Store Brand vs. National Brand Deli Margins: A Side-by-Side Comparison

Why compare item by item

Ask most buyers whether store brands earn more than national brands and you'll hear "usually". That is true often enough to be worth checking, and vague enough to be no help when you're deciding what goes in your case.

A deli case isn't one product. It is turkey, ham, roast beef, a few cheeses and a set of salads, each with its own price, its own cost and its own waste. The only comparison that tells you anything is one that puts a store-brand item next to the national-brand item it would replace, using your own numbers.

This guide builds on our private label deli margins guide, which covers the basic math. If you want the broader trade-offs of switching, see private label vs. national brands.

The five numbers for each item

For every item you want to compare, gather five numbers for both the national brand you sell today and the store-brand option:

1. Cost per pound, delivered, from your invoice.
2. Selling price per pound at your counter.
3. Usable yield: the share of each piece you actually sell, after ends and trim.
4. Shrink: product that goes out of date or is thrown away, as a share of what you buy.
5. Weekly pounds sold, or what you expect to sell.

Cost and price are easy to find. Yield and shrink take a week or two of weighing and logging, and they are where most of the surprises are.

Gross margin vs. realized margin

Gross margin is selling price minus cost, as a share of selling price. It is the number on the price sheet. Realized margin is what you actually keep once you account for the pounds you never sell.

Here is the idea with simple round numbers, purely as an illustration. Say you pay 60 for a piece and could sell all of it for 100. Gross margin is 40 percent. But if only 90 percent of the piece gets sold at full price because of ends, trim and an out-of-date day, your sales from that piece are 90, and your realized margin is (90 - 60) / 90, or about 33 percent.

Now compare a store-brand piece with the same cost and price that slices more cleanly, with 95 percent sold. Sales are 95, and realized margin is about 37 percent. Same invoice, same shelf price, a clearly better result. This is why yield belongs in every comparison.

The price gap: the decision that matters most

When you bring in a store brand, you decide where to price it against the national brand it sits next to. There are three common approaches:

• Price below the national brand. The classic store-brand position. Shoppers get a reason to switch; you give up some of the per-pound advantage in exchange for volume.
• Price at parity. Works when your product is clearly as good or better, and you're relying on taste and your name rather than price.
• Price above. For a premium tier such as a no-pump turkey or an off-the-bone ham, where the spec itself justifies the price.

Many stores use all three in one case: a value tier, a core tier and a premium tier, all under their own label. Whatever you choose, run it through the worksheet below before it goes on the sign.

Blended case margin

Your case margin is a blend: each item's realized margin, weighted by how much of it you sell. That has two consequences.

• The big sellers decide the result. Moving your top turkey and ham to a better-margin store brand often does more than converting a dozen slow items.
• Volume shifts count. If a store-brand turkey priced below the national brand pulls shoppers over, your sales mix moves toward the better-margin item, and the blended number rises even if the per-pound gap is modest.

To estimate the blend, multiply each item's realized margin by its share of your deli sales, then add them up. Do it once for your case today and once for the case with your proposed store-brand items.

A worksheet you can copy

Item	Cost / lb	Price / lb	Yield %	Shrink %	Lbs / week	Realized margin
National-brand oven-roasted turkey
Store-brand oven-roasted turkey
National-brand baked ham
Store-brand baked ham
National-brand American cheese
Store-brand American cheese

For each row: realized margin = (price × yield × (1 − shrink) − cost) ÷ (price × yield × (1 − shrink)). Fill in your top ten items and the answer is usually clear.

What the worksheet doesn't capture

Some of the value of a store brand doesn't show up in a per-pound margin:

• Loyalty. A shopper who loves your turkey can only buy it from you. A national brand is available at every competitor.
• Control. You choose the spec, the piece size and the line-up, rather than taking what a national brand offers everyone.
• Differentiation. Your case looks like your store, not like every other deli in town.
• Catering and prepared foods. Store-brand products carry your name onto every tray and sandwich. See our guide to deli catering trays.

There are costs too: a store-brand line needs label artwork, a launch plan and staff who can talk about it. Count those honestly.

Running a test before you commit

If the numbers look promising but you're not sure how shoppers will react, test first. Put the store-brand item next to the national brand for a few weeks, sample it at the counter, and track pounds sold, yield and shrink for both. Real sales from your own counter settle the question faster than any forecast.

Common mistakes

• Comparing invoice prices only. Yield and shrink can erase a lower invoice price, or make a higher one worth paying.
• Converting the slow items first. Start with the items that make up most of your sales.
• Pricing too low out of habit. If your store brand tastes as good or better, it doesn't have to be the cheapest item in the case.
• Not measuring after launch. Recheck yield, shrink and sales for each item after the first couple of months.

How Longview helps

Longview Trading has built custom private label deli programs for more than 25 years, for retailers from high-end stores with as few as two locations to some of the nation's largest chains. Tell us your top items and we can put real numbers next to them for your comparison. Choosing a supplier? Our guide on how to choose a private label deli supplier covers what to ask. Or ask for a quote; we will confirm minimums, timing and pricing for your program when we talk.