We’ve all heard stories about big-box stores making huge profits. A recent survey of U.S. shoppers shows many believe that grocery retailers are raking in about 35% profit. The reality for many grocers—including co-ops— is that profit tends to be around 2- 3%. That means after all expenses are paid, about 2-3% of the money made on sales is left over.

At Seward, we measure our sales and expenses every three months, which we call quarters. For many of the quarters since 2015, our profit has hovered around 0%. Sometimes our expenses have been more than our sales (a loss), and sometimes our sales have been slightly more than our expenses (a small profit).

But people shop all the time at Seward, so where does all that money go? Why isn’t there profit?

The money we take in at the registers goes to pay for three main categories of expenses.

1. Vendors

The products and ingredients we buy have to be paid for. More than half—about 60%—of all our sales dollars are used to pay our growers, producers, and distributors.

Because we purchase from so many small, organic, and underrepresented vendors with less “economy of scale”, this part of our expenses tends to be higher than for conventional grocers.

2. Staff

The next biggest piece of our sales goes to staff, which receives about 25% of the co-op’s total sales. Not only does the co-op pay transparent, union-negotiated wages, the co-op also provides significant benefits (things like discounts, paid time off, health insurance, retirement etc.). None of which is cheap, nor should it be.

3. Overhead

After we have paid for the products we sell and the people that sell them, only about 15% of our sales dollars remain. That 15% or so pays for all our remaining costs of doing business. This includes the costs of occupying and maintaining our buildings, utility bills,  business insurance, property taxes, equipment, snow removal, and grocery bags—all the basic needs for running a business.

When all of us are effective, after everything above is paid, there is a little bit left over, our profit. Between October and December 2022, we actually had a tiny amount of profit, 0.01%—much less than the 35% folks in the above survey may think we are making.

So, that’s where the money from a small, local, community-owned co-op goes! The money goes primarily to our community—our vendors and to staff, and a much smaller portion to necessary costs of doing business.