I often hear my wife exclaim, “Oh, how wonderful would it be to run my own little bookstore once I retire!” I frown. A small, local business.
I have nothing against them. If anything, I am the biggest proponent of small, local businesses. I generally refuse to eat at VC- and PE-funded bagel joints (but once in a while, I am forced to give in and get a cleverly priced 3-bagel serving from Pop Up at my wife’s behest). If there is a local business alternative to a PE-funded one, I will pick the local one 9 out of 10 times. That’s why Blank Street and its beautifully optimized operations see very few of my dollars, whereas Hutch and Waldo, on the Upper East Side, gets them. Although I should caveat: I almost never buy my coffee outside. I am learning how to create latte art—which is wholly unrelated to the discussion at hand about bookstores.
I frown at the idea of running a local business. The real reason I support these businesses is not just because I want them to thrive. I support them because I know running one is truly a borderline foolish endeavor in the vast majority of cases. And in my book, running a bookstore is the worst offender. I wanted to explain to my wife why just running a bookstore is asking for trouble. I believe we have already seen the last bookstore in the Upper East. Let me explain.
The last bookstore in the Upper East has been built.
I live in the Upper East, so I took that as an example. I never understood how you could run a bookstore here. It never passed the sniff test. There is a large Barnes & Noble here, but I am going to leave it out of this conversation, since those stores function on completely different economic and business incentives. This Barnes & Noble also happens to be the newest bookstore in the neighborhood. Too bad for the others. Here is a best-effort list of bookstores in the Upper East.
| Bookstore | Founded / Opened | One-line description |
|---|---|---|
| The Corner Bookstore | 1978 | Beloved neighborhood indie with a sharp new-releases + children’s mix; a Carnegie Hill fixture. |
| Kitchen Arts & Letters | 1983 | New and out-of-print books on food & drink; a pilgrimage spot for cooks and chefs. |
| Albertine | Sept 27, 2014 | French/English bookstore inside the French Embassy’s Payne Whitney mansion; ~14k titles & frequent events. |
| Barnes & Noble – Upper East Side (87th & 3rd) | July 19, 2023 | National chain’s neighborhood return, with an active events calendar. |
| Logos Bookstore | est. 1975 | Independent shop with Manhattan’s largest Judeo-Christian selection plus general interest, garden seating, and community groups. |
| Ursus Books & Gallery | 1972 | Rare & illustrated art/architecture books; dealer storefront on East 78th St. |
| James Cummins Bookseller | 1978 | Antiquarian/rare specialist (literature, Americana, plate books) tucked upstairs on Madison Ave. |
| Donald A. Heald Rare Books | est. 1972 | By-appointment antiquarian dealer for natural history, Americana, voyages & maps (E 74th St). |
| Assouline – Madison Avenue Boutique | June 7, 2024 | Publisher’s luxe “library” boutique focused on design, fashion, travel coffee-table books. |
| The Book Cellar (Webster Library) | n/a (active since 2010s) | Volunteer-run used book shop benefiting NYPL; especially strong children’s & mystery sections. |
What do you notice? No real bookstore has opened since 1983. And most of these old bookstores are projects started by the rich folks of the Upper East. Let’s take “The Corner Bookstore.” The moment I entered the bookstore, I knew the economics made no sense. And then I dove in and read the history. That explained it all. That immediately confirmed my theory.
In 1976 we purchased an 1890s brick-and-brownstone “handyman special” on the southeast corner of Madison Ave. and 93rd St […] and as we were both bookstore addicts and well aware that there was none in our neighborhood of young families and private schools, we decided to open one ourselves.
The ones from the 2000s are not real bookstores. Assouline is obviously a front for laundering money. Albertine is an attempt at using the French Embassy’s real estate to increase their cultural soft power (maybe they can learn from the Koreans). And Barnes & Noble is Barnes & Noble.
It was clear to me: like my wife, many harbour this bookstore pipedream. In this essay, I simply fulfil my moral duty (and societal obligation) to shed light on the realities of running small businesses, especially those that are as absurd as a bookstore (which, of course, saddens me greatly to even write)
So, you want to start a new bookstore, huh?
