Friday, December 04, 2015

Wednesday, November 04, 2015

What hours should a cash and carry business remain open?

I have a friend who knows a guy, etc...that runs a shop here in the US. I frequently wonder what hours a shop like this should stay open. Is it profitable to remain open 24 hours a day?

Suffice to say that the products are substantially in demand around the clock, unlike say milk, sugar and eggs. (haha jk)

This is a simple formula I was thinking about to answer the question:

(($ business / day) * 7 days) / 7 / (average total hours open per day) = $ / hr

There has to be a co-factor that determines the need or potential earnings in fringe hours. 4AM to 8AM or 12AM to 4AM are different than retail peak hours in a US suburban market, and this isn't a food place.

As the co-factor goes toward 0, the $/hr would also. But, if the co-factor remains at a point where the hourly operating costs are less than the profit, the shop should stay open 24 hours a day.

The co-factor model may be more granular if the market buying capacity within a certain area of this shop is definable. For example, there are many coffee establishments but fewer computer repair places per unit area. People will also more randomly stop at a coffee shop than a computer repair place. Yet this shop has a need more similar to a coffee house.