How much does the grocery store make off our beef?

[BRG]

We sell several beef's a year off the ranch. I know how much extra $ we make by doing this. Then I look in the grocery store and see what they charge. It looks crazy. I realize they are selling it different than halves and quarters. But it still is very high. They sell burger for around $2.50 lbs, wWhile we sell a whole beef for that. My question is, why do they have it so high?

 

[Mike]

We sell several beef's a year off the ranch. I know how much extra $ we make by doing this. Then I look in the grocery store and see what they charge. It looks crazy. I realize they are selling it different than halves and quarters. But it still is very high. They sell burger for around $2.50 lbs, wWhile we sell a whole beef for that. My question is, why do they have it so high?

I can see a new market emerging from these high prices of beef in the grocer. More and more people in my area are looking for a calf to split with their neighbor.

The public not only gets better prices but "knowing what they get" is also a factor. Smart cattlemen will take advantage of this.

 

[Jason]

We sell several beef's a year off the ranch. I know how much extra $ we make by doing this. Then I look in the grocery store and see what they charge. It looks crazy. I realize they are selling it different than halves and quarters. But it still is very high. They sell burger for around $2.50 lbs, wWhile we sell a whole beef for that. My question is, why do they have it so high?

You sell the whole beef at $2.50...hanging weight? Take the bone and trim out that's about 25%, your price just hit $3.33/lb. Who pays the processing? If you did, you only got between $2and $2.20.

If you are weighing boxed cut up product at $2.50 you are getting less than you would on the rail.

Does every piece of fresh beef sell? No some spoils. Stores have returns on beef as well.

I know what I make on selling beef 'retail' and when the market dumps it is good. When cattle prices are high, I can't justify the time or effort to do it.

There is a big difference in selling a few beef a year and moving 900 to 5000 head per day.

 

[BRG]

Jason "You sell the whole beef at $2.50...hanging weight? Take the bone and trim out that's about 25%, your price just hit $3.33/lb."

We sell ours at 1.80 hanging weight, and add the .$70 for processing on to it. That equals out $2.50. That is how we sell it, and that is a premium over just about any other way I can sell it.

Now if the price is $3.33 like you stated above, that is still way cheaper than what they sell it for here. Burger starts at $2.50 here all the way up to $4.00, roast are $4.00-$5.00, and steak is $5.00 up to $15.00. That is quite the profit they are getting. Or am I mistaken and someone else is getting a big cut of this too.

 

[Jason]

Only extra lean ground beef sells for $2.50 and up. Check out the $0.99 specials.

The butcher is making a killing at $0.70 for processing. I pay $0.50 and thought that was bad.

So back to the real amount of beef for sale. You still are at a retail price of $3.33 to the consumer, ground beef and all. The chuck on an animal is about 29% of the weight. Is yours ground or put into chuck roasts? I see lots of shoulder (chuck) roasts sell for under $3/lb. So right there you are making $0.33/lb on 29% of the animal.

The lean ground is $0.30 to $0.80 / lb over market, so you are making that on another 20-25% of the carcass.

You sell the 11% or so of middle meats at a loss from the store of between $1/lb and for the tenderloin of $12 for the small weight of that item. Even say a $2 loss on all 11%.

Then you have the hind end, inside round etc. At $3.33 you are higher than the outside round cuts and about the same as the inside.

All in all you are higher priced than the retail store and we haven't even discussed the costs involved to sell the beef, transportation and labor and utilities and spoil the store has to pay.

Agman had some numbers and the web master Macon had some interesting numbers on retail beef profits a while back. Do a search. I remember the numbers weren't what you would expect, but I don't recall the exact numbers.

By going direct to the consumer you have made the packer, wholesaler and retail margin. By selling a half or whole at a time, you saved the costs involved in marketing, storing, and spoilage.

Can you sell all your years production this way? Can you make a living on your production? I have yet to meet anyone who answers yes to both those questions.

Bottom line, each time a carcass is handled, costs have to be paid. Those who handle beef, packers, distributors, retailers know their costs and bid for the "raw" product accordingly. In the case of retailers, if they can't move a quantity of beef and have a set price given them by head office, they don't order it. Featured prices are sometimes used to move some product at a loss to avoid having to throw it out and losing all the money it cost to buy.

Large supermarket chains bid on wholesale beef from the packers/distributors based on movement of beef the previous week, and seasonal trends. If they have to mark it down to sell it they can't continue to pay the same, so the lower price moves down the line.

Understanding the whole picture and that selling a half here and there isn't the same a retailing beef, makes producers much better able to see market trends and understand some of the detailed info Agman presents here for us.

 

[agman]

We sell several beef's a year off the ranch. I know how much extra $ we make by doing this. Then I look in the grocery store and see what they charge. It looks crazy. I realize they are selling it different than halves and quarters. But it still is very high. They sell burger for around $2.50 lbs, wWhile we sell a whole beef for that. My question is, why do they have it so high?

The answer to your question is approximately 1.0% to 1.5% net on total beef sales. That is all folks.

 

[RobertMac]

I gross $5.0419/lb boneless retail...got just over $1.00/lb hoof to retail package...then some transportation cost. Makes a difference when you produce what your customer base wants and they are willing to pay for it. Commodity product is a race to the lowest price. But what does a redneck like me know???? :???:

Jason, one day I will answer both your question...YES!