I did what any smart (or stupid) person in 2025 would do: ask an LLM.
I have to say—I love ChatGPT because of this kind of stuff. The breadth of the world’s knowledge, all for me to enjoy for a low low price of $20/month.
I didn’t think I’d love playing with AOV and OpEx values for a bookstore nearly as much as I did. The conversation was long. GPT thought for 4 minutes and 14 seconds before uttering its first word. And then it unleashed wisdom, in spades. The conversation went on and on, and involed an excel workbook. Here is an abridged version.
Chatty suggested two routes: one is the “lean” approach, and the other is the “prime” approach.
Lean setup (First/York, ~1,000 sf)
A First or York Avenue location trades marquee frontage for manageable costs and time to build a loyal base. At about \$100-ish per square foot per year (a good deal, mind you), rent is roughly \$8.3k a month and CRT does not apply; the economics reward careful curation, predictable routines, and a focus on repeat customers: buy tight, reorder fast, and let consistent days compound into stable months.
Prime setup (Third Ave, ~1,200 sf)
A prime Third Avenue storefront buys visibility and steady footfall, but it also brings the Commercial Rent Tax and a high fixed-cost base. At roughly \$258 per square foot per year, monthly rent lands near \$25.8k and CRT adds about a thousand dollars more; the model favors reliable throughput: disciplined buying and rapid restocking, an active events calendar, institutional or group orders where possible, and hours that capture both commuter and weekend trade.
Groundwork
Before we move on, we need to prepare a bit for the fun part: the unfortunate business jargon.
| Term | Explanation |
|---|---|
| Rent (quoted \$/sf/yr) | Store rents are almost always quoted by the year, per square foot. To see what you actually owe each month, you divide by 12. So if the rate is \$120/sf and the store is 1,000 square feet, that’s \$120,000 a year, or \$10,000 a month. And because the space is big and the rate high, even a small rent bump can be a problem—another \$10/sf adds more than \$800 to the monthly bill. |
| Commercial Rent Tax (CRT) | South of 96th Street, Manhattan has a special tax that shows up once your rent passes a certain level. Think of it as an invisible landlord who takes a cut once you hit that threshold. On a busy avenue with high rents, this tax can be thousands of extra dollars each year—enough to make a location that looked “okay” on paper suddenly very shaky. |
| Build-out (\$/sf) | An empty space doesn’t sell books. It needs shelves, lighting, a counter, flooring, and maybe a bathroom that isn’t a health hazard. Contractors price this by the square foot. If your build-out costs \$150/sf for a 1,000 sf shop, that’s \$150,000 before you even order inventory. Go with nicer materials or fix structural surprises, and that number jumps. |
| Security deposit, free rent, and TI | Most landlords want a security deposit—often several months of rent—upfront. That’s money sitting in someone else’s account for years. Sometimes they’ll offer “free rent” months or a tenant improvement (TI) credit, which helps offset early spending. Two free months on a \$10,000 lease is \$20,000 you don’t need to pull from your savings before you open. |
| COGS (cost of goods sold) | This is what you pay for the books you stock. New books often leave you with about 40% gross margin before shipping or returns. A \$20 book you sell might cost you \$12 to buy. If you choose the wrong titles or buy too many, that’s cash trapped in slow-moving stock. |
| Gross margin vs. contribution margin | Gross margin is (sales − COGS) ÷ sales—what’s left before other costs. Contribution margin subtracts payment processing fees too, showing what’s truly left to pay rent, staff, and bills. If gross margin is 40% and card fees are 3%, you’re left with 37% to cover everything else. |
| Fixed costs (monthly) | These are bills you pay no matter how many books you sell—rent (plus CRT if it applies), salaries, utilities, insurance, internet, cleaning, basic marketing. They don’t care if it’s a snowstorm and nobody comes in. |
| Break-even sales | Divide your fixed costs by your contribution margin to see the sales you need just to not lose money. If fixed costs are \$40,000 and your contribution margin is 40%, you must sell \$100,000 in a month to break even. Profit starts only after that. |
| AOV (average order value) and transactions | Sales are just average order value × number of transactions. You can grow sales by getting customers to spend more per visit, bringing more customers in, or both. Convincing someone to add a second book might be cheaper and faster than attracting a new customer. |
| Returns and inventory turns | Returns mean lost sales and extra costs. Inventory turns—COGS ÷ average inventory—show how quickly you turn stock into cash. If you buy \$100,000 in books in a year and keep \$25,000 on hand, that’s 4 turns. Higher is better; it means less money gathering dust on shelves. |
| Occupancy cost % and payroll % | Occupancy % = (rent + CRT) ÷ sales. Bookstores try to keep this around or below 20% so rent doesn’t eat the business. Payroll % compares staff cost to sales, with well-run shops often in the low-to-mid teens. |
| Working capital | This is the cash cushion for buying books, paying suppliers, and covering slow months. Without it, one bad season or delayed shipment can throw the whole plan off course. |
Great, now we can finally move on.
