Quick Summary: How Much Do You Need to Open a Grocery Store in Riyadh?

The cost of opening a grocery store in Riyadh ranges from 280,000 Saudi Riyals for small stores (or 180,000 Riyals with smart savings) to 1.8 million Riyals for large supermarkets. The Saudi grocery market is valued at 232 billion Riyals with an annual growth of 5.9%, making it a promising investment for those looking to enter the world of entrepreneurship.

In this comprehensive guide, you will learn:

• Real and detailed costs for each type of grocery store
• Legal and official requirements and their exact costs
• Factors affecting costs in different areas of Riyadh
• Monthly profit expectations and capital recovery period
• Cost reduction strategies through smart planning

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Types of Grocery Stores and Their Costs in Riyadh

1. Small Store (Neighborhood Grocery) - 100 Square Meters

Total Cost: 280,000 Saudi Riyals

Important Note: You can start with less money (180,000-200,000 Riyals) if you:

• Purchase used equipment in good condition
• Get longer payment terms from suppliers (60-90 days)
• Start with limited inventory and expand gradually

Item	Cost (Saudi Riyals)	Details
Licenses and Permits	10,000	Commercial license + municipal permits + Food and Drug Authority
Location and Rent	35,000	Contract + insurance + setup fees (3 months in advance)
Initial Cash Inventory	50,000	Only 30% cash - rest on credit from suppliers
Equipment and Devices	85,000	Refrigerators + shelves + lighting (some can be bought used)
Point of Sale Systems	5,000	Simple local system compatible with Zakat
Marketing and Identity	15,000	Simple signage + basic printing
Working Capital	80,000	Cover basic expenses for first 3 months

2. Medium Store (Small Supermarket) - 300 Square Meters

Total Cost: 750,000 Saudi Riyals

Item	Cost (Saudi Riyals)	Notes
Licenses and Permits	25,000	Additional permits for specialized sections
Location and Rent	120,000	Better location + larger space (4 months in advance)
Initial Cash Inventory	120,000	35% cash from total inventory of 350,000 Riyals
Equipment and Devices	280,000	Multiple refrigerators + advanced equipment
Point of Sale Systems	15,000	Multiple systems + inventory management
Marketing and Identity	40,000	Broader marketing campaign
Working Capital	150,000	Cover 4 months of operation

3. Large Supermarket - 800 Square Meters

Total Cost: 1,800,000 Saudi Riyals

Includes specialized sections (meat, bakery, fruits and vegetables) with advanced refrigeration systems and larger staff. Cost can be reduced to 1.4 million Riyals using gradual financing and supplier credit.

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Detailed Basic Costs

1. Licensing and Registration Costs

Basic Requirements:

• Commercial Registration: 1,000 Riyals (from Ministry of Commerce)
• Commercial License: 2,000 - 5,000 Riyals (depending on activity)
• Municipal Permit: 1,500 - 3,000 Riyals
• Food and Drug Authority License: 2,000 - 4,000 Riyals
• Civil Defense Certificate: 500 - 1,000 Riyals
• VAT Registration: Free (mandatory for sales above 375,000 Riyals annually)

Additional Costs for Large Stores:

• Frozen food handling license: 3,000 Riyals
• Meat and poultry sales permits: 5,000 Riyals
• Food Safety Management System (HACCP) certificate: 8,000 Riyals

2. Rent and Location Costs

Rental Prices in Different Areas of Riyadh:

Area	Monthly Rent (Riyals/sqm)	Business Level
Olaya and Financial District	180-220	Excellent
Al Nakheel and Malqa	120-160	Very Good
Al Badeea and Sulaimaniyah	80-120	Good
Malaz and Shubra	60-100	Average
Outer Areas	40-80	Economic

Additional Location Costs:

• Rent Insurance: 1-3 months in advance
• Real Estate Broker Commission: 2.5% of annual contract value
• Store Setup: 150-400 Riyals/sqm
• Basic Utilities: 5,000-15,000 Riyals (electricity, water, internet)

3. Initial Inventory Cost

Optimal Inventory Distribution in a Grocery Store:

Category	Inventory Percentage	Average for Small Store (Riyals)
Basic Food Items	40%	60,000
Beverages	20%	30,000
Dairy Products	15%	22,500
Detergents and Cleaning Supplies	10%	15,000
Snacks and Sweets	10%	15,000
Other Products	5%	7,500

Important Inventory Tips:

• 70% of suppliers offer 30-60 day credit for new stores with simple guarantees
• Start with small cash quantities (30-40% of inventory) and listen to customer requests
• Large distribution companies (like Othaim, Panda, Nahdi) offer credit for established stores
• Focus on fast-moving products initially
• Maintain good relationships with local suppliers
• Plan to increase inventory before Ramadan (sales increase 200-300%)

Real Example of Initial Inventory (150,000 Riyals total):

• Direct cash: 50,000 Riyals (33%)
• 30-day credit: 60,000 Riyals (40%)
• 60-day credit: 40,000 Riyals (27%)

