How Much Do Grocery Stores Make? (Average Profit Margin)

Grocery stores can generate millions of dollars in annual sales, but high revenue doesn’t always mean high profit. Between inventory costs, labor, rent, utilities, shrinkage, and price competition, grocery stores often operate on thin margins.

Industry benchmarks can help you estimate average grocery store sales and profit margins, but actual results vary by store size, location, product mix, and operating costs. A grocery POS system like Toast can help operators track sales, inventory, product performance, and other data that affects profitability. 

In this guide, you’ll learn how much grocery stores make, what the average grocery store profit margin looks like, and which factors can affect profitability.

Key takeaways

• Grocery stores can generate high revenue, but net profit is usually much lower because of inventory costs, labor, rent, shrink, and other operating expenses.

• FMI’s latest public benchmarks show average weekly sales per supermarket were $711,806 in 2024, or about $37 million annualized before expenses.

• FMI’s latest public benchmarks listed average net profit for food retailers at 1.7% in 2024, and 2025 reporting suggests that margin remained a relevant industry benchmark.

• Using FMI’s average sales and profit margin figures, an average supermarket could generate roughly $629,000 in annual net profit, though actual results vary widely.

• Grocery stores can improve profitability by increasing basket size, reducing shrink, improving inventory accuracy, optimizing labor, and using POS reporting to make better decisions.

How much do grocery stores make?

Grocery stores can generate a lot of sales, but revenue varies widely by store size, location, format, and customer demand. According to FMI’s latest public Food Industry Facts benchmarks, average weekly sales per supermarket were $711,806 in 2024. Annualized, that works out to about $37 million in sales per supermarket before expenses.

That number is revenue, not profit. It represents the total amount an average supermarket brings in before accounting for inventory costs, labor, rent, utilities, shrink, and other operating expenses.

How much do large grocery chains make?

Large grocery chains operate at a very different scale than independent stores or single-location operators. For example, Kroger reported $147.6 billion in total company sales in 2025, compared with $147.1 billion in 2024.

That kind of company-level revenue should not be confused with what a single grocery store makes. Large chains may operate hundreds or thousands of locations, giving them more scale, buying power, technology investment, loyalty data, and supply chain leverage.

What is the average grocery store profit margin?

Grocery store profit margin is the percentage of revenue left after expenses. While grocery stores often generate high sales volume, they usually operate on thin margins because they sell many essential products at competitive prices.

FMI’s latest public benchmarks listed average net profit for food retailers at 1.7% in 2024. More recent 2025 reporting indicates that this margin remained a relevant industry benchmark. 

Supermarket News reported that food retail profit margins remained at 1.7%, while more than one-third of retailers expected increased compliance costs in 2025.

Estimated annual profit for an average supermarket

Using FMI’s public benchmarks, you can estimate how much profit an average grocery store might generate:

• Average weekly sales: $711,806

• Estimated annual sales: $37,013,912

• Average net profit margin: 1.7%

• Estimated annual net profit: about $629,000

That estimate is useful as a benchmark, but it’s not a guaranteed result. A store’s actual profit can change based on rent, labor, utilities, shrink, debt, product mix, store format, local competition, and supply chain costs.

How grocery store size affects revenue

Store size and design can have a big impact on how much a grocer makes. FMI’s 2024 benchmarks list the average supermarket size at 42,453 square feet, while weekly sales per square foot of selling area were $18.55.

A larger store may have more room for products, departments, and prepared food programs, but size alone doesn’t guarantee higher profitability. The space has to generate enough sales to support operating costs.

How grocery profit margins have changed

Grocery profit margins have moved closer to pre-pandemic levels after rising during the pandemic. Grocery Dive reported that grocery industry profit margins fell to 1.6% in 2023, the lowest level since 2019, when margins were 1.0%.

Those grocery trends help put the current margins in context. A 1.6% or 1.7% net profit margin may sound low, but it’s consistent with the industry’s recent return to narrow-margin operations after unusual pandemic-era conditions.

Why grocery store profit margins are so thin

Grocery store margins are thin because operating costs are high and price competition is intense. Many grocery products are everyday essentials, so shoppers are highly sensitive to price changes. 

At the same time, stores still need to cover the costs of stocking, staffing, refrigerating, displaying, and selling those products. Common costs that affect grocery profitability include:

• Cost of goods sold

• Labor

• Rent

• Utilities

• Refrigeration

• Spoilage

• Shrink

• Delivery and logistics

• Promotions and price competition

• Compliance and operating costs

How grocery stores can improve profitability

Because grocery margins are narrow, improving profitability usually comes from many smaller operational improvements rather than one major change. Even modest improvements in shrink, labor, pricing, inventory, or basket size can make a meaningful difference over time. Useful strategies often include:

• Increasing basket size

• Reducing shrink

• Improving inventory accuracy through technology like Toast’s inventory management tools

• Optimizing labor

• Tracking high-margin products

• Using promotions strategically

• Improving checkout speed with the right hardware and checkout setup

• Increasing customer retention and visit frequency with tools like Toast Loyalty

• Adding prepared foods or retail foodservice where relevant

• Monitoring sales per square foot

• Using POS reporting to make better decisions

• Leveraging data to uncover insights and opportunities through tools like Toast IQ

The key is to understand where sales are coming from and where costs are cutting into margins. With better reporting, inventory visibility, and product-level data, you can make more informed decisions about pricing, merchandising, staffing, and growth.

Why Toast Retail is perfect for grocery stores

With Toast Retail, the systems behind your grocery store work just as hard as you do.

Toast unifies barcode scanning, inventory tracking, and integrated scale support into a single, reliable system. Designed to handle high-pressure rushes without cracking, it gives grocery operators the real-time sales visibility they need to maintain margins, manage diverse stock, and keep lines moving fast.

Schedule a demo today.

FAQs

What is the average grocery store profit margin?

FMI’s latest public benchmarks listed average net profit for food retailers at 1.7% in 2024. More recent 2025 reporting suggests that 1.7% remained a relevant industry benchmark, showing how thin grocery store margins often are.

How much does a grocery store make per year?

According to FMI’s latest public benchmarks, average weekly sales per supermarket were $711,806 in 2024, which works out to about $37 million in annual sales before expenses. Using a 1.7% net profit margin, that would equal roughly $629,000 in annual net profit.

How much does a small grocery store make per year?

Small grocery stores typically make less than large supermarkets, but annual revenue can vary widely by location, store size, product mix, foot traffic, and operating costs. A neighborhood market, specialty grocer, or convenience-style grocery store may generate far less than the supermarket average.

What are the biggest costs for grocery stores?

Major grocery store costs include inventory, labor, rent, utilities, refrigeration, spoilage, shrink, delivery and logistics, promotions, and compliance costs. Because margins are thin, even small changes in these costs can affect profitability.

Why are grocery store profit margins so low?

Grocery store profit margins are low because grocers sell essential products in a highly competitive, price-sensitive market. Stores need to cover high operating costs while keeping prices attractive for shoppers, which leaves only a small percentage of revenue as profit.