 

[mrj]

RM, saying you produce what your customer base wants, I'm assuming you mean the high quality beef.

What do you do with the cuts people do not want? Liver, for instance, and even things like short ribs, soup bones, minute steak ( I know is sounds crazy, but some people do not like it, round steak in any form), so do you sell mostly by the cut, quarter, half, or what?

MRJ

 

[Anonymous]

Local locker plants have to pay someone to haul ofal away.

Ofal can be the total profit for a larger processor.


~SH~

 

[RobertMac]

RM, saying you produce what your customer base wants, I'm assuming you mean the high quality beef.

What do you do with the cuts people do not want? Liver, for instance, and even things like short ribs, soup bones, minute steak ( I know is sounds crazy, but some people do not like it, round steak in any form), so do you sell mostly by the cut, quarter, half, or what?

MRJ

MRJ,I sell liver for $3.69/lb and can keep any on hand...soup bones for $2.00/lb, great for making beef broth...cook them in a crock pot for 24 to 48 hours...lots of nutrients and minerals there. Then I cook a roast or stew meat after the bones. Then I pour the broth into ice trays and freeze it making frozen beef broth cubes to use later. I grind the round or make stew meat...not a problem to sell, my customers ask for it. High quality beef means different things to different consumers!

SH, you are right, but my chicken farmer friend and I are looking into grinding our "extra" parts and making pet food...some people will spend more on their pets than themselves. Lots of bones go there and I have to hide my liver so I can save it for my human customers.

 

[RobertMac]

We sell several beef's a year off the ranch. I know how much extra $ we make by doing this. Then I look in the grocery store and see what they charge. It looks crazy. I realize they are selling it different than halves and quarters. But it still is very high. They sell burger for around $2.50 lbs, wWhile we sell a whole beef for that. My question is, why do they have it so high?

The answer to your question is approximately 1.0% to 1.5% net on total beef sales. That is all folks.

Agman, my friend that is selling in some stores says they want a 30 to 40% mark up over his wholesale price. When I get my supply up(hopefully next spring) I'll find out for sure. :wink:
Have a cool...made by a USA owned company...BUD(I prefer Bud Ice), Robert

 

[PPRM]

This has been a good thread......

acles
Interesting you brought up Beer. I compare what is possible to the Micro-Brew industry. I don't think any of them can compete straight up with Budweiser or any of the other Big Boys as far as cost per unit and distribution. But that is not where they compete.....

I can't compete with Tyson on commodity product, so if I want to direct market, I have to do something different.......

So this thread does show the obstacles. That isn't a bad thing. You have to know they are there. No race was ever won without getting past the obstacles. I also think the Micro-brew deal is proof that it can be done....Hmmm... There's some pretty successful branded beef programs out west here...These guys have met the obstacles head on...Some have failed to....No guarentees,


PPRM

 

[Bill]

We sell several beef's a year off the ranch. I know how much extra $ we make by doing this. Then I look in the grocery store and see what they charge. It looks crazy. I realize they are selling it different than halves and quarters. But it still is very high. They sell burger for around $2.50 lbs, wWhile we sell a whole beef for that. My question is, why do they have it so high?

The answer to your question is approximately 1.0% to 1.5% net on total beef sales. That is all folks.

Agman, my friend that is selling in some stores says they want a 30 to 40% mark up over his wholesale price. When I get my supply up(hopefully next spring) I'll find out for sure. :wink:
Have a cool...made by a USA owned company...BUD(I prefer Bud Ice), Robert

Anheuser-Busch buys a lot of their barley out of western Canada. Where do they source most of their rice? They may be an American owned company but I bet their raw product is sourced all from all over.

 

[BRG]

I know a huge portion of the grain comes from the Red River Valley. Alot of contracts up there.

 

[agman]

We sell several beef's a year off the ranch. I know how much extra $ we make by doing this. Then I look in the grocery store and see what they charge. It looks crazy. I realize they are selling it different than halves and quarters. But it still is very high. They sell burger for around $2.50 lbs, wWhile we sell a whole beef for that. My question is, why do they have it so high?

The answer to your question is approximately 1.0% to 1.5% net on total beef sales. That is all folks.

Agman, my friend that is selling in some stores says they want a 30 to 40% mark up over his wholesale price. When I get my supply up(hopefully next spring) I'll find out for sure. :wink:
Have a cool...made by a USA owned company...BUD(I prefer Bud Ice), Robert

I am absolutely confident in my post RM. There was a post about six weeks ago by a gentleman who owned 26 Winn dixie stores who cooberated that net fiqure for the beef department in his stores.

Best of luck to you in your venture. Go for it.

 

[RobertMac]

The answer to your question is approximately 1.0% to 1.5% net on total beef sales. That is all folks.

Agman, my friend that is selling in some stores says they want a 30 to 40% mark up over his wholesale price. When I get my supply up(hopefully next spring) I'll find out for sure. :wink:
Have a cool...made by a USA owned company...BUD(I prefer Bud Ice), Robert

I am absolutely confident in my post RM. There was a post about six weeks ago by a gentleman who owned 26 Winn dixie stores who cooberated that net fiqure for the beef department in his stores.

Best of luck to you in your venture. Go for it.

I'll keep that in mind when I start negotiating...thanks.
Take care, Robert

 

[PPRM]

Robert,

Keep us posted and good luck,,,,, Going in with your eyes wide open will help,


PPRM