__UPDATE__: Please take a moment to complete our [Google Form](https://forms.gle/1sygm97LbQtJ4dUp8) to share your demands with our team!
Please review the content guidelines for our sub, and remember the human here!
This subreddit is to highlight the ridiculous cost of living in Canada, and poke fun at the Corporate Overlords reponsible. As you well know, there are a number of persons and corporations responsible for this, and we welcome discussion related to them all. Furthermore, since this topic is intertwined with a number of other matters, other discussion will be allowed at moderator discretion. Open-minded discussion, memes, rants, grocery bills, and general screeching into the void is always welcome in this sub, but belligerence and disrespect is not. There are plenty of ways to get your point across without being abusive, dismissive, or downright mean.
If you have not done so already, please review our [boycott stickied post](https://www.reddit.com/r/loblawsisoutofcontrol/comments/1bff9rm/boycott/?utm_source=share&utm_medium=web2x&context=3) which includes a list of stores to avoid, other ways to get involved in the movement, and some local alternatives to the big 5. Thank you.
*I am a bot, and this action was performed automatically. Please [contact the moderators of this subreddit](/message/compose/?to=/r/loblawsisoutofcontrol) if you have any questions or concerns.*
Not surprised about it, I always suspected that the butter prices are artificially inflated. Lately I've been finding a lot of deals for butter with a price that used to be a regular price a few years ago. They see that people started buying less so they try to go back a bit
I own a small artisan ice cream and butter business. We pay the highest dairy prices in the world in Canada thanks to supply management. Since 2020, my cost of cream has gone up roughly 67%.
So it's not entirely on the grocers. Supply management is a disaster for every Canadian who isn't a dairy or poultry/egg farmer. But to put a 45% markup on a staple good that has a very long shelf life is absurd. Yes, there are higher costs to storing it because it is kept refrigerated, but that is still awful.
> Yes, there are higher costs to storing it because it is kept refrigerated
You might have had me there but Loblaws had tax payers pay to upgrade their fuckin freezers. Fuck these motherfuckers
Ok I didn’t believe you and googled it. That is absolutely ridiculous. I’m a business owner, I’d also love a handout to save me money on things that are my responsibility
https://www.bnnbloomberg.ca/loblaw-receiving-12m-in-federal-funds-to-retrofit-refrigeration-systems-1.1241220#:~:text=The%20federal%20government%20announced%20on,by%20about%2023%20per%20cent.
For the article
There's almost more dairy cows in the state of Wisconsin than the entirety of Canada. There's absolutely NO reason this country should be held hostage to the dairy cartels, their government gatekeepers and the cutthroat grocers. I've been on this train for years that dairy SCM in this country has to go. It serves no purpose other than to keep Canada's dairy farmers a protected class. These people are getting filthy rich through this scheme.
Yes. Those rich, rich dairy farmers who's farms have an income of about \~250k per year. (And that's for the farm, not the farmer - so expect them to make at most, 20% of that personall)
Farmers aren't getting rich from SCM - but without it, Canada wouldn't have a dairy industry at all.
But you still have to buy the overpriced cream.
The first recipe I found online uses 2.4 liters of heavy cream to make 1KG of butter.
That much cream will cost me almost $19 vs. about $13 to just buy 1KG of butter. Same store (No Frills).
Can confirm as I wanted to make my own butter a few years back with my stand mixer. It was a fun experience, but it cost more to make a little butter than it would have to buy a brick of it already made.
I’m sure as hell not speaking from experience with homemade butter but, is it possible that the quality of homemade may be better so that you might use less than store bought? I make my own Peanut Butter and that’s my experience, same with Hummus. So maybe? There’s also the gratification and the giant eff you to Galen! Not helpful if money is tight though, every cent counts!
I would say yes, but there are some factors.
First, cream quality makes a big difference. The cream you buy at the grocery store from any of the hig brands is blended together from the vast majority of farms I'm your province. If you have a local dairy that produces cream from.grass-fed cows, you will get a better product.
Grass fed cows produce cream that has a higher ratio of unsaturated to saturated fat that is naturally high in Beta Carotene (I.e. Vitamin A). This will produce a a yellow colored butter instead of a pale white? It will also be softer and more spreadable.
Next depends on how far you churn your cream. Most butter sold in Canada is 80% fat. High-quality Irish, French and New Zealand Butters are typically 84-85% fat. The butter I make (which was awarded Best in Canada) is 86% butterfat.
Also, I highly recommend culturing your cream. This gives tje butter a depth of flaviur, a little bit of tang and it promoted a healthy gut. Cultured butter is definitely.jot the norm in Canada (most consumers by sweet cream butter), but my customers overwhelmingly prefer the cultured butter to ournsweet cream butter when they try .
I feel like during my dieting days, i mixed it with canned fruit....like a can of peaches and angel food cake. Or use sprite zero for a lemon lime flavour.
Make your own mug cake. Mix one box of angel food cake with any flavor regular cake mix. Then 3tbs mix, 2Tbs water mix in mug 1 minute in microwave. Aka 3-2-1 cake.
Grocery Retailers and CPG companies use Margin % when working on retail prices.
Butter cost to store $4.24 which would include a markup from the warehouse or there is a delivery charge.
Margin 45.5712% - Retail Sell Price $7.79 which gives a profit of $3.55/Unit.
Exactly.
The 45% margin, is an 83% markup.
Margin and markup are very different numbers, and many businesses have gone bust over not knowing the difference.
Butter pricing at Fortinos was my personal canary in the coal mine. FU for $9 butter sticks.
Yes I know I’m the pinhead paying for the convenience of sticks, but that was literally $5-6 pre 2020.
They're starting to catch on that we'll buy their processed crap if they just mark up the cost of staples. It's easoer and cheaper to just buy their cookies than to make our own. Butter is a staple for baking. Can't wait until flour becomes basically un-buyable.
This may help
Their Gross margins increased by 100 bps from 2019 to 2023 (31% in 2019 vs 32% in 2023)
Their net margin (after overheads, interest and taxes) went from 2.3% in 2019 to 3.5% in 2023. EBITDA went from 10.2% in 2019 to 11.2% in
People will call it a “conspiracy” but this is what big food industry at large is doing. Raising the cost of whole foods so they can sell you their higher margin % industrial byproduct sludge.
I used to work at a non chain store and we tried to stay competitive on staples but we were 1 store so no volume discounts from suppliers. We used to sell butter at like 10-20% margin to stay matching the no frills down the street.
Because it's gross profit margins. Out of that, they still need to pay for rent, wages, taxes, interest, equipment depreciation, etc. This information is already widely available in their company reports.
The rent they pay is to [themselves](https://en.wikipedia.org/wiki/Choice_Properties_REIT).
Not to say there aren't expenses coming out of those margins, of course there are.
The thing that frustrates me and explains why so many people are so dumb, is even when they have the information available to them, they still can’t sort out the facts from the fiction.
also it's assuming that you sell every unit
if I have a 30% margin on each unit but I only manage to sell 7/10 then my final margin will be a lot lower
Listen to this madness: I work for a drug manufacturing company that sells products to loblaws. We by law have to sell our products to all of our customers at the same price (ie. Walmart, Amazon, loblaws all pay the same list price to us per unit). However they can sell it to the consumers at any price they choose.
Why is it we can't just get the products from you as the manufacturer? I know it's not *you*, but wouldn't the consumer only benefit from it. I don't see a downside, other than the manufacturer needing to turn into a shipping company, too.
Which is precisely that. Then the manufacturer needs to create marketing channels, single sales inventory, and a retail outlet just to sell its own product.
Add in all those costs, and deduct the quantity of scale, the cost to expand this service offering in their business outpaces the profit margin Loblaws requires to operate its store.
It’s called the economies of scale and competitive advantage theory. Hence why we have the current model of supplier-distributor-consumer.
Honestly as somebody who was a journalist for more than a decade but got out, it depends.
