its a moving target depending on where you are, if on an agressive ad (loss leaders) , shrink recovery policies, added value items, etc.
30% is the target around here- unless its a heavy tourist area, or sell alot of marinades, then its 35-40 %
but a word of caution, there are pros and cons to a full service and self service cases- full service is of course much more labor, also, on a full service display, customers are looking at price per lb, rather than price per package when wrapped in a tray. on some poorer areas, if you have 10.99lb on choice rib eyes in a full service case- some customers are going to think you are expensive. again, thats all they see on a full service case is price per lb
its great to sample new items over a full service case- you have one on one contact with the customer.
I agree with "Mainemeatman", I've been on both sides: Small Independent Market of 5 stores. Old fashion butcher shop, full service, sold many rubs, marinades, ready to eat items: small meat loaves, stuffed peppers, stuffed chicken breasts etc...everything turned over. Price per # is what the customer looked at. 32% was great! Now, working for a larger chain of 57 stores with both full service and self service the price per package is the key. Here in Ct. a $9-$10 package is the highest we can go, or then the very very strict shrink policies come into play and it is not worth your job. 28% is great, many in the chain are 26%. Those that come in at over 30% on monthly inventory are only kidding themselves, they will give you a 97% cutting test on a chuck roll.
It's been awhile and maybe I'm not remembering right but didn't everyone mark there product up 30% above cost and then if they got a 25-26% gross it was good. I worked at the First National Stores (traveling cutter)in maine. That seems like thats what everyone tried to get, and if they didn't that they were sent to madawaska or never heard from again!!Steve
as we all know gross margin is a measure of profit, simply put,,, it's sales- purchases=gross profit dollars, then divide the gross profit by sales, a wise operator will say "we bring gross profit dollars to the bank" not the percentage symbol
meaning you can have a lower gross margin percent, but higher gross profits dollars.
for example, I buy bnls choice rib-eyes at 6.00lb, i want to sell them whole (cut to order) at 30% margin the retail will be 8.57lb ($6.00/.70)
an ave rib eye weighs say 14lbs thats 14lbs x 8.57=119.98 how many of these will you sell? not many around here
but, lets step back and say, if i sold them at 6.99lb i'd be making close to a dollar per lb- on a 70lb case, thats 70.00 gross profit,,but only 14.3% gross margin-the ave sale will be 97.86 on a 14lb ave. Under 100.00, i'll sell many more than at 120.00
7.99lb retail will be 25% margin
a few years ago, i met with new owners of a store this married couple bought- he asked me-how to improve profits in the meat dept. i said lower your prices-he just couldnt understand this answer-so i had to explain presently we sell chicken tenders for 3.99lb, they only cost 1.70lb, thats 57% margin!! but you only sell 1 case a week, and sometimes you have to reduce them
if we sell them at 2.49lb (over 30% margin) we will sell 10 cases per week, eliminate any shrink and give you a much better price image at .79cents profit on 40lbs=31.60 per case-10 cases = 316.00 and still achieve targeted 30% margin
if you over margin your retails, you can easily incur more shrink-thats why regular cutting tests are good to do
rate of sell-or sellabilty is very important-id rather have more product moving at lower margins-give you a good price image too.
sale item penetration (sale item sales to overall sales) also called ad shrink, affects gross margins bigtime if you have an aggressive flyer and ad prices. (need to have a sale item profit strategy, on fall out cuts, marinades and stuffed items (from sale items) however, sometimes we train our customers to cherry-pick if the only signs on your case is sale item signs-attracting attention to only low margin items-so dont be complaining about being cherry-picked if thats the only signs on the case- make many signs-particularly on the higher margin items, over half your customers have not seen the ad-draw attention to higher margin items with signs-if your handwriting sucks, find a woman to make signs
alot in the mix when talking gross margins-always keep in mind, most meatcases have defrost cycles for 40 minutes at least three times a day-the product keeps better in the cooler-no need to load the case in the morning-if busiest time of the day is 2-7
The other Butchers answered the questions. At Albertsons our target was 25-30%. The sales were usually 100-150,000 a week 10% LABOR, 5% COSTS AND PROFIT 10-15%. We had no bonus system but if the sales were good we got plenty of overtime.. alan
high volume, cures a lot of ills, the product turns, the products are continuosly fresh, less shrink- tthis is the promise land for a meat department
steve- yes, meat departments use to target 20-25% margins.
