Meridian Grocery Co. · Margin Recovery

Margin
Recovery

A six-week diagnostic of Meridian's 84-store grocery network finds 250 bps of EBITDA margin recoverable in two quarters — no store closures required.

Confidential · Prepared for the Steering Committee · Q3 2026

Three workstreams,
twenty weeks.
Shrink, scheduling, and vendor terms — sequenced so cash starts moving in week six.
Final Deck · Steering Committee Review
The Governing Thought 02
Why Now

250 bps of margin is sitting in three fixable drivers.

Meridian's EBITDA margin sits at 4.1%, 250 bps below the 6.6% peer median for regional grocers of similar scale. Six weeks of store visits, P&L teardown, and vendor file review found the gap concentrated in three places.

  • Shrink runs 2.1% of COGS against a 1.3% peer benchmark, worst in perishables
  • Overtime hours run 18% over plan, driven by manual store-by-store scheduling
  • Vendor rebates are captured at 71%, 21 points below the contracted rate
Meridian Grocery Co. · Margin Recovery Confidential
The Diagnosis 03
The Driver Tree

Three drivers explain nearly all of the 250 bps gap.

The driver tree traces the gap from total EBITDA margin down to store-level root causes — the same tree the steering committee will use to track recovery.

[Driver Tree: Margin Gap → Shrink · Labor · Vendor Terms]
  • Perishables — produce, meat, and bakery — account for 64% of total shrink dollars
  • Scheduling variance concentrates in the 22 highest-turnover stores
  • Vendor rebate deductions sit unbilled in AP for an average of 47 days
Meridian Grocery Co. · Margin Recovery Confidential
The Diagnosis, Quantified 04

The math behind the 250 bps.

$14M
Annual shrink above benchmark — 2.1% of COGS vs. 1.3% peer median across 84 stores.
18%
Overtime hours over plan — manual, store-by-store scheduling with no demand signal.
71%
Vendor rebate capture rate, 21 points below the 92% contracted rate.
Meridian Grocery Co. · Margin Recovery Confidential
“
We knew shrink was bad. We didn't know 64% of it was walking out the back door of the produce section.
VP Store Operations Meridian Grocery Co.
The Options, Ranked 06
Five Moves

Five moves, ranked by impact and speed.

Every option on the table was scored on margin impact and time to cash; these five clear the bar.

  • Perishables shrink program — new markdown cadence and waste tracking in the 20 highest-shrink stores. 60 bps, live in 8 weeks.
  • Centralized scheduling engine — replaces manual store scheduling with a demand-based tool. 70 bps, live in 12 weeks.
  • Vendor rebate recovery — audit and rebill 18 months of unbilled deductions. 45 bps, cash in 6 weeks.
  • Assortment rationalization — cut the bottom 8% of SKUs by velocity. 40 bps, live in 16 weeks.
  • Top-12 vendor renegotiation — align terms to actual volume tiers. 35 bps, live in 20 weeks.
Meridian Grocery Co. · Margin Recovery Confidential
The Roadmap 07
Horizon 1 · Weeks 1–8

Stop the bleeding.

Cash-generative moves that need no new systems.

  • Rebill 18 months of unbilled vendor deductions
  • Launch markdown cadence in the 20 highest-shrink stores
  • Freeze discretionary overtime approvals above plan
Horizon 2 · Weeks 9–20

Rebuild the system.

Structural fixes that hold the gains after week 8.

  • Roll out the centralized scheduling engine to all 84 stores
  • Rationalize the bottom 8% of SKUs by velocity
  • Renegotiate the top-12 vendor contracts to volume tiers
Meridian Grocery Co. · Margin Recovery Confidential
The Roadmap, Quantified 08

250 bps of margin, five workstreams.

Units: bps of EBITDA margin recovered
60
Shrink
70
Scheduling
45
Vendor recovery
40
Assortment
35
Contracts
Source: Meridian margin diagnostic working data · Steering Committee · Q3 2026
Meridian Grocery Co. · Margin Recovery Confidential
The Steering Ask

Approve the two-quarter recovery plan.

Sign off on Horizon 1 funding and the 20-store pilot list — implementation starts the Monday after this review.

What we need by Friday.
Approve the $2.1M Horizon 1 budget.
Confirm the 20-store pilot list.
Name an owner for the scheduling workstream.
Meridian Grocery Co. · Margin Recovery Confidential · Steering Committee