How distributor markup actually works, and where it hides.
Cost-plus pricing sounds simple. In practice, the cost is rarely the cost, and the markup is rarely one number.
Most restaurant distribution agreements are written as cost-plus: the distributor charges you what the product cost them, plus an agreed percentage. On paper, a “cost plus 9%” deal means a case that cost the distributor $70.55 should cost you $76.90.
The problem is that both halves of that formula move. “Cost” can include freight, allowances the distributor keeps, and landed charges. The markup can differ by category, change at renewal, or apply to a different base than you think.
What’s inside a case price
Take a case of shredded mozzarella. The price on your invoice is built from several layers, and only one of them is set by the cheese market.
Three places markup hides
The cost base. If the distributor’s “cost” already includes a margin, such as inbound freight marked up or manufacturer allowances not passed through, your 9% is applied on top of a number that is already inflated.
Category exceptions. Many agreements carry different markups for proteins, produce or specialty items. A low headline rate can sit alongside much higher rates on the products you buy most.
Fees outside the price. Split case, fuel and small-drop fees don’t appear in the case price at all, so they are easy to miss when you compare quotes.
How to check your own pricing
Compare what you pay for your top 20 products against the underlying commodity trend and against what your other locations pay for the same item. If prices rise while the market is flat, or one location pays more than another, the markup is doing more than the contract says.
Angel does this for every line on every invoice, against your history, your other locations, the Angel Index, markets and your terms, and requests the credit when something doesn’t match.