Aldi Grocery Store Franchise In USA Cost, Profit, How to Apply, Requirement, Investment, Review | SkillsAndTechSkillsandTech | February 19, 2022 |
If you’re looking for a supermarket offering rock-bottom prices and a large selection high quality ingredients, Aldi is your answer. This chain of grocery stores has more than 2,100 locations in the United States and have been in the supermarket game since 1913.
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How much does it cost to open Aldi Grocery Store?
The bad news is you can’t franchise Aldi Grocery Store right now, no matter how much money you’ve got to invest. The company is privately owned meaning you can’t buy stock from them or franchise a location. Bummer!
But there are still ways you can do business with Aldi Grocery Store or open a competitive market. In this guide, I break down the company’s facts, advantages, challenges, and what other grocery alternatives you can franchise.
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Financial Requirements and Fees
As mentioned above, you can’t franchise Aldi. They’ve been a privately owned chain ever since they started 1913. Based on my research, I couldn’t find any indication they’ll change their mind on this soon.
But if you’re looking for an estimate, you can compare numbers with a close competitor. It’s not an exact match, but Dollar General is often considered Aldi’s competitor due to the low prices and food section that includes freezer items, canned goods, snacks, and beverages. Since you can’t franchise Dollar General either, we can take a look at how much the usual dollar stores’ franchise fees are.
Liberty Dollar is one store you can franchise and the fee for a basic $3 or less items to sell in a 10,000 sq. ft. area is $322,900. Again, do note that this is just an estimate and that the actual official number might be higher based on the location, permit fees, and labor cost in your area.
Average Sales / Revenue per Year
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There are no official records or reports that show what Aldi’s annual revenue is. But according to an article by the Retail Leader in 2018, Aldi’s 2017 revenue is estimated to be at $88 billion. With more stores going online each year, you can bet gross sales are even higher now.
Aldi Grocery Store Facts
|Total Units||Over 2,130|
|Incorporated Name||Aldi Inc.|
|Franchising Since||Does Not Allow Franchising|
|Industry||Retail / Grocery|
|Subsector||Food and Beverage|
In 1913, Anna Albrecht opened up a small grocery store in Essen, Germany. This store was simply known as Albrecht. Her sons Karl and Theo Albrecht took over in running the business in 1948 and called it Albrecht Discount.
The name was shortened to Aldi in 1962. A few years later, the brothers came into a disagreement regarding the selling of cigarettes in their store. They divided Aldi in half with Theo Albrecht owning and running Aldi in Northern Germany and calling them Aldi Nord while Karl Albrecht controlled the stores in Southern Germany hence calling them Aldi Sud.
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Both stores have penetrated the international markets. The Aldi you see in the United States is Aldi Sud. Meanwhile, Aldi Nord operates in the same country as well after purchasing Trader Joe’s.The first Aldi store in the United States was in Southeastern Iowa. Through the years they’ve branched out into more states and countries such as Ireland, Great Britain, Hungary, Australia, and Slovenia.
Aldi’s concept is selling quality products at a low cost. One way the company maintains low prices is by mostly carry their own products. You usually won’t find big brands at Aldi. You’ll still find chips, sauces, frozen food, beverages, and many other things you’d expect at a grocery store. But the labels will be from a white-label Aldi brand.
If you’ve ever shopped at Aldi, you already know to bring your quarters. That’s because you’ll need to insert a quarter to get a shopping cart. You get your quarter back when you return the shopping cart. This simple step helps Aldi reduce theft of carts and encourages customers to bring carts back to the store. All these little things help Aldi save money that can be passed on to consumers.
Another reason as to why they maintain such low cost is stores are smaller, product displays are simple, and no free plastic bags, and staff is kept to a minimum. You won’t find a butcher or baker on-staff at Aldi. Hiring staff costs money and this grocer keeps employee levels at a minimum.
There are many different suppliers where Aldi gets their food from. This is one way you can still make business with Aldi since they don’t allow franchising. If you have a product you want to pitch the company to sell in stores, all you have to do is to fill up a form that you can get here. Aldi US does not disclose their suppliers but on Aldi UK’s website, they make their suppliers known like where they get their eggs, vegetable produce, and dairy.
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Another way you can do business with Aldi is through real estate. Aldi is always on the hunt for new store locations. They must fit the following criteria:
- Approximately 22,000 square feet with parking spaces that can fit a minimum of 95 cars.
- Population with a dense trade area within 3 miles around the store.
- Must be located in regional shopping districts and communities with access to the population.
- Site must be allowed for grocery use.
