Those entrepreneurs looking to fill this need are asking questions as many of them have little to no experience buying and reselling scratch and dent food. A reader of our business to business blog, The Closeout Industry, has a couple of questions before he opens his salvage grocery store:

Hello Robert, thank you for publishing Wholesale Liquidations Exposed. I just finished and am very impressed. I believe it will benefit me in a lot of ways, none more than avoiding some of the pitfalls you warn about. I do have three questions:

The Salvage Grocery section was awesome. The reason I was searching in this field was that I am exploring opening a salvage grocery. My question is about food stamps. I really need to be able to take them as this parish is very poor and it would greatly benefit. Do you have any experience in this area and if so, any advice. (I visited a salvage grocery store about 75 miles away and he said it was crucial to his business.)

Will 1000 sq ft be enough store floor space to start the Salvage Grocery? I am currently renting a lumber warehouse at the main intersection of our town where a hardware company used to be. The office area that was remodeled is where I want to put the store. It is about 19′ x 56′. It does have another 19 x 75 directly behind me that I can use for bringing in the pallets and sorting or, if necessary, I could incorporate it into the store. But it would need a new floor and ceiling if I did that. Let me know if you think a 19 x 56 is big enough to start.

PS: We’re in a rural area, the town has about 5,500 people and the parish (it’s Louisiana) has about 25K. The Walmart here also pulls in people from neighboring parishes. We have one other grocery store in town. We are on a main highway that has lots of traffic from 100K person city to the state capitol.

I would have to agree that accepting this form of payment is critical to the success of your salvage grocery store. Food retailers must apply to this merchant program much like you would apply for a standard Visa and Mastercard merchant account.

As I stress in our guide that you purchased, it would be best to round out your salvage food inventory with perishable food staple items including all dairy products along with fresh bread. In your local area it should not be difficult setting up accounts with perishable food distributors.

The Supplemental Nutrition Assistance Program, or SNAP, provides food assistance for an estimated 30 million US families per month. Eligible recipients use an electronic debit card to purchase food from grocery merchants much like a debit card.

Learn more about accepting food stamps (SNAP) as a retailer-

Retailer Eligibility
28 Page Retailer Guide

I believe you can get started in a small space, but you will begin to feel the stress of cramped quarters soon after opening in my opinion. Processing salvage food for retail merchandising is a daunting task that takes time and space. In addition, you will need storage for un-merchandised inventory awaiting placement in your store.

From my experience there were many times loads would become available that we could not take advantage of because we did not have the room to store anymore banana boxes of food that was not on our sales floor. We would combat this issue by renting railway storage containers and placing them out back in our receiving area. The containers would provide additional warehousing space for inventory. Often, containers can be rented for a nominal monthly fee. I would encourage you to look into this option.

If you can take advantage of more space I would go for it. Or better yet, is there a larger location you can secure? I wish you great success in your business, please keep us posted as time goes by. Our readers here would love to hear about your experience!

Further Posts about Salvage Food:

Starting a Salvage Food Store

Reselling Banana Boxed Groceries

Salvage Grocery Interview

How to Open a salvage Store

Selling banana boxed food

In our guide, Wholesale Liquidations Exposed, we offer about 10-16 pages dedicated to reselling salvage groceries including some of the nation’s top contacts for buying banana boxed truckloads.

Enter the world of salvage grocery retailers! Clever and hard working entrepreneurs are buying truckloads of salvaged groceries and turning right around and retailing these items at drastically reduced pricing to cash-strapped families across the country!

I received an email from one such individual who is planning to open a reclaimed grocery store in his hometown. Most who decide to enter this niche area of liquidation merchandise retailing have many question that need to be answered.

Lets get right to his questions:

“When you’re done with the full book on salvage stores, I’d like to get one. I’m looking for as much information as possible. I’m opening in a small town in Feb or March and have three possible people to buy from whom I’ve already contacted… and all are on your list as well! I’ve got a few questions since you’ve started one of these businesses…. I’m looking at 1200-2000 sq feet… how much product would I need to buy to fill a store in that neighborhood… I was guessing 18-24 pallets.”

Congratulations and from the tone of your email I can tell you are very excited! I think you are on track with an opening inventory, but also keep in mind that the hardest part of running a salvage grocery store is simply keeping new stock on hand. Make sure the supplier you chose can offer loads ongoing because I have a feeling you will have a quick sell through within a week or two…and need to reorder fairly quickly. I would recommend that you find two or three suppliers to use as a backup because in the salvage grocery business supply and demand can be tough at times.