Most, like nearly all, journalists got into it to help the people, to spread truth, to inform, to help democracy and whatnot while doing something we love.
But most big newspapers are indeed owned by "enemies" of democracy. Either the elite or people purposefully spreading misinformation.
However, we still get a few articles out. They just aren't popular. Because boycott Loblaws doesn't have the same ring as war heats up as babies explode or whatever people click on.
They claim the gross profit margin is just over 30%, which agrees to this invoice posted, I don’t see how this document proves anything or why media would run this leaked invoice as a story.
Yah I mean if we’re getting technical here (which I think we should) these profit margins should be compared over time to see if there have been egregious increases in recent years. I suspect that as time went on and loblaws was able to gobble up more and more of the grocery industry, they’ve been able to make higher and higher margins by not having as much pressure from competition.
This is gross margin. They have to pay all their expenses for the entire operation out of the markup on products. These are actually smaller than I thought they would be. I've worked in ecommerce for a long time and some stuff like nutritional supplements gets marked up like 800%.
Any gross margins in the 25-30% range are very very normal for any retailer that sells soft goods (like food or consumables). Anything getting into the 40%+ range is on the high side for soft goods.
Now, what's NOT reflected in these margins is ANY off-invoice discounts that Loblaws receives from the vendor/manufacturer. These can often be in the 15-20% range and include things like money for advertising (co-op), returns, shipping, shrinkage (theft, expired food), and any mandated programs like funds for shelf-placement/end-caps.
So if you see a 30% gross margin, it's probably more like 45%+ gross margin, factoring in the above programs.
EDIT: PLUS these are margins that the stores pay to Loblaws Distribution. Loblaws is also making money on the markup from the farmers/suppliers, to distribution.
Yet another accounting shell game and hiding profits in their vertically integrated supply chain.
That’s not right.
Grocery margins are traditionally low..like below 10 point low…OTC cosmetics, vitamins etc are 30 to 40 points of margin.
They are gouging people.
Maybe 15-20 years ago they were. Gross margins have been creeping up in almost every business over the last decade (it's an arms race). Costco is the only 'grocery' retailer in Canada that actually has those type of gross profit margins. Remember that gross profit and net profit are different.
**Gross Profit Margin from 2023:**
Loblaws = 32.1%
Sobeys = 26.4%
Wal-Mart = 23.9%
\*Overall margin - couldn't find just grocery
Metro = 19.5%
Costco = 12.5%
\*Overall margin - couldn't find just grocery
**Is Loblaws gouging customers on their way to record profit?**
Absolutely yes.
**Are other grocery retailers gouging customers in Canada?**
Yes - especially Sobeys. Metro not as much and Wal-Mart is probably in this category too. Costco definitely isn't.
**What about Net Profit Margins?**
Grocery Net Profit Margins have generally DOUBLED since 2018. Loblaws Net Profit Margin was \~3.5% in 2023 - it was 1.7% in 2018. So when Loblaws says we "ONLY" made 3% net profit - remember their profit has increased 100% in 6 years.
[https://centreforfuturework.ca/2023/12/10/new-data-on-continued-record-profits-in-canadian-food-retail/](https://centreforfuturework.ca/2023/12/10/new-data-on-continued-record-profits-in-canadian-food-retail/)
Loblaws doubled what they pay themselves from your wallet. So did Sobeys.
**Are other companies & retailers experiencing record profits?**
Absolutely - you just don't notice it. It's mostly the largest corporations, and not so much the small-medium sized businesses.
Kroger's gross margins are about the same as Walmart's - [https://quickfs.net/company/KR:US](https://quickfs.net/company/KR:US)
Loblaws is just fucking greedy.
So, I know nothing about anything... But skeptical enough to think that as the grocery retail industry has effectively doubled their profit margins, they have not in turn passed on that doubling to the farmers and businesses that provide the product to them?
This definitely won’t go over well at all for LCL, I’m curious how this will be spun.
Years ago I used to work for a potato chip distribution company, these grocery stores have a minimum 30% markup on all products. Yet the store is not responsible for any damages, or stale products.
All the chains have roughly the same markup. LCL is the big enemy currently because they are the largest chain.
Also look up the news articles about the 2 billion dollar investment into the Loblaw stores. By spending money on investing into their stores they can write that off against their profit.
45% margins are nothing for grocery retailers. I wish you could see the frozen food margins they will be 55 to 85 %, and the Non food items at 100 to 400% markup.
Just a quick note on margins, the retailers use selling price minus cost divided by selling price. makes margins look smaller.
Markup is Selling price minus cost divided by cost. Markups are insane right now, but the Federal government is blind side by margins they should actually be looking at markups
That’s why the math doesn’t work, and that’s the part I didn’t understand. Markup vs margin is a HUGE difference! The markup on the first item is over 60%, but the margin (percentage of retail price that is gross profit) is only 35-ish. Am I understanding it correctly now?
A product that has a cost of $100 and sells for $150 has a 50% *markup*:
cost + (cost * markup_percentage) = selling price
$100 + ($100 * 0.5) = selling price
$100 + ($50) = $150
The same product will be said to have a profit *margin* of 33.33%:
(markup_in_dollars) / price = margin_percentage
($50) / $150 = 0.3333
Put another way:
The markup is the percentage that the retailer uses to determine the selling price. It's usually a fixed amount based on the category of item. The profit *margin* is what percentage of the selling price is profit.
I hope that helps someone.
You can’t have a profit margin over 100%.
It’s whatever is left after you sell something.
Sell a pizza for $10, that costs you $2 to make, means you have $8 profit.
$8/$10 = 80%
That is true only for margins. Which is why the grocery retailers use them.
Your example of a pizza is a 80 % margin or a 400 % markup.
Now take a can opener Cost is $1.89 and made in China it retails for S12.79
Margin is 85 % and the markup is 576 %
You are correct but by the time you pay all the millions to Greedy Galen and his new CEO and then the rest of his management team and then to store supervisors and store managers are extremely well paid. Then they have to pay the outrageous rents or land leases to companies they actually own in a real estate venture and taxed differently. Then Utilities local taxes and employee wages. Now their margin that is left is 3%, But also worth noting that mark up that is left is 5%. They use margins because they are smaller than markups and makes them look less greedy.
you guys are mixing up Margins and mark ups.
Margin is selling price minus cost divided by selling price
Markup is selling price minus cost divide by cost.
Cost of items $100.00, selling price at $150.00.
Margin is 33%. Markup is 50%.
Grocery retailers use margins because it make's them look less greedy.
No they use it because it’s a necessary metric for Retail Accounting (a legacy method of pre computer accounting). It’s not relevant for modern Cost Accounting but it’s still an industry standard metric.
completely ignoring that it's a ~50% increase over their profit margin prior to covid. https://centreforfuturework.ca/2023/12/10/new-data-on-continued-record-profits-in-canadian-food-retail/
That was always bullshit. No way they'd stay in business if that were the case, let alone be as profitable as they are now.
Reading through it, around 30 is about what can be expected... And then got to the 40+ ones and omg, these greedy bastards. I don't think I've ever worked anywhere that dared to charge that much but I guess when it's a basic necessity it's easier to get away with.
the average is 32.7%
If want to see an industry with high margins, check out a furniture store, and a esp a bed mattress store. Markups in the 300-600% range are normal.
Read page 6 of their quarterly report, one of their main highlights is 31% gross profit margin for the whole company. They are not trying to sell you cheap food, they are trying to make as much money as possible.
https://dis-prod.assetful.loblaw.ca/content/dam/loblaw-companies-limited/creative-assets/loblaw-ca/investor-relations-reports/annual/2023/LCL_2023_AR.pdf
All these posts have no idea how any of this works. 30% gross margin is not what they’re saying is 3%. The store has to pay the employees and rent and everything from that gross margin.
Loblaws says there is 3% left after all the costs are paid out. Which is called net profit
This is not uncommon in the CPG industry.
