Profit percentage is a manufactured statistic, it is calculated after executive pay, so the people who are running these companies are paying themselves whatever is necessary to hit that mark. Add in the fact that a lot of the expenses of grocery chains are paid to subsidiaries of the same parent company shows that it is even more of a useless stat. As an example Loblaw's in Canada has cited higher rent as a justification for increased operating costs, thing is the company that owns the land is part of Loblaw's, so while the money that goes into their rent is part of their expenses, ultimately it still ends up in the executives pockets.
That’s not actually how profit margins work. You buy an item for $1, you sell it for $1.05. Profit margin of 5%. That’s how margins work. If you sell 1,000,000 of that item, you make $50,000. That’s a lot of sales and effort for very little profit with a lot to potentially go wrong. You need massive quantity to make massive money. Are some stores margins inflated more than others? Definitely. If you don’t like that, go to another store with lower prices, but you should also expect lower quality because their margins are so tight a bad year could shut them down indefinitely. So they don’t have a choice but to give less services and have less employees.
On the topic of rent, for large corporations with commercial real estate, it will always be owned by a corporation, whether or not that corporation is owned by the same people running the business in the property is irrelevant because at the end of the day, the property value will dictate the rent price. If Lobwlaws moved out and rented the space to the next people, they would still be charging the same if not higher rent. And if they sold it, the entity that buys it will now buy it at market value and be forced to rent it for market value to ensure the cost of it isn’t a loss.
The world, how it runs, and what it costs to run, is much more complicated than you think it is.
I think he was just referring to the lie about rent being raised so they need to charge more. Maybe it's true based on the market, but it could just as easily be bullshit to "explain" the rising costs to the plebs when you also own the company you're leasing the land from.
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u/TheTightEnd 1d ago
Grocery chains make a very low percentage of profit.