What about the retailer?

[Faster horses]

At the risk of being called a packer-lover~ what I would like to know is "What about the RETAILER?" What about the profit he makes on our product? I don't hear anyone yelling about that on this forum, or did I just miss it?

If I were a betting person, I would bet he makes more pure profit than the packer...

OK, BRING IT ON. But please remember I am a lady.

 

[M Gravlee]

FH,
I'll throw my two cents in on this one. I owned and operated a regional supermarket chain in the Southeast for 26 years. Got lucky and sold 'em just before Wal-Mart started with the SuperStores. We were selling a little over 1,000,000 pounds of beef a year.

Beef was a great "draw" and we placed a lot of emphasis on it. Ground beef is great year around to pull customers into the store and steaks were good in summer and roasts in winter. It's a lot easier to creat a good meat image for your store with beef than chicken or pork. Most stores chicken and pork are very much alike.

As far as how much retailers "make" on beef, we averaged around a 15% gross profit. Much less than the 22% on pork and chicken. But with beef's higher price per pound we had more cents per package gross profit on the beef. Those numbers are before expenses. Labor, rent, utilities, taxes, etc. Over the years we averaged about 1% net profit. About the industry average.

I guess my point is if the retailer pays .85 for something and sells it for $1.00 it looks like he's getting rich, but it's not that great after expenses. Many of the supermarket chains are in real trouble today. Winn-Dixie who owned most of my old stores filed Chapter 11 this spring.

A healthy beef industry requires that producers, packers and retailers all make a reasonable profit. Problem is what is "reasonable".

 

[agman]

FH,
I'll throw my two cents in on this one. I owned and operated a regional supermarket chain in the Southeast for 26 years. Got lucky and sold 'em just before Wal-Mart started with the SuperStores. We were selling a little over 1,000,000 pounds of beef a year.

Beef was a great "draw" and we placed a lot of emphasis on it. Ground beef is great year around to pull customers into the store and steaks were good in summer and roasts in winter. It's a lot easier to creat a good meat image for your store with beef than chicken or pork. Most stores chicken and pork are very much alike.

As far as how much retailers "make" on beef, we averaged around a 15% gross profit. Much less than the 22% on pork and chicken. But with beef's higher price per pound we had more cents per package gross profit on the beef. Those numbers are before expenses. Labor, rent, utilities, taxes, etc. Over the years we averaged about 1% net profit. About the industry average.

I guess my point is if the retailer pays .85 for something and sells it for $1.00 it looks like he's getting rich, but it's not that great after expenses. Many of the supermarket chains are in real trouble today. Winn-Dixie who owned most of my old stores filed Chapter 11 this spring.

A healthy beef industry requires that producers, packers and retailers all make a reasonable profit. Problem is what is "reasonable".

Your information is very consistent with industry information that I have access to both from public and private data. A breakdown of your gross margin to a net margin may be beneficial if you have the numbers. Thanks for your response.

 

[Faster horses]

And I thank you too.

I have worked with small-town grocery stores in regards to advertising for many years and I knew before I made my post that beef is more of a draw than a high-profit item. My point was that while the packers take a hit here on ranchers.net (and many other places) the retailer more or less is never mentioned. Both need to make money selling our product, or they would cease to exist.

Point made?


BTW, Macon, I really appreciated your remark about the stores creating a meat image with beef, while most stores pork and chicken are very much alike.

BEEF IS KING!!