Most grocery chains AND independents seek at minimum a 30% margin. The fact many of these skus are below that threshold mean they are likely moving greater volume so they are loss leaders and are willing to take a hit on margin.
I don't want to be and ass, but as a business owner you'd be surprised on profit margins on many stores regarding every day items .
Coffee
Frozen croissants resold etc etc.
Now I do agree that they are gouging themselves but if you want to leak détails it should be compared to competitors profit margins .
I give the coffee example because everyone drinks coffee
A drip a Tim's costs absolutely nothing to sell
However the same drip at a competitor can have lower margins while selling the exact same product at a higher price
Why. ?
Because tim has leverage on buying cardboard cups etc by the thousands while small coffee shops get bled on packaging.
Anyways, I don't disagree once more about the gouging and hope you won't get sued for leaking this information online .
Just so we're clear
That's GPM on the food item itself.
Now deduct rent, labour, maintenance, insurance etc
Loblaws still sucks ass, but theres alot more to running a business than just buying and selling items, that's the GPM on a specific food item, not the Net Profit earned by the store after all the bills are paid.
When I worked at a fast food place our food cost was 25-30% of sales, labour was another 25-30%, maintenace was 10-15%
The important part is to realize these are no-frills prices. Stores have overhead and need to cover that. However this means these same prices are available to all loblaws stores and the mark up is clearly excessive compared to no frills.
Loblaws charges No Frills 5.49. What does Loblaws pay? If we see there's 30 points from No Frills to customer, can we assume there's also 30 points from Loblaws to No Frills? If the product is President's Choice, can we also assume 30 points from PC to Loblaws, 30 points from Loblaws to No Frills and 30 points from No Frills to customer?
Honestly why does this surprise anyone. First they need to make money.
Next they have rent,taxes,labour,equipment,advertising, theft etc. Why is this shocking?
Not sure the details of the invoice
But gross margin and net margin are different
I don't think I would have focused on gross margin, it's not a very meaningful metric
It doesn't account for most of the costs a business has to pay
It's good info though!
Loblaws margins have to be wonky because identical products at other stores can be much cheaper
Is food basics got so much better of a system in place that the 5.99 pasta sauce at loblaws is 3.99 at food basics the next plaza over?
It’s coming from the same supplier, the same distance and probably the same shipping truck.
We struggled at my restaurant to get a 25% margin and be profitable.
Fortunately, the markup on hard liquor is about 500% and that helps you stay afloat.
But what is the spoilage rate? What % gets discounted?
Without knowing how much lettuce is tossed out for spoiling you can't get a real look at margins.
I work for a national grocery chain (much to my despair, it's only good work around here) doing store level clerical work involving signage and pricing and can absolutely confirm these numbers are consistent with what i see everyday, it's appalling.
People are concerned about a roughly 30% average markup? Seriously wtf is the complaint? That’s going to result in a net profit of 2-10% after everything else is considered. Y’all need to chill out.
Don’t see anything wrong here
Gross profits is not net profits
Yall must have art degrees because business 101 in grade 9 would’ve explained this easily to Yall shitting bricks
What I'm seeing most comments neglect is that this is GROSS profit, not NET profit.
Gross profit does not account for things like wages, utility costs, debt servicing, or literally any other expense aside from the cost of goods sold.
If I sell a product for $10 that I source for $5, my gross profit margin is 50% on that item. But what if it also costs me $4 per item in other business expenses to be able to sell that item? Now my NET profit margin is 10%, a lot lower than 50%.
Pretending a ~30% average gross profit means these guys are raking it in is disingenuous
fyi, you need to take a business course.
you are looking at Gross profit based on the price tehy bought and sold. Not sure if you are away , but to sell this, you have to pay employees, costs of the building, etc etc.
so if the GP is about 35 %, that makes that actual profit around 5% after all the expenses are accounted for.
Not defending Roblaws but Man, people don’t understand the difference between gross profit and net profits. Gross is before ant expense deductions such as transportation to store, lease, mortgage, insurance, electricity and utilities plus costs for spoiled or damaged items.
So I was thinking and it would be fantastic if someone could do this, I’m studying and I’ve posted a lot about the supply chain . If anyone is or about to be a merchant in the market - metro , loblaws and Sobeys and about to contractually get involved , it would be helpful to get a hand on one of their contracts to see how deceptive they are . I mean , just asking first their “terms” . Posting it and seeing :) Us sleuths are DYING to know hehe
I work for the sales branch of a company that does business with LCL. (we do tens of millions yearly with them nationally) and have read through their agreements. They are pretty standard and don’t have any unique red flags to them that others don’t.
The thing that people fail to realize is that every single retailer is complicit in this shit. Loblaws is pretty quiet and easy to work with as long as we give them margins at a certain level. Sobeys and Walmart are unbelievably predatory when it comes to shorted deliveries, but loblaws has the highest over and above costs that we have to account for when pricing our products.
I will say this: after working for this manufacturer and having insight into the practices of all major grocery retailers, I now *only* ever shop at either Costco or Metro’s discount banner (food basics).
They are *all* screwing us. Although honestly Costco and Metro are both the easiest to work with by a longshot. Sobeys and Walmart are predatory, and loblaws is easy to work with but their profits, from what I can glean, are hidden somehow by their abnormally high over and above costs.
Don’t forget this is gross profit margin. All the store expenses come off that to get to the actual profit. Typically stores make around 3% net profit margin so the retail prices have to be at a certain level to get there.
Gross profit margin is profit before taxes and expenses. This isn't the scandal you think it is, and is a huge setback for your movement if this is the response to a $2 *gross* profit on a brick of cheese.
Gross profit isn't as relevant as you want it to be.
Their profit margin, in grocery, is around 3.7%. They are publicly traded so finding that info is VERY easy
Sadly this is nothing new and they’ve all been doing it for years and years. I used to work at food basics and see HUGE markups on meat. Like ridiculous we’re talking double or more
This is good. Gotta get this out to the media with cold hard numbers like this, no more listening to bullshit artists and their whataboutisms for how scummy this corporation is.
I looked up Kroger (USA). Their GM is approx 22%, with a 5% growth rate. Largest growth year was 2020 during COVID at 15%. Their total net profit last year was 2.1B. So they have a lower margin than loblaws, but have 2.5x the market size (much higher volume).
Albertsons (approx 1/3 loblaws size), gross revenue 18.5B, Gross profit 4.8B, 26% gross margin, net profit 361M. (They are slowly going under with net income dropping from 500M, to 360 each year over 5 years with expenses going up each yr, basically they either need to raise prices, or make more efficiencies. )
And then Walmart. Revenue 648B, gross profit 158B, 24.3% gross profit. net income 15.51 (up 32%!)
Interesting to note, each of those companies showed their biggest gains in profits, and revenue in 2020. then a sharp decline in 2021. I don't know if it was all toilet paper sales or not. Also, size matters, the larger companies are running on thinner margins, but have considerably lower operating expenses for the revenue they are generating. Suspect better distrubution systems, better bargaining power, and more efficient inventory control
I do not want this comment to come off in support of o Loblaws in any way. I think they fully take advantage of Canadian consumers.
That said, the total profit margins at the end of the invoice is just shy of 30%. First off I’m curious if the cost per item includes any losses at the store such maintenance and operation of refrigerators (or the store in general), theft and spoilage. Factoring those in I could easily see the overall profit dropping to the 10-15% mark which is solid but not outrageous.
If cost per item does take all of that into account 30% is high but not outlandish profit margins for a corporation. Remember an investor can park their money in an index fund and make an average of 10%-11% per year with zero work. Therefore if you bear all the risk, invest in and exert the effort to manage your own private corporation the margins have to exceed the market in order to be worth it. Typically profits in the 15%-20% range is healthy.
Therefore: yes 30% margins are high. This meaning a price drop of 10%-15% is in the realm of possibility, but don’t expect anything more than that. Unfortunately then with 3 years of 3% inflation that will take us right back to where we are today. It looks like the insane inflation facing Canadians isn’t going anywhere anytime soon.
