The Good Food CFO podcast · The Good Food CFO

Beyond 51%: Determining Your TRUE Product Margins for Food Business Success

·45 min·3 clips

Core COGS, other COGS, and ad spend each sit in a different layer of the margin stack.

1. The Good Food CFO Podcast episode “Beyond 51%: Determining Your TRUE Product Margins for Food Business Success” focuses on why a food business needed a 68% to 70% product margin. 2. Sarah Delavan hosts the episode, and Chelsea Steer is the producer who asks clarifying questions and represents the listener’s perspective. 3. The episode is built to answer a question from episode 118, “The Profit Assessment,” about why Sarah recommended a product profit margin above 51%. 4. Sarah says 51% is her recommended minimum because 50% gross profit margin only replaces the money needed to make one more unit. 5. She distinguishes product margin from blended margin, saying a product can have different margins across DTC, wholesale, and distribution channels. 6. Sarah gives channel examples of $10 DTC revenue, $5 wholesale revenue, and $3.50 distribution revenue for the same product. 7. She says a product-level blended margin combines all channels, and a business-level gross profit margin blends multiple products and channels together. 8. Sarah explains that gross profit margin on a P&L includes ingredients, packaging, labor, and other COGS. 9. She defines other COGS as shipping supplies, shipping fees, POS fees, farmer’s market fees, event costs, sales commissions, storage, warehousing, and 3PL fees. 10. Sarah adds a separate category for advertising and marketing spend, including boosted social posts, Facebook ads, promos, and chargebacks. 11. The episode shows how revenue minus core COGS produces gross profit margin, then other COGS reduce that into contribution margin. 12. Sarah says the final layer, gross profit after marketing and ad costs, helps show what remains before operating expenses. 13. Chelsea asks whether core COGS are the same calculation at each step, and Sarah confirms the math starts from the product’s revenue and unit costs. 14. Sarah uses a client example where P&L gross profit margins were 20% or below, which forced a line-by-line review. 15. That review showed product margins were too low, storage fees were draining profit, and ad spend was also reducing the final percentage. 16. Sarah says the client was paying recurring storage fees for inventory that was just sitting there, which changed the operating strategy. 17. She explains that the 68% to 70% target came from historical P&L data and limited wiggle room in other COGS. 18. The episode’s tone is instructional, with Sarah and Chelsea pausing often to define terms and check understanding. 19. Food founders who need help reading P&Ls and pricing products will get the most value from this episode. 20. Founders looking for a casual chat without financial terminology may skip this one.

Listen to the show on

Apple Podcasts Spotify

Play clips from this episode More from The Good Food CFO podcast