I would venture to say that when you open the doors a flood of people will come to make a purchase and you will have a fair amount that come in just out of curiosity. Some will fill up their cart at your grand opening, while others will carefully evaluate the inventory you have for pricing and quality (safety/expiration dates) before they decide to purchase.

You really should take the time to insure your store is clean and well merchandised. The last impression you want the public to have of your establishment is that of a “salvage store”. The term salvage brings to mind problems with quality and safety. I visited a store up in a little town (very similar to yours in population) where everything was jumbled together, floors were dirty and the overall smell was enough to send people walking! This particular store was about 40 minutes away from Walmart and Fred Myer and unfortunately for the store owner, he was losing business as most people continued to travel for grocery and staple household items. Do not make this same mistake as your sales will begin to dwindle as the newness of your business settles in such a small town.

“I want to look full and I’ll also have coolers for milk, eggs and butter. The town we’re moving to is very small (around 2500 population) with just a Dollar General and convenience store in town as the supermarket closed since Wal-mart opened roughly 15 miles away, but there are other small towns that surround this town that we’ll pull from. It’s in Northern Indiana and it’s a farming and light industrial town.”

Excellent! You must have the basics and fresh dairy products is a great start. You should also plan to stock other staple items including toilet paper, laundry soaps and personal care items (shampoo, toothpaste etc). I would also encourage you and your wife to maintain a non-food section selling general merchandise closeouts like pet products, utensils, greeting cards, cosmetics etc.

When sourcing suppliers, do not fear contacting those that are far away from your location as most reputable salvage grocery brokers will have contracts with reclamation centers close to your location. You should contact Damage Recovery (from our guide) and see if they can arrange shipments to your location; I know they also work closely with Church and Dwight for HBA and personal care items.

Please keep in mind: Just because I have listed or referred to a specific supplier does not mean you should not perform due diligence in full supplier research. Salvage loads can range from good to bad and often dependent on stock available at any one given time. I have personally experienced the good and bad that comes with buying and reselling salvage merchandise, it is a business like no other as heavy risk is involved. Unlike buying from a wholesale distributor where you know exactly what you are ordering, salvage loads are the exact opposite…most of the time you have no clue as to what will arrive upon ordering. Because of this fact, most salvage grocery stores will close within a year or two. You must be able to sustain the good and bad apples (pardon the pun)!

I have always felt a healthy balance of non-food items can help curb the occasional bad loads of salvage groceries you will encounter. Thank you for the questions and I wish you the best of luck in your new endeavor!

Please keep us posted as to your success!

What is a Salvage Grocery Store?

A Salvage food store is simply a smaller grocery store where the bulk of the inventory is sourced from a reclamation centers. A grocery reclamation center collects shipments of box-damaged, expiring or distressed food (and non-food) items from large grocery chains like Safeway, Raleys, Walmart, Krogers etc. The job of the reclamation center is to try and recover as much capital as possible from distressed inventory.

• Grocery items with major damage including large dents, opened inner packaging, leaking and no product labels are simply thrown away.

• Grocery items with minor denting, damaged packaging, odd lots and near dating are placed onto pallets and resold at liquidation pricing to salvage food retailers.

Large chain stores have strict procedures in place for reselling food which is near-dated (close to the manufacturers sell by date) and items that have already expired. Big Box chain stores will occasionally try to liquidate near-dated products in house, but often this job is left for the reclamation center.

Near-dated and expired grocery items, for the most part, retain edibility and consumers who have done their homework understand this concept. This would explain the long lines outside the salvage grocery store!

Salvage retailers buy pallets and truckloads of groceries directly from reclamation centers or by using a food Broker.  Loads are often referred to as banana boxed groceries because distressed stock is loaded into recycled banana boxes at the reclamation center for re-distribution.

The average pallet of salvage food will contain 24 banana boxes filled with assorted items. Presently, as a reseller, you can expect to pay a flat price per banana box of $8-14 or purchase loads based upon a percentage of original wholesale cost. Supply and demand will always dictate current pricing and you should understand that loads sell very quickly!

Reselling salvage groceries might be the niche you are looking for. People must have food to sustain life….why not purchase grocery items from you at a drastically discounted rate?