How much do I need to start?
Startup costs are a very real thing, especially the security deposit, buying your initial book inventory, and build-out, of course. I know my wife would do a fabulous job in making the shop the perfect cozy bookstore, but it’s going to cost a pretty penny.
Let’s go back to the two cases, lean and prime.
| Line item | PRIME 3rd Ave (1,200 sf) |
LEAN First/York (1,000 sf) |
Notes |
|---|---|---|---|
| Security deposit (2 mo rent) | \$51,600 | \$16,667 | Typical for small NYC retail; credit can push higher/lower |
| First month’s rent | \$25,800 | \$8,333 | Due at signing |
| Build-out / renovations | \$240,000 | \$160,000 | Shelving, lighting, counter, paint, floors |
| Fixtures & shelving | \$30,000 | \$20,000 | Can thrift/custom mix to save |
| Initial inventory — books | \$90,000 | \$70,000 | ~5–10k units to start, ordered tight |
| Sidelines opening buy | \$10,000 | \$7,500 | Cards/gifts/puzzles (higher margins) |
| POS hardware (reader, stand, printer) | \$1,200 | \$1,200 | Square/Lightspeed/etc. |
| E-commerce setup | \$1,000 | \$500 | Domain, theme, basic setup |
| Signage/awning & permits | \$6,000 | \$4,000 | Awning + city filings |
| Professional fees (lease, architect, filings) | \$12,000 | \$10,000 | Attorney + architect expediter |
| Insurance prepay (GL/BOP) | \$1,000 | \$800 | First month/quarter |
| Opening marketing | \$5,000 | \$3,000 | Launch event, print, local ads |
| Working capital reserve | \$80,000 | \$35,000 | To cover early months’ cash burn |
| Subtotal (before contingency) | \$553,600 | \$337,000 | |
| Contingency (10% of build-out/FF\&E/signage) | \$27,600 | \$18,400 | Highly recommended |
| Total estimated startup | \$581,200 | \$355,400 |
Even if we assume Chatty is being a bit too loose with the budget, that’d be a bare minimum of a quarter-million-dollar startup cost for even the super-lean bookstore on 1st and York.
How to break even
Prime location (Third Avenue)
A Third Avenue storefront buys you steady foot traffic and visibility, but it comes with a heavy monthly burden. Rent alone lands around \$25,800 a month, and the Commercial Rent Tax adds roughly another \$1,000. By the time you add payroll and other basics, the fixed monthly costs are about \$42,000. Give or take, of course.
At a 40% contribution margin (scroll back up if you missed that), you’d need \$105,000 in sales each month just to break even. That’s about \$3,500 in sales every single day. If the average order value is \$30, that means roughly 117 transactions a day—every day, no off days. Just to avoid losing money.
If 80% of your sales come from books, here’s what that looks like in units sold:
- At an \$18 average book price → 4,700 books/month (~160/day)
- At \$20/book → 4,200 books/month (~140/day)
- At \$22/book → 3,800 books/month (~128/day)
I know I would not want to be on that hamster wheel of selling books. In practice, I can’t imagine the grind that’d be needed to hit those numbers: new releases, events, and bulk orders—just so I don’t lose money.
