After 15 years of cheese selling (my anniversary was May 18!), it’s not like I think I’ve seen it all, but I feel like I have a general handle on the questions I will get. Last weekend however, one threw me for a loop.
A guy walks up to me and says, “What’s your margin on cheese?”
“Are you asking as a customer or as a food professional?” I respond. Something about his manner is odd, not the least of which is that there’s no lead up to this question at all and he asks as if it were just as normal to ask this as “where’s the brie?” I ask this question mostly because I want to know if he understands the difference between margin and mark-up,* and also because I want to try and figure out where he’s coming from.
“I’ll answer your question, but I find it strange – if you are in the food business – that you can’t tell by looking at the prices. There are not a lot of secrets in the food world. We pretty much all know what each other pay for things. Where do you work?”
“I work at a company that sells products online.”
“Ok, so you want me to tell you how we do our pricing but you won’t tell me where you work or why you are asking. I mean, I’m standing here at my workplace so you know where I’m coming from but you won’t give me any information about yourself and you expect me to tell you what are generally considered trade secrets. Doesn’t that strike you as a little odd?”
“I didn’t mean it that way. I work on the computer systems.”
“Ok, for what company?”
“…” Clearly this is a secret for some reason.
“Ok, here’s the deal, our cheese margins are between 35-50% which is low for the industry. What our margin is depends on how much labor goes into a cheese. Does that answer your question?”
“(Looking at a two-year aged gouda) I just find it strange that you can sell cheese for $15/lb. Why don’t people just buy it at Costco?”**
It’s certainly not limited to selling cheese, but this is how people get themselves into trouble. If he had identified himself as a customer I would have been much friendlier, answering the question after I generally explained the issues behind cheese pricing: high labor to sales ratio, higher cost of refrigeration that regular grocery, need to cover shrink, etc. as well as the fact that pricing also reflects that people can ask questions to workers who get paid a living wage (with benefits) and therefore tend to have more knowledge and experience than people at other stores.
By puffing himself up, he unknowingly violated the unwritten rule of the food trade which is that the first thing you do when asking questions to someone else in the food trade is identify yourself. He thereby put himself in the category of people like the sales rep who once called me up pretending to be a customer asking me about Cheese X*** and saying that we really needed to carry it and that he and all his friends would buy it etc. Liars and time-wasters are the most reviled people in the business. That doesn’t seem like an unusual concept.
*Margin is the percent you make after subtracting the wholesale price of a product. It is related to – but different from – the mark up. For example, if we pay $1 for something and our mark up is 50% we charge $1.50. Since .50 is the amount we net, 33% is the margin because .50 is 33% of $1.50.
**It’s not that this is not a valid question. It’s simply that a cheese professional would know the answer to this. This is food retail 101.
**Since they dealt with him quickly and appropriately, I will not ID the company.
So what was your final verdict on this questioner? Was he for real, or a customer trying to find out the “real dirt” on why your cheese is more expensive than at Costco? (Which, really, seems like a ridiculous comparison.)
I still have no idea. I think for real, but just confused.