Here are a few of the larger salvage Banana Box suppliers:

Damage Recovery Systems, Inc
31 Robinson St
Pottstown, PA 94664-6439
610-327-3000

Cascadesaleswis.com
1822 Park Avenue
New Holstein, Wisconsin 53061
920-528-8613

ReStoreIt LLC
4075 Windgap Avenue
Pittsburgh, PA 15204-1007
412-771-2580

Lucky’s Bargain Barn
10938 Highway 58
Georgetown, TN 37336-4094
866-559-2709

Grocery Traders
1347 IL Highway
Carmi, IL 62821
888-844-1665

Troyer’s Market, Inc
891 W 300 S,
Berne, IN 46711 USA
260-849-0924

GDC Commodities Exchange
4603 North Brawley #104
Fresno, CA 93722
559-271-3290

How did you get started selling salvage groceries?

About 4 years ago my wife and I went to a large flea market on a Saturday afternoon and while walking though I noticed one vendor who was attracting a lot of attention. He was selling name brand beauty products (Shampoos, Soaps etc) from large watermelon boxes. We spent some time talking to him and he was willing to share his experience buying what he called banana boxes of scratch n’ dent grocery products. While we were talking with him there were continuous sales being completed at his booth. He had what appeared to be his wife and teenager taking money from booth customers.

On our way home from the flea market, my wife and I got really excited about what we thought could be a great opportunity. We talked about opening a small salvage grocery store in our hometown. The rest is history!

From that day at the Flea Market how long was it before you opened your store?

Roughly two and half months later we were open for business. Looking back now I wished we would have went a little slower as I think our excitement caused us to overlook our inexperience in retailing. We just wanted to open and make a ton of money!

Wow! That is quick, it sounds as though you made some mistakes…can you elaborate?

We had a very good grasp on retailing on-line, as my wife and I ran a successful Ebay business. Due to our cash flow from online sales and our desire to be self employed we jumped right into this idea that we could become successful without the need to plan. I think our dream of owning our own store caused us to overlook a very important fact: we had no experience in the grocery or salvage industry. I did work as a bagger when I was eighteen at a local grocery store, but that was the closest experience I had.

We immediately looked for a store front as well as salvage food supplier. I was able to go back to the guy at the flea market and convince him to reveal his source as we lived 70 miles from his flea market booth and I assured him we would in no way take away any of his customers. Reluctantly, he gave me the name and phone number of a broker he used to get his merchandise from. Without checking any references or investigating this contact I called the following Monday and introduced myself and asked for load pricing. We were not ready to buy at that point, but within a couple of weeks we had a location and were ready to order.

Our first load consisted of sixteen pallets and we paid $16 per box for what we thought was a mixed load of Groceries, HBA’s and Paper Products. When the truck arrived we unloaded our pallets onto the ground and realized that we were shorted 2 pallets and the load consisted mainly of food

– No soaps, paper or shampoo. No big deal I thought, I would call the broker who we purchased from and get the discrepancy settled. Wrong. This guy would not answer his phone or return our calls! In fact, to this day we have yet to ever talk with him again.

We opened our doors to the public with that first load and learned a valuable lesson….having multiple, trustworthy suppliers would make or break our business.

How were you able to find more suppliers?

Well, this will sound crazy, but I drove to the “Ship from” address on our first loads’ bill of lading and found the source that broker (we bought from) was using to fulfill his order. As it turned out we were able to start buying loads much cheaper and the service was much better

Tell us what happened on the first day you opened your Salvage Store?

We had what they call a “Soft Opening” with no advertising. We relied upon two large banners we placed outside of our store proclaiming “Groceries 50% or Less below Retail!”. As I recall we had over 120 shoppers through the store on that first day. Register receipts for the first 12 hours totaled about $2400.00. We were pleased with the days take, but everything that could have gone go wrong…did.

We did not have enough help, it was just me and my wife. People were asking questions left and right about the condition of the food and its shelf life. We had two people try to walk out of the store without paying and 3/4′s of the way through the day shoppers got really tired of waiting in long lines to check out. We had major issues with our newly purchased cash register.

When that day was over we looked at each other and said the same thing, “What have we gotten ourselves into!”.We laugh about it now, but honestly we could have saved a lot of heartache and money if we had just slowed down the process of getting our store open.

Have you since created a full business plan and if so, how has it helped?

Yes, we have a written plan in place which focuses on our goals and direction. We now have a clear picture of our strategy for our success and we do not vary from our direction. Because we track our sales and progress we can at any one time see if a particular area of our business needs help.

Fast-forward to today, what is the hardest part of your salvage grocery business?

Getting products/loads ongoing. Salvage food is like a commodity, one day there are several loads available and if you wait to long to order they may not be available. Loads are always on a first come, first serve basis. I know that truckloads are usually sold well in advance and those that have the money to buy ongoing typically get the freshest loads.

