Financial calculations for the restoration of a defunct rural shop
Retail activity in communities under 2,000 has long faced a declining trend and is often unflatteringly described as a perennial candidate for subsidies. This forces businesses to reduce their opening hours and often even cancel their entire operations, especially in municipalities with fewer than 500 inhabitants. The closure of the store means that residents lose quick access to basic food and hygiene items, which we see as alarming.
In this article, we will present an economic model for sustainable stores operating entirely in operating profit even in the smallest of communities.
For the following models, assume that the stores operate with an average margin of 15% and are open at least 5 days a week for 8 hours a day.
For such an operation, the fixed costs would be as follows
Gross salary: 15 200 CZK i.e. 20 338 CZK on the employer’s side (note: minimum gross wage for 2021)
energy, water and other services: 8 000 CZK
Rent: 3 000 CZK
Total fixed costs: 31 338 CZK
Municipality with 300 inhabitants (traditional model)
Suppose that a shop in a village with 300 inhabitants has average daily sales of CZK 3 840 i.e. CZK 115 200 per month. Such a shop makes a profit on the sale of goods of CZK 17,280 per month, which significantly exceeds the fixed costs.
Here, the annual loss from operation would amount to almost CZK 170,000.
Municipality with 500 inhabitants (traditional model)
Suppose that a shop in a village with 500 inhabitants has average daily sales of CZK 6 400 i.e. 192 000 CZK per month. Such a shop makes a profit of CZK 28,800 per month on the sale of goods, which is not even enough to cover fixed costs.
The annual loss of this establishment will be approximately CZK 30 456. Assuming that such shops can get a subsidy of at least 100,000,- once every 3 years, it seems that the operation can at least earn its keep.
Here, it is clear that the per-employee wage has become the most malleable component of the minimum wage increase. Using Contio 24 technology, a completely unattended operation can be achieved for both model municipalities in the following figures.
Municipality with 300 inhabitants (Contio 24)
In the unattended model, fixed costs without the wage component can be assumed, i.e. CZK 11,000 and while maintaining the above profit on goods of CZK 17,280, the fart shop operates with a profit of CZK 6,280 per month.
Municipality with 500 inhabitants (Contio 24)
In the unattended model, fixed costs without the wage component can be assumed, i.e. CZK 11,000 and while maintaining the above profit on goods of CZK 28,800, the fart shop operates with a profit of CZK 17,800 per month.
The return on investment for the renewal of a shop with the unattended CONTIO KIOSK technology set for a village with 300 inhabitants is 10-12 months, and for a village with 500 inhabitants 3 months.