4. Equipment and Fixtures

Basic Equipment and Costs:

Equipment	Cost (Riyals)	Notes
Vertical Display Refrigerators	15,000-25,000	Depending on size and brand
Chest Freezer	3,000-8,000	For ice cream and frozen items
Display Shelves	8,000-15,000	Coated metal or stainless steel
Electronic Scale	800-2,000	For fruits and vegetables
Shopping Carts	200-400/cart	10-20 carts for medium store
LED Lighting	5,000-12,000	Energy efficient
Security Cameras	3,000-8,000	4-8 cameras
Alarm System	2,000-5,000	For protection

5. Point of Sale Systems and Technology

Mandatory Technical Requirements:

• Electronic Invoicing System: Compatible with Zakat and Tax Authority (2,000-8,000 Riyals)
• Card Reader Device: Compatible with Mada (800-2,000 Riyals)
• Monthly Subscription: Point of sale system (150-400 Riyals/month)
• Transaction Fees: 1.75% for credit cards, 0.75% for Mada cards

Economic Alternatives:

• Local developed systems: 1,500-3,000 Riyals (like Saudi startup systems)
• Mobile cashier applications: 500-1,500 Riyals + low monthly fees
• Refurbished used devices: Save 30-50% of cost

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Legal and Regulatory Requirements

1. Registration with Ministry of Commerce

Required Steps:

1. Reserve Commercial Name via "Balady" platform (500 Riyals)
2. Obtain Commercial Registration (1,000 Riyals)
3. Get Activity Practice License (2,000-5,000 Riyals)

Time Required: 5-10 working days

2. Food and Drug Authority Requirements

To Obtain Food Handling License:

• Health certificate for workers (200 Riyals/person)
• Implementation of Hazard Analysis and Critical Control Points system
• Food safety training courses (1,000 Riyals/person)

3. Saudization Requirements

Required Saudization Percentages:

• Small Stores (less than 5 employees): Not required
• Medium Stores (5-20 employees): Minimum 15% Saudis
• Large Stores (more than 20 employees): Minimum 25% Saudis

Additional Costs:

• Saudi employee salary: 4,000-8,000 Riyals/month (minimum 4,000 Riyals)
• Foreign worker salary: 1,500-2,500 Riyals/month + accommodation and food
• Foreign worker residence renewal fees: 10,800 Riyals/year per worker
• Health insurance fees: 1,200-2,400 Riyals/year per worker

Important Note: Most small grocery stores rely on 1-2 foreign workers at 1,800-2,200 Riyals including accommodation, making the monthly salary cost about 4,000-6,000 Riyals for a small store.

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Monthly Operating Costs

For Small Store (100 sqm):

Item	Monthly Cost (Riyals)
Rent	8,000-12,000
Employee Salaries	6,000-12,000
Electricity and Water	2,000-4,000
Insurance	500-1,000
Maintenance	1,000-2,000
Marketing and Advertising	2,000-5,000
Monthly Total	17,500-33,000

For Medium Store (300 sqm):

Item	Monthly Cost (Riyals)
Rent	25,000-40,000
Employee Salaries	35,000-55,000
Electricity and Water	5,000-8,000
Insurance	1,500-2,500
Maintenance	3,000-5,000
Marketing and Advertising	5,000-10,000
Monthly Total	74,500-120,500

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Factors Affecting Cost

1. Geographic Location

High-Cost Areas:

• Olaya: +40-50% increase in costs
• Financial and Business District: +30-40%
• Al Nakheel and Malqa: +20-30%

Medium-Cost Areas:

• Malaz and Al Badeea: Standard cost
• Shubra and Sulaimaniyah: -10% to +10%

Economic Areas:

• Outer neighborhoods: -30% to -50%
• Industrial areas: -40% to -60%

2. Store Size and Type

Traditional Grocery Store:

• Area 50-150 sqm
• Lower cost but limited profits
• Focuses on basic products

Small Supermarket:

• Area 200-500 sqm
• Wider product range
• Potential for higher profits

Large Supermarket:

• Area 500+ sqm
• Specialized sections (meat, bakery)
• Large investment but rewarding returns

3. Seasonal Considerations

Ramadan Month:

• Sales increase 200-400%
• Need to increase inventory
• Hire additional staff

Summer Holidays:

• Sales decrease 20-30%
• Opportunity for maintenance and development

Back to School:

• Increased demand for snacks
• Stock simple stationery

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Financial Projections and Profits - Real Market Numbers

Actual Profit Margins in the Saudi Market:

Product Type	Profit Margin	Important Notes
Basic Food Items (rice, sugar, oil)	8-15%	Intense competition, low profits but fast turnover
Soft Drinks and Juices	20-30%	Good profits, continuous demand
Snacks and Chocolate	35-50%	Highest profits, especially imported products
Dairy Products and Cheese	15-25%	Perishable but daily demand
Detergents and Cleaning Supplies	25-35%	Excellent profits, slow turnover
Cigarettes	8-12%	Low profits but guaranteed sales

Realistic Monthly Profits (Based on Actual Experiences):

