turn a profit.
However, having a small crew in one location can result in overworked and unhappy employees.
Expired Products
Dollar stores have an infamous reputation for selling goods that have expired or are almost expired.
Hence the reasonable costs. However, whether this is deliberate, running a dollar store guarantees you’ll hear a lot of complaints about it.
You can only hope that the stocks you receive will have extended expiration dates now that Dollar General has rectified this problem.
Messy Stores
You may have observed that Dollar General stores can occasionally be disorganized. It appears that the exhibit is disorganized or that they have not been placed particularly properly the things.
That, then, is the reason for the previously indicated low staffing. But it’s what they’ve truly come to be recognized for. At this point, it’s almost like a standard customer expectation.
Hiring extra staff to reduce the need for your team to switch between cashiering and shelving maintenance is the obvious solution to disorderly stores.
However, additional employees bring higher costs, which harm profitability. Your personnel will have to multitask in the interim, which implies that your messy store issue will persist.
An Alternative Dollar General Franchise
The following are some additional stores to consider:
Just-A-Buck: This dollar business demands a $100,000 to $300,000 investment as well as a $50,000 franchise fee.
Liberty Dollar Store: An investment cost of $67,900 is required for a 1,000-square-foot store offering things for $1.
Dollar Discount Store of America: The initial investment ranges from $99,000 to $195,000, including an $18,000 franchise fee and a 3% royalty fee.
Conclusion
With all the information presented above, it is clear that the Dollar General store is a successful enterprise that, should it ever become a viable alternative, might offer a lucrative franchise opportunity.
If you’re passionate about managing a store, this is the right kind of retail enterprise for you.
However, a specific date for when Dollar General will be available for franchising is not yet known, so you might want to search for other dollar store concepts you might start right away. Thankfully, you have a few choices.
