Mr Sands, who sold the 28-store David Sands group for an estimated £10 million to £15 million, is to open the shop in a former pub in Glenrothes in March.
It will trade as David's Kitchen Ltd, under the Nisa Local fascia.
Mr Sands, who has worked in property development since the Co-op deal, has brought in Keith Fernie, a former senior manager and buyer with the David Sands group, as managing director.
Mr Sands' father, Lindsay Sands, and sister Marjorie Watts, join Mr Fernie as directors as in the business.
Mr Sands, who currently has no plans to build a new convenience store chain, is the company's chairman.