here's a quick example of margin vs mark-up (both are measures of profit)
mark-up is based on the cost of product gross margin is based on the sales
say a one lb hot dog costs 1.00 we sell for 1.50 mark-up is 50% (1.00x1.50) .50 is 50% of cost gross margin is 33% (.50 is 33% of 1.50 or .50 gross profit divided by retail=33%
this industry is on gross margin (sales)
this is a quick formula for margin .... cost divided by (100-desired margin)=gross margin %
from the hot dog ex. above 1.00 / .70 = 1.42 divide by .7 for 30% gross, or divide by .75 for a 25% gross
another example bnls pork loins cost 1.80lb we want to sell them whole cut to order targeting 25% 25 % mark-up would be 1.80 (cost)x 1.25=2.25lb 25% margin would be 1.80 (cost) divided by .75 = 2.40lb
steve, 23 yrs ago i was a meat manager in a chain, my head cutter was a guy named D. Labbe, he was meat supervisor for 35 yrs for first nationals in maine years ago, ive run into a few old time cutters across maine that worked for first National, most knew this guy-ever heard of him? not sure if he went to the "county" or not.
Nice examples "Mainemeatman" I try to explain to my students how important it is to know the formulas! the math won't change, just plug in the numbers. I feel to many young cooks and meat-cutters get into the business and think that there will be no math. Have a nice weekend.
numbers are the language of business,,,its best to have a good foundation of retail math if you work in any position in a store
When I was a meat manager, my supervisor use to ask me math questions, his favorite was "what's your sale item penetration" sales item sales to total sales..... I could get these numbers from the scan file manager thru velocities- but never "had the time" to do it- then one week, I did, and started keeping track of how this really affected my margins, so, even thow he pissed me off, it became one of my favorite "tools" to increase gross margins this pushed me to merchandise more- push more signage to attract to higher margin items, this also drove home, the cherry pickers will find the sale items, but the majority of customers havent seen the flyer and look for signs so i could use that to my advantage
WOW, you are a very knowledgable man about the business. Looking back...I wish I would have learned from you or at least worked with you. We seem to "speak" the same language now. Yes, those store managers always poking around asking questions and like you said...no time...run a report for this and that, make a cutting list, get everyone out on break then a lunch. Punch in an order, grab some cold kielbasa on the run, fill the case, help Mrs. Smith out, clean the room.....
Yes Labbee was my meat supervisor he sent me all over the state filling in for vacations and days off. He was a good guy. I think I spoke to you on the Maine forum about it (bangorboy)When he first hired me he made waterville my home store liveing in Belfast he then didn't have to pay me traveling pay when he sent me to rockland or Ellsworth or anywhere. But anyway I can still see his face when i told him that the women in the office in waterville told me I had to use up my sick time and to call in sick so I did and he said no no Stephen you can't do that.I didn't miss a day after that in 13yrs. Some one told me he died. I got to know a lot of those cutters i don't know what happen to them all.I did find Ronald Michaud the meat manager in rockland this summer he doesn't look a day older. He worked for a while for Hannafords I think. We really earned our money back then .I'm retired now did work for awhile here in Tn, alot of stores here don't have experienced people in the meat department one store when the manager left made the meat wapper the manager and the kid cutting the meat worked for a resturant what a mess.
I forget the date but it was the Ellsworth store-- Blake Smith ,Rolly Higgins and me in the meat dept.Tylenol was the last thing left on the shelf. It was a hard dept to clean you had to squeege the water through the doors down a hall and out the back dock. It had a wood floor! I remember one morning after a hard nite in Bangor I was out filling the case the first thing. Rolly came out through the swinging door yelling--how many hands did god give you. two I answered-- he said well use them!!. He was sometimes hard to work for but all and all he wasn't. I got mad and said i could leave I just wanted to get back to Bangor!