Lean location (First or York Avenue)
A First or York Avenue space trades prime visibility for breathing room on costs. Rent runs about \$8,300 a month, and there’s no CRT to worry about. With payroll and other overhead, the fixed monthly cost is closer to \$23,500. Of course, this also means less footfall. Farther from the subway. I barely ever go to York unless it’s to play pickleball.
Here, break-even sits around \$59,000 in sales per month, or about \$2,000 a day. At a \$30 AOV, that’s roughly 66 transactions per day.
If 80% of sales are books:
- At \$18/book → 2,600 books/month (~87/day)
- At \$20/book → 2,400 books/month (~80/day)
- At \$22/book → 2,200 books/month (~72/day)
It’s still a grind, but the lower overhead gives you more time to build a loyal base before the math catches up to you. But I need to keep selling.
Show me the money
I asked Chatty to help me paint a picture here of the financial outcomes.
Figures are monthly, before owner pay, debt service, and taxes. Assumptions are: average ticket about \$30; card fees roughly 3.1%; gross margin posture varies by execution—38% (“books-only/bad”), 43% (“disciplined/okay”), 46% (“well-run/excellent”). Contribution margin is gross margin minus card fees.
Prime (Third Avenue, ~1,200 sf)
Fixed costs (rent + CRT + lean payroll + basic overhead) land around \$43.1k a month. Break-even spans ~\$100k–\$124k depending on margin discipline.
-
Bad case (books-only discipline): at \$90k revenue, contribution ≈ 34.9%, operating result –\$11.7k.
Realism: A live Year-1 risk without pre-committed demand (events that move units, school/corporate orders). Two soft months can happen; you need buffer to absorb them. -
Okay case (disciplined buying and pricing): at \$120k revenue, contribution ≈ 39.9%, operating result +\$4.8k.
Realism: Achievable by mid-year with consistent evening trade, quick reorders, and a reliable events cadence—but thin. Small slips in traffic or margin erase the cushion. -
Excellent case (tight operations and stronger mix): at \$150k revenue, contribution ≈ 42.9%, operating result +\$21.2k.
Realism: A stretch in Year-1. More plausible once a brand and pipeline are established.
Feasibility: Viable, but high-beta. Treat “Okay” as the ambitious target; “Excellent” is not a sensible base case in the first year.
Lean (First/York, ~1,000 sf)
Fixed costs (rent + lean payroll + basic overhead) are about \$19.3k a month. Break-even spans ~\$45k–\$55k depending on execution.
-
Bad case (books-only discipline): at \$45k revenue, contribution ≈ 34.9%, operating result –\$3.6k.
Realism: Possible in a slow start or late-summer dip; the loss is shallow and fixable with scheduling and tighter buying. -
Okay case (disciplined buying and pricing): at \$70k revenue, contribution ≈ 39.9%, operating result +\$8.6k.
Realism: The most probable Year-1 outcome with steady neighborhood demand, fast reorders, and modest programs (school lists, clubs). -
Excellent case (well-run and demand cultivated): at \$95k revenue, contribution ≈ 42.9%, operating result +\$21.4k.
Realism: Credible with a solid holiday and a few recurring group orders; doesn’t require marquee events.
Feasibility: Resilient. “Okay” is a realistic Year-1 baseline; “Excellent” is attainable with excellent execution.
Clearly, even with stellar execution, this is not a business you enter for the money. In the median case, you are going to be barely making a living wage. And this doesn’t even include the lifestyle here, where things are constantly falling apart, and there is constant pressure to sell to break even.
Would I start a bookstore?
Yes. Throughout this essay, I mentioned just a bookstore. The economics and the payoff suck. I love making businesses work, and I think I can make a bookstore work if I play with the traditional “definition” of a bookstore. Maybe a media company, in the guise of a bookstore? I have dozens of ideas. And because I am actually a DJ, one of those ideas involves DJs. But even I am not stupid enough to start a bookstore in the Upper East, despite all my clever ideas on making the business work. I will only ever be a patron.