Conventional grocery store chains have a profit margin of about 2.2%. Whole Foods may generate 5-12%. Small independent grocery stores make 1-4% profit typically. Factors affecting independent owners include marketing, product costs, and shrink.
Grocery stores operate on a slim profit margin per item, usually 1-3%. They rely on customers buying many items per trip to add up profits. Prepared foods, vitamins, meat, alcohol are some of the most profitable items.
Online grocery sales can lose money if baskets are small, unless delivery fees make up costs. Consumer backlash over fees and profitability complicate online efforts. The online grocery market is growing.
Grocery store owners can make $62,000 or more depending on location, size, being a franchise. Top end owners outearn store managers. But small store owners may make less.
In 2018 median weekly sales were about $456,000 per store. Per day about $65,000.
The scale of supermarkets makes the business profitable overall through economies of scale. Smaller stores have tighter profit margins. Investment costs to start a supermarket range from $100,000 to $2 million depending on size.
Profit Margin Defined
Profit margin is the percentage of sales that constitutes profit. Grocery stores have slim profit margins, from about 1% to 3%. Smaller stores may have higher margins with good inventory management and customer service.
Factors affecting profitability include costs, shrinkage, and basket size. Prepared foods, meat, and alcohol are very profitable. Online sales can lose money if basket sizes are small. Backlash over fees complicates online efforts, although the online market grows.
Supermarket Owners’ Earnings
Owners can make over $62,000 depending on location and size. Top owners outearn store managers. But small store owners may make less. Profit comes from volume despite low margins per item, often just pennies.