For Small Store (100 sqm):

• Average Daily Sales: 1,800-4,000 Riyals
• Monthly Sales: 54,000-120,000 Riyals
• Gross Profit Margin: 22-28% (average)
• Monthly Gross Profit: 12,000-33,600 Riyals
• Operating Expenses: 10,000-18,000 Riyals
• Monthly Net Profit: 2,000-15,600 Riyals

For Medium Store (300 sqm):

• Average Daily Sales: 4,500-9,000 Riyals
• Monthly Sales: 135,000-270,000 Riyals
• Monthly Net Profit: 15,000-45,000 Riyals

Seasonal Profits - Very Important Point:

Ramadan Month:

• Sales increase: 250-400%
• Ramadan month profit alone: May equal 3-4 normal months
• Profitable products: Dates, nuts, juices, sweets

Summer Holidays:

• Sales decrease: 15-25%
• But increase in cold drinks and ice cream

Back to School:

• Increased demand for snacks
• Opportunity to sell simple stationery

Capital Recovery Period (Realistic):

• Successful Small Store: 15-24 months
• Medium Store: 20-30 months
• Large Supermarket: 30-42 months

Real Example - Grocery Store in Average Riyadh Neighborhood:

• Initial cost: 250,000 Riyals
• Average daily sales: 2,800 Riyals
• Monthly net profit: 8,500 Riyals
• Capital recovery: 29 months

Tips for Increasing Profits:

1. High-Margin Products:

• Focus on snacks and sweets
• Personal care products
• Cold drinks in summer

2. Additional Services:

• Delivery service (5-10 Riyals fee)
• Recharge card sales (3-5% margin)
• Bill payment service (commission)

3. Smart Inventory Management:

• Avoid expired products
• Order small, frequent quantities
• Monitor fast-moving products

Important Warning: These profits require good daily management and excellent customer service. Poorly managed stores may achieve much lower profits or even losses.

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Cost Reduction Strategies

1. Smart Location Selection

Look for:

• Dense residential areas without strong competition
• Near schools and mosques
• Easy access and parking
• Future expansion potential

Avoid:

• High-rent commercial areas
• Streets with heavy traffic congestion
• Proximity to large supermarkets

2. Negotiating with Suppliers

Effective Strategies:

• Buy larger quantities for discounts
• Pay cash for additional discounts
• Form alliances with other stores for joint purchasing
• Find local suppliers to reduce transportation costs

3. Efficient Inventory Management

Best Practices:

• "First In, First Out" system to avoid expiration
• Monitor daily sales to know most demanded products
• Reduce slow-moving products
• Take advantage of supplier promotional offers

4. Improving Energy Efficiency

Electricity Saving Methods:

• Use LED lighting
• Regular maintenance of refrigeration equipment
• Good thermal insulation for the store
• Use energy-efficient appliances

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Step-by-Step Work Guide

Phase One: Planning and Preparation (1-2 months)

Week 1-2:

• [ ] Market study and target area identification
• [ ] Business plan and budget preparation
• [ ] Search for financing sources

Week 3-4:

• [ ] Search for suitable location
• [ ] Negotiate lease contract
• [ ] Start licensing procedures

Week 5-8:

• [ ] Complete licenses and permits
• [ ] Store design and get setup price quotes
• [ ] Contact suppliers

Phase Two: Setup and Establishment (1-1.5 months)

Week 9-10:

• [ ] Execute setup and decoration work
• [ ] Install equipment and devices
• [ ] Install point of sale systems

Week 11-12:

• [ ] Train employees
• [ ] Purchase initial inventory
• [ ] Market for opening

Phase Three: Opening and Operation

Week 13:

• [ ] Trial opening for 3 days
• [ ] Solve operational problems
• [ ] Official opening

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Resources and Supporting Entities

Government Entities:

• Ministry of Commerce: Commercial licenses and commercial registration
• Food and Drug Authority: Food handling licenses
• Riyadh Municipality: Municipal permits
• Zakat and Tax Authority: Tax registration

Support and Financing Entities:

• Social Development Bank: Interest-free loans for small projects
• Small and Medium Enterprises Fund: Entrepreneurship support and financing
• Kafalah Program: Commercial loan guarantees

Professional Associations:

• Riyadh Chamber of Commerce: Consultations and services for traders
• Retail Traders Association: Networking and support

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Conclusion and Final Recommendations

Opening a grocery store in Riyadh can be a profitable investment if carefully planned. Success depends on:

1. Choosing the right location based on accurate market study
2. Sound financial planning while maintaining sufficient working capital
3. Building strong relationships with suppliers and customers
4. Continuous development to keep pace with market needs

Remember: These numbers are based on 2025 market prices and may change. It's important to get recent price quotes before making the final decision.

For free consultation or to obtain lists of approved suppliers, you can contact the Riyadh Chamber of Commerce or the Entrepreneurship Program.

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This guide was prepared based on recent market data and interviews with successful grocery store owners in Riyadh. For the latest updates, we recommend checking the official websites of relevant government entities.