Make sure you are talking the right language - SKUFood
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Make sure you are talking the right language

Happy Thanksgiving to all of the people in our SKUFood community from Canada. I think we can all agree 2020 has been a year like no other but we have to find the positives. Holidays like Thanksgiving are a reminder to take a step back and think about the positives. Although it has been an incredibly challenging year it is also a good time to be in the food industry. People put more focus on food in 2020 and they are giving more credit to food produced locally by people they can trust. If you supplied a lot of product into food service it was very difficult. Some of that volume is coming back but certainly not all of it.

From my perspective relationships between suppliers and retailers also changed in 2020. Overall there was more collaboration. Yes there are examples where this is not the case, some bigger than others but the personal interaction changed.

One important aspect of a productive business relationship is the ability to understand the terms and language of the person on the other side of the desk. We are not referring to English or French. Every industry has its own terms and calculations. Food is a great example.

Gross margin and mark up are two terms people do not always understand. Some people think they are interchangeable-they are not. Suppliers use mark up because they are focused on cost of production where as retailers use gross margin because they are focused on selling at retail price.

A mark up is defined as the profit you make expressed as a percentage of the total cost of goods. In other words you start with the total cost of goods and add a percentage to arrive at a selling price.

A gross margin is defined as the profit expressed as a percentage of the selling price.

Join us this week on Wednesday October 7 at 2pm Atlantic (1pm Eastern), as we will discuss the difference between mark up and gross margin.

The first 50 people to login in to the SKUFood Recipe for Success, presented by FCC on Wednesday October 7 will receive a SKUFood profit wheel. This is a great tool to help you calculate mark up and gross margin.

We had some great comments about our Recipe for Success last week to help you sell more on retailer’s e-commerce sites. One person sent me a note to say they had already implemented some changes in their business to take advantage of some opportunities we shared. Awesome!

If you missed our SKUFood Recipe for Success presented by FCC last week you can view the replay here.

October Recipes for Success, presented by FCC

It is exhilarating to produce products and figure out how to get them to market successfully. It can be a challenge to focus on the numbers but that is how you generate the best return for all of your hard work. When you understand the numbers that you control and that are out of control, you have a much better opportunity to deliver the best results.

October 7- Gross margin and mark up are two terms that are used a lot in the food industry. Unfortunately, some people assume they are the same thing. We will explain how to calculate both numbers and why different people need to use one or the other. Retailers focus on gross margin and it is important for producers and processors to speak their language. We will also help you calculate category margins from retail prices.

October 14- Retail pricing, gross margin and contribution margin are all metrics retailers focus on. Each of these calculations impact producers and processors. It is important to understand your customer’s expectations and how you fit in their plans. Suppliers cannot set retails or margins but when you understand them, you can predict the impact on your products. We will explore these numbers in different departments across the store.

October 21- Unfortunately, we have trained consumers in food and beverage to look for items on temporary price reduction (TPR). Your customers expect you to offer discounts to support their TPR programs. Suppliers must build this into their marketing and sales plan to compete in today’s retail environment. When you understand how much to discount your price and what the results will be, you can build a much more effective plan. We will also illustrate how much you have to sell to make it all back.

October 28- There are many costs associated with producing great food and beverage products. You need to understand every cost right through until your product goes into the consumer’s shopping cart. We will explore some of the costs you incur after production such as brokers and distributors. There are many options and you should consider them all before you find the right solution for your products that will maximize sales and profits.

At SKUFood we understand it is important to give back. We have the ability to share insights and information you can use in your food business right away. If we were able to get in the same room for an event you would hear me say, “Success in the food industry is not just about making great products to sell; it is about selling the great products you make.” Communicating with your customers in these challenging times is an example of this.

If you want to talk about generating sales in this new environment or need some advice just send me an email at or give me a call at (902) 489-2900.