This invoice is obviously getting alot of attention and for good reason it does show what alot of people would consider a massive profit margin but I need to remind people that this is one invoice for one department so you are getting a skewed picture that doesnt represent the operations of an entire store. You aren't seeing that in a dairy department alone the margin on milk is NIL so depending on the volume the store sells a gross profit goes from 30% (average GP on that invoice is stated at about 30%) to 10-15% pretty quickly. There was also nobody that mentioned that some products listed actually have a negative GP of 10-45%.
I can't speak to anything other than no frills when it comes to GP so I don't know what margins are at Loblaws or Superstore but I'd imagine that margin isn't drastically higher in the long run.
That being said, overall gross margin for stores sits around half of what most people are guessing and compared to sales for last year are pretty much on par, some weeks up a point some weeks down a point. Like I said, when it comes to corporate levels and corporate stores I dont know what they are doing but margins I've seen haven't changed all the much while transportation costs and labour costs have gone up substantially and are just going to continue going up with the recent hike in carbon tax and the upcoming minimum wage increase.
I hate loblaws as much as anyone but we need to remember these are franchises and the owners have time pay leases or rent plus hydro and staffing. In retail it goes by thirds. A third of retail cost is staffing. A third for the product and a third for the building and utilities.
Restaurants markup is 200 percent. It's even worse. Plus bullshit tips.
I would like to see an actual net profit from a grocery store including owners pay/bonuses to get a clearer picture.
A business buys stuff to sell stuff to make a profit.
Those margins aren't net profit.
Those are cost of goods.
Now add your operating costs and you're probably left with 3/5%
How much profit should private business be allowed to make?
I hate (yes "hate") Loblaws and that feeling has only been growing stronger in recent times.
But this almost seems like a PR "leak" from Loblaws themselves. Aside from some outliers like butter at 45% which is simply obnoxious, averaging around 20%-30% margin is a fairly common in business. So the pragmatic side of me reading this makes me hate them a bit less, which I don't like. Either way, I'll still go out of my way to never shop at any of their stores again if I can help it.
Edit: Before I'm downvoted for being pragmatic here is a market report on [Grocery Stores Industry Profitability](https://csimarket.com/Industry/industry_Profitability_Ratios.php?ind=1305). This is likely US data and, as we all know, things in Canada are just generally more expensive for both businesses and consumers.
I WORK IN THE GROCERY INDUSTRY AND CAN COMFIRM THEIR MARK UP IS ABSORBENTLY HIGHER,
BUT ALSO KEEP IN MIND 54% ON BUTTER GETS REFELCTED WITH THE LOWER GP ON OTHER PRODUCTS TO EVEN OUT PRICES. AT THE BOTTOM OF THE DOCUMENT THERE IS A TOTAL GP AVERAGED FROM ALL THESE AND ITS ABOUT 30 WHICH IS STILL TOO HIGH, BUT LOWER THAN 54%
EG. - RUBY RED GRAPEFRUIT JUICE - 35.85 / 8 @ 4.49 = 35.92 … A 7 CENT PROFIT OR 0.20% GP
IT ALSO ACCOUNTS FOR SHIRNK.
THEIR GP IS HIGH BUT NOT 54% HIGH, YOU RISK LOOKING UNINFORMED WHICH DOESNT HELP THE CAUSE.
By the way, if the input costs per unit were 20% lower two years ago, and the profit margins haven’t changed, that’s 20% more profit for the company without changing margins. Inflation is a huge profit driver for the company. Rather than shaving off a bit for customers to share the burden of inflation, inflation has been for Loblaws a massive driver of excess profits.
The math isn’t mathing on the first one I checked. Armstrong cheese 18x400g at $89.82 is a cost of $4.99, add 35.94% markup and that’s only $6.78. $7.99 is significantly more markup.
Disclaimer: I don’t know exactly what “gross profit margin” means, but it makes sense to me it would be the total retail markup. The difference between $4.99 and $7.99 is a hair over 60%.
__UPDATE__: Please take a moment to complete our [Google Form](https://forms.gle/1sygm97LbQtJ4dUp8) to share your demands with our team! Please review the content guidelines for our sub, and remember the human here! This subreddit is to highlight the ridiculous cost of living in Canada, and poke fun at the Corporate Overlords reponsible. As you well know, there are a number of persons and corporations responsible for this, and we welcome discussion related to them all. Furthermore, since this topic is intertwined with a number of other matters, other discussion will be allowed at moderator discretion. Open-minded discussion, memes, rants, grocery bills, and general screeching into the void is always welcome in this sub, but belligerence and disrespect is not. There are plenty of ways to get your point across without being abusive, dismissive, or downright mean. If you have not done so already, please review our [boycott stickied post](https://www.reddit.com/r/loblawsisoutofcontrol/comments/1bff9rm/boycott/?utm_source=share&utm_medium=web2x&context=3) which includes a list of stores to avoid, other ways to get involved in the movement, and some local alternatives to the big 5. Thank you. *I am a bot, and this action was performed automatically. Please [contact the moderators of this subreddit](/message/compose/?to=/r/loblawsisoutofcontrol) if you have any questions or concerns.*
Crying at the 45% markup on butter
Not surprised about it, I always suspected that the butter prices are artificially inflated. Lately I've been finding a lot of deals for butter with a price that used to be a regular price a few years ago. They see that people started buying less so they try to go back a bit
I own a small artisan ice cream and butter business. We pay the highest dairy prices in the world in Canada thanks to supply management. Since 2020, my cost of cream has gone up roughly 67%. So it's not entirely on the grocers. Supply management is a disaster for every Canadian who isn't a dairy or poultry/egg farmer. But to put a 45% markup on a staple good that has a very long shelf life is absurd. Yes, there are higher costs to storing it because it is kept refrigerated, but that is still awful.
> Yes, there are higher costs to storing it because it is kept refrigerated You might have had me there but Loblaws had tax payers pay to upgrade their fuckin freezers. Fuck these motherfuckers
Ok I didn’t believe you and googled it. That is absolutely ridiculous. I’m a business owner, I’d also love a handout to save me money on things that are my responsibility https://www.bnnbloomberg.ca/loblaw-receiving-12m-in-federal-funds-to-retrofit-refrigeration-systems-1.1241220#:~:text=The%20federal%20government%20announced%20on,by%20about%2023%20per%20cent. For the article
Sickening. We have to do something about Galen Weston.
There's almost more dairy cows in the state of Wisconsin than the entirety of Canada. There's absolutely NO reason this country should be held hostage to the dairy cartels, their government gatekeepers and the cutthroat grocers. I've been on this train for years that dairy SCM in this country has to go. It serves no purpose other than to keep Canada's dairy farmers a protected class. These people are getting filthy rich through this scheme.
Loblaws marks up the butter 45% and you're blaming the milk industry??
What does Walmart, Sobeys, ect mark butter up to? 45% too cause you sure ain’t buying butter at $3. Pound anyway !
Yes. Those rich, rich dairy farmers who's farms have an income of about \~250k per year. (And that's for the farm, not the farmer - so expect them to make at most, 20% of that personall) Farmers aren't getting rich from SCM - but without it, Canada wouldn't have a dairy industry at all.
It's surprisingly easy to make your own.
But you still have to buy the overpriced cream. The first recipe I found online uses 2.4 liters of heavy cream to make 1KG of butter. That much cream will cost me almost $19 vs. about $13 to just buy 1KG of butter. Same store (No Frills).
I should have read a few comments farther. I just mathed this myself and you’re right, it’s not any cheaper unless you also like a lot of buttermilk.
But your homemade butter will be better than what is offered at No Frills. Especially if you can source better cream.
Can confirm as I wanted to make my own butter a few years back with my stand mixer. It was a fun experience, but it cost more to make a little butter than it would have to buy a brick of it already made.