- A full access intersection is preferred.
- A daily traffic count of more than 20,000 vehicles daily.
- 2.5 acre pads for purchase and development.
- End-cap or inline space with a minimum of 103’ of frontage.
Once your site is chosen and all the necessary permits are in place, Aldi will begin construction. The time frame varies per construction company. For instance, Aldi’s designated construction company in the Pittsburgh area claims it took only 51 days to construct and finish building the store. However, a construction company in Ireland reports it took them approximately 6 months for a new build.
Currently, Aldi is still owned by the Albrecht family. They family is known to be secretive and enjoy very private lives. It probably goes without saying that they’re quite wealthy too.
How Much Does Aldi Grocery Store Make in Profit?
It is not known how much Aldi grocery stores make in profit exactly since they are a private company that’s not required to disclose their data. But judging from the number of locations they have and the unofficial $88 billion revenue that was estimated, you can expect profitability to be better than the typical grocery store chain.
Grocery stores are known for razor thin margins between 1% – 3%. But keep as mentioned earlier, Aldi has taken all sorts of creative measures to increase profitability. If Aldi was able to bring their margin up to 6%, they would profit $5,280,000 annually.
Advantages of an Aldi Grocery Store Franchise
We know you can’t franchise an Aldi grocery store but if you could, here are some of the advantages of operating this business.
Aldi is a big name. And it’s not just one of the biggest low cost grocery stores in the United States. They’re also found around the world such as in Australia, the United Kingdom, Germany, Switzerland, Ireland, Slovenia, Italy, and even in China.
So if you are able to run an Aldi grocery store in your area, best believe that not only Americans will be able to recognize your store but even tourists will be familiar with Aldi.
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When people go to Aldi to shop, they’re introduced to a different experience than what they get at a usual grocery store. To start, carts at Aldi are rented for a quarter. Some may find this as a hassle but it actually helps one become more disciplined in returning the carts to their proper place so you can get your quarter back.
The products, as mentioned above, are not the big brands you’re already familiar with so you get to try something new. The prices are also low so you get to save money while shopping. Last but not the least, the polices improve the environment by encouraging reusable bag use, using the cartons where the products came from for displays on the shelves and helping out businesses that aren’t big brands by encouraging suppliers to join them. With this kind of experience, you can understand why Aldi has a loyal following.
Aldi reported the company is planning to expand further in the United States with a $ 5 billion investment. Aldi’s goal is to become the 3rd largest grocery business in America and compete against Kroger and Walmart. They’ve adjusted to the needs of their customers during this pandemic by opening delivery and pick up services.
So if you do business with Aldi, know that the chain is aggressively continuing to expand. I think Aldi really does have the potential to become one of the big 3 grocery stores in the future.
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Challenges of an Aldi Grocery Store Franchise
Even running an Aldi might pose some challenges. This guide is going to show you some of them that you can expect should you become a franchise operator for this grocery chain.
The Albrecht family may lead private lives but I’m not so sure of the generation that follows after the siblings. It was reported that the grandson of Theo Albrecht sued their mother for embezzling funds. With such a feud happening, the Aldi business experience challenges if the family members aren’t able to rally around a single vision for the company.
90% of the products sold at Aldi are white label. So if a product doesn’t sell well, they pull it off the shelves to make way for new and better items. This is common knowledge for all Aldi loyal customers that there’s even a community about it called Aldi Aisle of Shame.
This is an aisle at the center of every Aldi shop where products aren’t doing well are tagged as Red Hot Deals, which means the prices are already marked down and that these products won’t be restocked anymore.
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So if you like a certain product at Aldi and it’s not a hit with the rest, you may have to say goodbye to this item soon enough.
As much as Aldi is known as a popular grocery store, it still faces off large corporations such as Walmart and Kroger. Aldi must continue its efforts in finding suppliers that are willing to provide them products at low cost and they must also battle inflation if they are to continue moving forward with this winning concept.
Is the Aldi Grocery Store Franchise Right For You?
Aldi is one of the top grocery stores in the United States that’s doing so well despite not carrying any big brands. They also have a loyal following around the world. If it was available for franchising, it could be for you.
What is an alternative Aldi grocery store franchise?
Since you can’t franchise Aldi, check out Grocery Outlet. This chain has been around since 1946 and has over 400 stores in the United States. To franchise Grocery Outlet, you’ll need a liquid capital of $25,000 and you can expect the total investment to be around $150,000 to $250,000.
With this guide, you’ll know what to expect when you want to franchise a good bargain grocery store.