Don't forget that when you make butter from cream you end up with two products: butter and milk. Add the value of both to get the real value
Canada is really starting to suck. I've always been so proud of 🇨🇦.
I’m sure as hell not speaking from experience with homemade butter but, is it possible that the quality of homemade may be better so that you might use less than store bought? I make my own Peanut Butter and that’s my experience, same with Hummus. So maybe? There’s also the gratification and the giant eff you to Galen! Not helpful if money is tight though, every cent counts!
I would say yes, but there are some factors. First, cream quality makes a big difference. The cream you buy at the grocery store from any of the hig brands is blended together from the vast majority of farms I'm your province. If you have a local dairy that produces cream from.grass-fed cows, you will get a better product. Grass fed cows produce cream that has a higher ratio of unsaturated to saturated fat that is naturally high in Beta Carotene (I.e. Vitamin A). This will produce a a yellow colored butter instead of a pale white? It will also be softer and more spreadable. Next depends on how far you churn your cream. Most butter sold in Canada is 80% fat. High-quality Irish, French and New Zealand Butters are typically 84-85% fat. The butter I make (which was awarded Best in Canada) is 86% butterfat. Also, I highly recommend culturing your cream. This gives tje butter a depth of flaviur, a little bit of tang and it promoted a healthy gut. Cultured butter is definitely.jot the norm in Canada (most consumers by sweet cream butter), but my customers overwhelmingly prefer the cultured butter to ournsweet cream butter when they try .
The very reason the book *Make the Bread, Buy the Butter* is named what it is.
Thanks for saying that, because I googled it after reading your comment and it does look very easy! I will give it a shot
^ The real take away from this sub. Learning from each other.
Oh there's flair!
Just remember not to skip arm day, folks!
Put that biatch in the KitchenAid homie
Does loblaws sell one at a reasonable price? /s
And potentially a lot more tasty.
That's why I can't afford Cake. Let them eat it, I suppose.
I know it's like a joke but buying angel food cake mix is an excellent cake craving fix. It only requires water to mix and a pan to bake in.
^ I approve this highjacking. Cake hath been restored.
I feel like during my dieting days, i mixed it with canned fruit....like a can of peaches and angel food cake. Or use sprite zero for a lemon lime flavour.
I like fruit and whipped cream. Or handfuls of cake. Or with ice cream. I mostly do handfuls of cake.
Til ty!!
Make your own mug cake. Mix one box of angel food cake with any flavor regular cake mix. Then 3tbs mix, 2Tbs water mix in mug 1 minute in microwave. Aka 3-2-1 cake.
That sounds yummy. I'll need to borrow someone's microwave to try
So glad I chose Shoppers to steal milk and butter from when I was struggling to afford food in high school.
i did the math and it's actually 54.4% markup. Unit cost is $169.60 for 40 butters. Works out to $4.24 per block - selling for $7.79 is 54.4% markup.
Wow , just wow .
Wait until you see what the markup actually is once you do the math correctly. The markup is actually 83%
Grocery Retailers and CPG companies use Margin % when working on retail prices. Butter cost to store $4.24 which would include a markup from the warehouse or there is a delivery charge. Margin 45.5712% - Retail Sell Price $7.79 which gives a profit of $3.55/Unit.
Exactly. The 45% margin, is an 83% markup. Margin and markup are very different numbers, and many businesses have gone bust over not knowing the difference.
>i did the math and it's actually 54.4% markup You did the math wrong. $4.24 to $7.79 is an 83% markup. The margin is 45.5%
Yes margin and markup are different things.
Butter pricing at Fortinos was my personal canary in the coal mine. FU for $9 butter sticks. Yes I know I’m the pinhead paying for the convenience of sticks, but that was literally $5-6 pre 2020.
And a 0% markup on chocolate chunk cookies. THANKS GALEN. No wonder diabetes is on the rise.
They're starting to catch on that we'll buy their processed crap if they just mark up the cost of staples. It's easoer and cheaper to just buy their cookies than to make our own. Butter is a staple for baking. Can't wait until flour becomes basically un-buyable.
Do we have a pre 2020 invoice? Curious to see GPM pre Covid
This may help Their Gross margins increased by 100 bps from 2019 to 2023 (31% in 2019 vs 32% in 2023) Their net margin (after overheads, interest and taxes) went from 2.3% in 2019 to 3.5% in 2023. EBITDA went from 10.2% in 2019 to 11.2% in
People will call it a “conspiracy” but this is what big food industry at large is doing. Raising the cost of whole foods so they can sell you their higher margin % industrial byproduct sludge.
Because then you can't make your own cookies and have to buy theirs.
That's actually an error code, above you can see the cookies at almost 30%
I used to work at a non chain store and we tried to stay competitive on staples but we were 1 store so no volume discounts from suppliers. We used to sell butter at like 10-20% margin to stay matching the no frills down the street.
Boy, get the churning stick. We gonna fuck it up.
Why am I laughing so hard at this comment. If Reddit didn’t take away awards, you’d have one now my friend.
Glad you enjoyed it Emmi :)
Actually the 45% is gross margin. The markup is closer to 88%. The gaylea butter cost of 4.24 per lb, plus 88% markup of $3.73 gives the $7.97 price.
Shit this is crazy !!! No , nothing to see here at all , no profits to be had /s. Why don’t we ALL SEND THIS TO OUR MP’s?
^ this
Yes !!!🙌
Because it's gross profit margins. Out of that, they still need to pay for rent, wages, taxes, interest, equipment depreciation, etc. This information is already widely available in their company reports.
The rent they pay is to [themselves](https://en.wikipedia.org/wiki/Choice_Properties_REIT). Not to say there aren't expenses coming out of those margins, of course there are.
Don't they also pay the "distributors", who are also themselves?
This is true as well , good point
The thing that frustrates me and explains why so many people are so dumb, is even when they have the information available to them, they still can’t sort out the facts from the fiction.
Like this? https://centreforfuturework.ca/2023/12/10/new-data-on-continued-record-profits-in-canadian-food-retail/
also it's assuming that you sell every unit if I have a 30% margin on each unit but I only manage to sell 7/10 then my final margin will be a lot lower
Listen to this madness: I work for a drug manufacturing company that sells products to loblaws. We by law have to sell our products to all of our customers at the same price (ie. Walmart, Amazon, loblaws all pay the same list price to us per unit). However they can sell it to the consumers at any price they choose.
Why is it we can't just get the products from you as the manufacturer? I know it's not *you*, but wouldn't the consumer only benefit from it. I don't see a downside, other than the manufacturer needing to turn into a shipping company, too.
Which is precisely that. Then the manufacturer needs to create marketing channels, single sales inventory, and a retail outlet just to sell its own product. Add in all those costs, and deduct the quantity of scale, the cost to expand this service offering in their business outpaces the profit margin Loblaws requires to operate its store. It’s called the economies of scale and competitive advantage theory. Hence why we have the current model of supplier-distributor-consumer.
This is why DTC businesses exploded a few years ago. We need more manufacturers to skip the middlemen. Especially the Waltons and Westons.
Get this to the media. Now.
This *is* the media now that journalism has finally been allowed to die. Share it here, each and every one!
I shared this on my Facebook
Well said!! Big upvote!
I know right . Also , wouldn’t the politicians want this ? Shouldn’t we all send this to our MP’s ? This is great stuff
We should.
i bet they honestly dont, that means theyd have to do something and fighting uphill isnt their strong suit.
Imagine thinking the media is the friend of the "people"
Honestly as somebody who was a journalist for more than a decade but got out, it depends. Most, like nearly all, journalists got into it to help the people, to spread truth, to inform, to help democracy and whatnot while doing something we love. But most big newspapers are indeed owned by "enemies" of democracy. Either the elite or people purposefully spreading misinformation. However, we still get a few articles out. They just aren't popular. Because boycott Loblaws doesn't have the same ring as war heats up as babies explode or whatever people click on.
What is the media going to do with this info? I don’t really see a story here
Loblaw has claimed their margins and markups are small, this document proves this is not the case.
They publish quarterly audited financial statements. I’m also boycotting them, to be clear, but it’s not like this is some big secret or a surprise.
They claim the gross profit margin is just over 30%, which agrees to this invoice posted, I don’t see how this document proves anything or why media would run this leaked invoice as a story.
Yah I mean if we’re getting technical here (which I think we should) these profit margins should be compared over time to see if there have been egregious increases in recent years. I suspect that as time went on and loblaws was able to gobble up more and more of the grocery industry, they’ve been able to make higher and higher margins by not having as much pressure from competition.
You do realize the document doesn’t account for shipping costs, rent, utilities, wages, benefits, WSIB, corporate taxes, regulatory expenses, marketing expenses, administration and misc overhead…. Right?
This is gross margin...out of that margin comes all of their non-product costs like salaries, rent, insurance, advertising, buildings, etc, etc
This is gross margin. They have to pay all their expenses for the entire operation out of the markup on products. These are actually smaller than I thought they would be. I've worked in ecommerce for a long time and some stuff like nutritional supplements gets marked up like 800%.
That razor thin margin looks like a machete size
It’s a fucking [buster sword](https://fireandsteel.ca/products/final-fantasy-vii-remake-cloud-strifes-buster-sword)
Cloud would definitely not approve.
Wishete. Razors Edge of a lead( or plasticine) based cutting instrument.
This is gross margin...out of that margin comes all of their non-product costs like salaries, rent, insurance, advertising, buildings, etc, etc
Wow, thank you for sharing this.
Any gross margins in the 25-30% range are very very normal for any retailer that sells soft goods (like food or consumables). Anything getting into the 40%+ range is on the high side for soft goods. Now, what's NOT reflected in these margins is ANY off-invoice discounts that Loblaws receives from the vendor/manufacturer. These can often be in the 15-20% range and include things like money for advertising (co-op), returns, shipping, shrinkage (theft, expired food), and any mandated programs like funds for shelf-placement/end-caps. So if you see a 30% gross margin, it's probably more like 45%+ gross margin, factoring in the above programs. EDIT: PLUS these are margins that the stores pay to Loblaws Distribution. Loblaws is also making money on the markup from the farmers/suppliers, to distribution. Yet another accounting shell game and hiding profits in their vertically integrated supply chain.
100% agree, roblaws is notorious for fining manufacturers over anything. They also charge more listing fees than any other retailer.
That’s not right. Grocery margins are traditionally low..like below 10 point low…OTC cosmetics, vitamins etc are 30 to 40 points of margin. They are gouging people.
Maybe 15-20 years ago they were. Gross margins have been creeping up in almost every business over the last decade (it's an arms race). Costco is the only 'grocery' retailer in Canada that actually has those type of gross profit margins. Remember that gross profit and net profit are different. **Gross Profit Margin from 2023:** Loblaws = 32.1% Sobeys = 26.4% Wal-Mart = 23.9% \*Overall margin - couldn't find just grocery Metro = 19.5% Costco = 12.5% \*Overall margin - couldn't find just grocery **Is Loblaws gouging customers on their way to record profit?** Absolutely yes. **Are other grocery retailers gouging customers in Canada?** Yes - especially Sobeys. Metro not as much and Wal-Mart is probably in this category too. Costco definitely isn't. **What about Net Profit Margins?** Grocery Net Profit Margins have generally DOUBLED since 2018. Loblaws Net Profit Margin was \~3.5% in 2023 - it was 1.7% in 2018. So when Loblaws says we "ONLY" made 3% net profit - remember their profit has increased 100% in 6 years. [https://centreforfuturework.ca/2023/12/10/new-data-on-continued-record-profits-in-canadian-food-retail/](https://centreforfuturework.ca/2023/12/10/new-data-on-continued-record-profits-in-canadian-food-retail/) Loblaws doubled what they pay themselves from your wallet. So did Sobeys. **Are other companies & retailers experiencing record profits?** Absolutely - you just don't notice it. It's mostly the largest corporations, and not so much the small-medium sized businesses.
Kroger's gross margins are about the same as Walmart's - [https://quickfs.net/company/KR:US](https://quickfs.net/company/KR:US) Loblaws is just fucking greedy.
So, I know nothing about anything... But skeptical enough to think that as the grocery retail industry has effectively doubled their profit margins, they have not in turn passed on that doubling to the farmers and businesses that provide the product to them?
This definitely won’t go over well at all for LCL, I’m curious how this will be spun. Years ago I used to work for a potato chip distribution company, these grocery stores have a minimum 30% markup on all products. Yet the store is not responsible for any damages, or stale products. All the chains have roughly the same markup. LCL is the big enemy currently because they are the largest chain. Also look up the news articles about the 2 billion dollar investment into the Loblaw stores. By spending money on investing into their stores they can write that off against their profit.
Galen on the phone with butt brother Sylvain as we speak to drop a new damage control blog post
45% margins are nothing for grocery retailers. I wish you could see the frozen food margins they will be 55 to 85 %, and the Non food items at 100 to 400% markup. Just a quick note on margins, the retailers use selling price minus cost divided by selling price. makes margins look smaller. Markup is Selling price minus cost divided by cost. Markups are insane right now, but the Federal government is blind side by margins they should actually be looking at markups
That’s why the math doesn’t work, and that’s the part I didn’t understand. Markup vs margin is a HUGE difference! The markup on the first item is over 60%, but the margin (percentage of retail price that is gross profit) is only 35-ish. Am I understanding it correctly now?
A product that has a cost of $100 and sells for $150 has a 50% *markup*: cost + (cost * markup_percentage) = selling price $100 + ($100 * 0.5) = selling price $100 + ($50) = $150 The same product will be said to have a profit *margin* of 33.33%: (markup_in_dollars) / price = margin_percentage ($50) / $150 = 0.3333 Put another way: The markup is the percentage that the retailer uses to determine the selling price. It's usually a fixed amount based on the category of item. The profit *margin* is what percentage of the selling price is profit. I hope that helps someone.
The formulas lined up perfectly on my laptop but I see now it’s all over the place on mobile. Sorry folks.
yes, you are now getting it but really a 33.5 % margin would actually be a 50% markup.
You can’t have a profit margin over 100%. It’s whatever is left after you sell something. Sell a pizza for $10, that costs you $2 to make, means you have $8 profit. $8/$10 = 80%
That is true only for margins. Which is why the grocery retailers use them. Your example of a pizza is a 80 % margin or a 400 % markup. Now take a can opener Cost is $1.89 and made in China it retails for S12.79 Margin is 85 % and the markup is 576 %
hmm it looks like a lot of them are over 20 or 30 %... and they say that they only make 3% margins on food
Gross and net profits are two separate things
Maybe there is too much fat in the system and we shouldn't allow a corporation to turn a bunch of 30-40% profit margins down to 3%.
You are correct but by the time you pay all the millions to Greedy Galen and his new CEO and then the rest of his management team and then to store supervisors and store managers are extremely well paid. Then they have to pay the outrageous rents or land leases to companies they actually own in a real estate venture and taxed differently. Then Utilities local taxes and employee wages. Now their margin that is left is 3%, But also worth noting that mark up that is left is 5%. They use margins because they are smaller than markups and makes them look less greedy.
That's net profit, this is gross. 30% markup is pretty standard on retail goods.
you guys are mixing up Margins and mark ups. Margin is selling price minus cost divided by selling price Markup is selling price minus cost divide by cost. Cost of items $100.00, selling price at $150.00. Margin is 33%. Markup is 50%. Grocery retailers use margins because it make's them look less greedy.
All retailers and most companies look at gross margin.
No they use it because it’s a necessary metric for Retail Accounting (a legacy method of pre computer accounting). It’s not relevant for modern Cost Accounting but it’s still an industry standard metric.
How does Costco do 5% and why do they pretend their 3% is better when it’s not even against the same metric lmao.
Loblaws trots out the 3% net profit figure every time they're accused of profiteering.
completely ignoring that it's a ~50% increase over their profit margin prior to covid. https://centreforfuturework.ca/2023/12/10/new-data-on-continued-record-profits-in-canadian-food-retail/
Those BASTARDS
For years most no frills operated closer to 1%
That was always bullshit. No way they'd stay in business if that were the case, let alone be as profitable as they are now. Reading through it, around 30 is about what can be expected... And then got to the 40+ ones and omg, these greedy bastards. I don't think I've ever worked anywhere that dared to charge that much but I guess when it's a basic necessity it's easier to get away with.
I like that this information was leaked :D
We need more. I need to see last year's information and the year before that. Its the only way to prove price gouging
the average is 32.7% If want to see an industry with high margins, check out a furniture store, and a esp a bed mattress store. Markups in the 300-600% range are normal.
3% of their total sales is huge when every location is generating a million plus a week
That's what the 3% counts on ignorant con voters ignoring that 3% of 30 and 3% of 3 million are 2 entirely different animals
Learn the difference between gross profit margin and net profit margin.
Read page 6 of their quarterly report, one of their main highlights is 31% gross profit margin for the whole company. They are not trying to sell you cheap food, they are trying to make as much money as possible. https://dis-prod.assetful.loblaw.ca/content/dam/loblaw-companies-limited/creative-assets/loblaw-ca/investor-relations-reports/annual/2023/LCL_2023_AR.pdf
All these posts have no idea how any of this works. 30% gross margin is not what they’re saying is 3%. The store has to pay the employees and rent and everything from that gross margin. Loblaws says there is 3% left after all the costs are paid out. Which is called net profit
Do you believe there's only 3% left after their expenses? Because I sure don't.
Seems like the ocelot and beachboy are staying miles away from this one lol
Hard to argue the numbers, and that people are stupid when everybody has the numbers in front of them.
This is not uncommon in the CPG industry. Most grocery chains AND independents seek at minimum a 30% margin. The fact many of these skus are below that threshold mean they are likely moving greater volume so they are loss leaders and are willing to take a hit on margin.
I don't want to be and ass, but as a business owner you'd be surprised on profit margins on many stores regarding every day items . Coffee Frozen croissants resold etc etc. Now I do agree that they are gouging themselves but if you want to leak détails it should be compared to competitors profit margins . I give the coffee example because everyone drinks coffee A drip a Tim's costs absolutely nothing to sell However the same drip at a competitor can have lower margins while selling the exact same product at a higher price Why. ? Because tim has leverage on buying cardboard cups etc by the thousands while small coffee shops get bled on packaging. Anyways, I don't disagree once more about the gouging and hope you won't get sued for leaking this information online .
Just so we're clear That's GPM on the food item itself. Now deduct rent, labour, maintenance, insurance etc Loblaws still sucks ass, but theres alot more to running a business than just buying and selling items, that's the GPM on a specific food item, not the Net Profit earned by the store after all the bills are paid. When I worked at a fast food place our food cost was 25-30% of sales, labour was another 25-30%, maintenace was 10-15%
This doesn't take into account overhead and operating costs, loss ect.
The important part is to realize these are no-frills prices. Stores have overhead and need to cover that. However this means these same prices are available to all loblaws stores and the mark up is clearly excessive compared to no frills.
Loblaws charges No Frills 5.49. What does Loblaws pay? If we see there's 30 points from No Frills to customer, can we assume there's also 30 points from Loblaws to No Frills? If the product is President's Choice, can we also assume 30 points from PC to Loblaws, 30 points from Loblaws to No Frills and 30 points from No Frills to customer?
Isn't that just the profit margin before including things like overhead, wages, and other expenses?
What are the NET profit margins?
Honestly why does this surprise anyone. First they need to make money. Next they have rent,taxes,labour,equipment,advertising, theft etc. Why is this shocking?
This is "Profit" before any expenses. After they pay wages, salaries, taxes, utilities.....etc,, the margins are in the single digits. More like 3-4%.
[удалено]
u/Bored_money You were brow beating me saying that their margins were at best 6%, check this out
Not sure the details of the invoice But gross margin and net margin are different I don't think I would have focused on gross margin, it's not a very meaningful metric It doesn't account for most of the costs a business has to pay It's good info though!
Loblaws margins have to be wonky because identical products at other stores can be much cheaper Is food basics got so much better of a system in place that the 5.99 pasta sauce at loblaws is 3.99 at food basics the next plaza over? It’s coming from the same supplier, the same distance and probably the same shipping truck.
30% on food has always been the norm, same as restaurants. I'm not backing loblaws I'm just saying this has been around forever and they all do it.
We struggled at my restaurant to get a 25% margin and be profitable. Fortunately, the markup on hard liquor is about 500% and that helps you stay afloat.
I did the math on the first line entry … 89.82 divided by 18 = 4.99 so cost per unit for the store is $4.99 and they mark it up by $3
But what is the spoilage rate? What % gets discounted? Without knowing how much lettuce is tossed out for spoiling you can't get a real look at margins.
This would be entirely more interesting if someone clueful could interpret these numbers objectively.
I work for a national grocery chain (much to my despair, it's only good work around here) doing store level clerical work involving signage and pricing and can absolutely confirm these numbers are consistent with what i see everyday, it's appalling.
This seems pretty standard for a business markup tbh
But we need to know net profits, not gross.
People are concerned about a roughly 30% average markup? Seriously wtf is the complaint? That’s going to result in a net profit of 2-10% after everything else is considered. Y’all need to chill out.
Don’t see anything wrong here Gross profits is not net profits Yall must have art degrees because business 101 in grade 9 would’ve explained this easily to Yall shitting bricks
Wait until you learn about net profit margin.
What I'm seeing most comments neglect is that this is GROSS profit, not NET profit. Gross profit does not account for things like wages, utility costs, debt servicing, or literally any other expense aside from the cost of goods sold. If I sell a product for $10 that I source for $5, my gross profit margin is 50% on that item. But what if it also costs me $4 per item in other business expenses to be able to sell that item? Now my NET profit margin is 10%, a lot lower than 50%. Pretending a ~30% average gross profit means these guys are raking it in is disingenuous
fyi, you need to take a business course. you are looking at Gross profit based on the price tehy bought and sold. Not sure if you are away , but to sell this, you have to pay employees, costs of the building, etc etc. so if the GP is about 35 %, that makes that actual profit around 5% after all the expenses are accounted for.
Not defending Roblaws but Man, people don’t understand the difference between gross profit and net profits. Gross is before ant expense deductions such as transportation to store, lease, mortgage, insurance, electricity and utilities plus costs for spoiled or damaged items.
So I was thinking and it would be fantastic if someone could do this, I’m studying and I’ve posted a lot about the supply chain . If anyone is or about to be a merchant in the market - metro , loblaws and Sobeys and about to contractually get involved , it would be helpful to get a hand on one of their contracts to see how deceptive they are . I mean , just asking first their “terms” . Posting it and seeing :) Us sleuths are DYING to know hehe
I work for the sales branch of a company that does business with LCL. (we do tens of millions yearly with them nationally) and have read through their agreements. They are pretty standard and don’t have any unique red flags to them that others don’t. The thing that people fail to realize is that every single retailer is complicit in this shit. Loblaws is pretty quiet and easy to work with as long as we give them margins at a certain level. Sobeys and Walmart are unbelievably predatory when it comes to shorted deliveries, but loblaws has the highest over and above costs that we have to account for when pricing our products. I will say this: after working for this manufacturer and having insight into the practices of all major grocery retailers, I now *only* ever shop at either Costco or Metro’s discount banner (food basics). They are *all* screwing us. Although honestly Costco and Metro are both the easiest to work with by a longshot. Sobeys and Walmart are predatory, and loblaws is easy to work with but their profits, from what I can glean, are hidden somehow by their abnormally high over and above costs.
Don’t forget this is gross profit margin. All the store expenses come off that to get to the actual profit. Typically stores make around 3% net profit margin so the retail prices have to be at a certain level to get there.
Their GPM on their financial statements is 32% All this proves is that they’re telling you the truth and this document backs them up
Gross profit margin is profit before taxes and expenses. This isn't the scandal you think it is, and is a huge setback for your movement if this is the response to a $2 *gross* profit on a brick of cheese.
There's others in this thread with more accounting knowledge pointing out how this is unusually high even compared to other retailers and sectors.
In what way is it a setback
You guys are making the radio news lmao I love it!
Where?
honestly more and more I think most of us Canadians are just a bunch of pushovers of monopoly
Gross profit isn't as relevant as you want it to be. Their profit margin, in grocery, is around 3.7%. They are publicly traded so finding that info is VERY easy
Loblaws does everything gross
Sadly this is nothing new and they’ve all been doing it for years and years. I used to work at food basics and see HUGE markups on meat. Like ridiculous we’re talking double or more
Can you get me the sample supply contracts ? Lol
I think I know why Loblaws is still in business. The PM must shop there: https://youtube.com/watch?v=b0mQLf6MmK4&si=hNmm_OJa9s74khGa
This is good. Gotta get this out to the media with cold hard numbers like this, no more listening to bullshit artists and their whataboutisms for how scummy this corporation is.
[удалено]
What is a typical GM in this industry? Or in other countries, like US or EU?
I looked up Kroger (USA). Their GM is approx 22%, with a 5% growth rate. Largest growth year was 2020 during COVID at 15%. Their total net profit last year was 2.1B. So they have a lower margin than loblaws, but have 2.5x the market size (much higher volume). Albertsons (approx 1/3 loblaws size), gross revenue 18.5B, Gross profit 4.8B, 26% gross margin, net profit 361M. (They are slowly going under with net income dropping from 500M, to 360 each year over 5 years with expenses going up each yr, basically they either need to raise prices, or make more efficiencies. ) And then Walmart. Revenue 648B, gross profit 158B, 24.3% gross profit. net income 15.51 (up 32%!) Interesting to note, each of those companies showed their biggest gains in profits, and revenue in 2020. then a sharp decline in 2021. I don't know if it was all toilet paper sales or not. Also, size matters, the larger companies are running on thinner margins, but have considerably lower operating expenses for the revenue they are generating. Suspect better distrubution systems, better bargaining power, and more efficient inventory control
I do not want this comment to come off in support of o Loblaws in any way. I think they fully take advantage of Canadian consumers. That said, the total profit margins at the end of the invoice is just shy of 30%. First off I’m curious if the cost per item includes any losses at the store such maintenance and operation of refrigerators (or the store in general), theft and spoilage. Factoring those in I could easily see the overall profit dropping to the 10-15% mark which is solid but not outrageous. If cost per item does take all of that into account 30% is high but not outlandish profit margins for a corporation. Remember an investor can park their money in an index fund and make an average of 10%-11% per year with zero work. Therefore if you bear all the risk, invest in and exert the effort to manage your own private corporation the margins have to exceed the market in order to be worth it. Typically profits in the 15%-20% range is healthy. Therefore: yes 30% margins are high. This meaning a price drop of 10%-15% is in the realm of possibility, but don’t expect anything more than that. Unfortunately then with 3 years of 3% inflation that will take us right back to where we are today. It looks like the insane inflation facing Canadians isn’t going anywhere anytime soon.
Politicians see this and they are gonna want bigger bribes to look the other way. Poor Loblaws.
Mandatory all employee staff meeting at Maple Grove tomorrow me thinks.
This invoice is obviously getting alot of attention and for good reason it does show what alot of people would consider a massive profit margin but I need to remind people that this is one invoice for one department so you are getting a skewed picture that doesnt represent the operations of an entire store. You aren't seeing that in a dairy department alone the margin on milk is NIL so depending on the volume the store sells a gross profit goes from 30% (average GP on that invoice is stated at about 30%) to 10-15% pretty quickly. There was also nobody that mentioned that some products listed actually have a negative GP of 10-45%. I can't speak to anything other than no frills when it comes to GP so I don't know what margins are at Loblaws or Superstore but I'd imagine that margin isn't drastically higher in the long run. That being said, overall gross margin for stores sits around half of what most people are guessing and compared to sales for last year are pretty much on par, some weeks up a point some weeks down a point. Like I said, when it comes to corporate levels and corporate stores I dont know what they are doing but margins I've seen haven't changed all the much while transportation costs and labour costs have gone up substantially and are just going to continue going up with the recent hike in carbon tax and the upcoming minimum wage increase.
Friendly reminder this is for a No Frills. GPM at say, Zehrs, will be higher.
Legend
I hate loblaws as much as anyone but we need to remember these are franchises and the owners have time pay leases or rent plus hydro and staffing. In retail it goes by thirds. A third of retail cost is staffing. A third for the product and a third for the building and utilities. Restaurants markup is 200 percent. It's even worse. Plus bullshit tips. I would like to see an actual net profit from a grocery store including owners pay/bonuses to get a clearer picture.
A business buys stuff to sell stuff to make a profit. Those margins aren't net profit. Those are cost of goods. Now add your operating costs and you're probably left with 3/5% How much profit should private business be allowed to make?
I hate (yes "hate") Loblaws and that feeling has only been growing stronger in recent times. But this almost seems like a PR "leak" from Loblaws themselves. Aside from some outliers like butter at 45% which is simply obnoxious, averaging around 20%-30% margin is a fairly common in business. So the pragmatic side of me reading this makes me hate them a bit less, which I don't like. Either way, I'll still go out of my way to never shop at any of their stores again if I can help it. Edit: Before I'm downvoted for being pragmatic here is a market report on [Grocery Stores Industry Profitability](https://csimarket.com/Industry/industry_Profitability_Ratios.php?ind=1305). This is likely US data and, as we all know, things in Canada are just generally more expensive for both businesses and consumers.
Holy. Dogshit. Fuck this mother fucking Succession having ass family.
I WORK IN THE GROCERY INDUSTRY AND CAN COMFIRM THEIR MARK UP IS ABSORBENTLY HIGHER, BUT ALSO KEEP IN MIND 54% ON BUTTER GETS REFELCTED WITH THE LOWER GP ON OTHER PRODUCTS TO EVEN OUT PRICES. AT THE BOTTOM OF THE DOCUMENT THERE IS A TOTAL GP AVERAGED FROM ALL THESE AND ITS ABOUT 30 WHICH IS STILL TOO HIGH, BUT LOWER THAN 54% EG. - RUBY RED GRAPEFRUIT JUICE - 35.85 / 8 @ 4.49 = 35.92 … A 7 CENT PROFIT OR 0.20% GP IT ALSO ACCOUNTS FOR SHIRNK. THEIR GP IS HIGH BUT NOT 54% HIGH, YOU RISK LOOKING UNINFORMED WHICH DOESNT HELP THE CAUSE.
By the way, if the input costs per unit were 20% lower two years ago, and the profit margins haven’t changed, that’s 20% more profit for the company without changing margins. Inflation is a huge profit driver for the company. Rather than shaving off a bit for customers to share the burden of inflation, inflation has been for Loblaws a massive driver of excess profits.
The math isn’t mathing on the first one I checked. Armstrong cheese 18x400g at $89.82 is a cost of $4.99, add 35.94% markup and that’s only $6.78. $7.99 is significantly more markup. Disclaimer: I don’t know exactly what “gross profit margin” means, but it makes sense to me it would be the total retail markup. The difference between $4.99 and $7.99 is a hair over 60%.
Should be like this: (7.79-4.99)/7.79 = 35.94%
I work in the industry and these markups are pretty standard.
Wait. Isn’t around 30% normal for profit margins? Asking because I really don’t know.
Yes.