We have been fortunate in that our cash flow allows us to buy a truckload weekly, but there have been times when inventory will slow due to availability. If a good deal comes along sometimes we have bought more than we can warehouse just to take advantage of supply and demand. After 4 years of experience we have 4 salvage suppliers that we buy from on a regular basis.

What percentage of waste do you experience when buying salvage food for resell, in other words do you receive items that are unsellable?

Some loads are really good while others may contain more damage. I think the biggest factor with unsellable food is due to what I will and will not accept as marketable. Let me explain: two weeks ago we received a shipment that had one pallet which had a really good assortment of higher dollar grocery items, BUT…one of the banana boxes at the very top of the pallet had a few Ocean Spray cranberries juices bottles that were leaking. They were almost empty in fact! They leaked throughout the next two boxes below. It was a very sticky mess. We cleaned up the items below as much as we could, but rather than place the damage on our shelves we elected to toss about one and a half boxes of merchandise. Stuff like this happens as this is the nature of the biz-

What percentage of your client base would you call repeat buyers?

Ah, this is the great part of any business…making friends. We have our regulars who shop religiously, some like clockwork, on a particular day of the week. I would have to say that at least 25-30% of our daily traffic is from repeat business.

On the flip side, salvage grocery shopping is not for everyone. As much as we try to convince people that the food is safe and tastes just as good as their local big box…they shy away. We make sure that when we advertise we always try to educate the public about what we sell and address all safety concerns.

Do you sell anything other than salvage groceries?

I would say our store is approximately 70% salvage food/grocery products. The other 30% consists of general merchandise (closeouts) and first quality staple items including fresh milk, butter and misc dairy items. We also maintain 4 refrigerated cases for sodas and other drinks. In addition we have contracts with a few local vendors who supply our store with rotating stock including sunglasses, hats and toys. We have found several vendors who will provide merchandise on consignment. This is great for us as we only purchase what sells!

If you were to give one piece of advice to someone who was opening their own salvage store what wold it be?

Don’t do it in my neighborhood! Ah, just kidding! Hey, to anyone thinking of this business go for it! We have done really well and call me crazy, but we enjoy the salvage aspect of it. Not knowing exactly what you are getting on each shipment is kinda fun.

Back to your question: I would have to say the single most important lesson my wife and I have learned is simply, “Do not think you can handle all of the work”. We have learned that we cannot be business owners, checkout clerks, accountants, and entrepreneurs all by ourself. In the beginning we did everything and it grew old fast. Long, late nights caught up with us quickly and we had to hire outside help. We started with one part-timer and now we have two three full time employees and a part time/temp to help out.

Thank you for sharing this information with us….It sounds as though most of your experience came from the “School of Hard Knocks”. We wish you continued success and please let us know if you open another location.

Sharp entrepreneurs are cashing in retailing name brand canned foods and dry consumables at unheard of pricing, sometimes below 50% of big-box grocery stores!

How do you open up one of these stores? Where do you get the salvage inventory? These are but a few of the questions people are asking in an attempt to get into this business.

As stores are closing across the country, smart start ups are realizing the best thing to do is offer discounted merchandise to help consumers stretch their dollars.

Often sold in Banana boxes, name brand food can be purchased at rick bottom prices by the pallet and truckload from salvage grocery reclamation centers and Brokers nationwide.

Do you think you have what it takes to open a salvage food discount store? Do you have the knowledge needed or access to banana box suppliers?

I have just finished an 80+ page guide, which will give you all the details needed to get your store open from the ground up. All details can be found HERE

When fuel costs go up a wave can be experienced as trucking companies must increase pricing for shipments which in turn increases distributors costs and results in higher prices on your local grocers shelves. Discount food outlets are booming with customers as the average American family is finally being forced to lives within tight budget. When dollars are thin smart consumers know deals can be found at discount and salvage grocery stores. This is where you the entrepreneur comes in. If you are looking for a great business to open…this just might be the direction you should head into. I would suggest you do some market research in your own hometown to see what kinds of discount food sellers are already open for business. If there are stores currently in your market it would be best to pay them a visit and see how they merchandise, what they sell and ascertain whether or not you could compete with them for a client base.

If there are presently no salvage food or discount food stores in your city or town, you might be able to corner the market. I would suggest organizing a business plan and getting started as soon as possible. While there are several salvage food distributors across the country selling mixed banana boxes filled with dented canned goods, near date packaged food and closeout health and beauty aids it would be prudent to also secure some suppliers of deeply discounted wholesale and closeout foods as well.

Food is defined as “Salvage” for several reasons including defects in packaging or being close to or past a products expiration date. Closeout food will typically fall into the category of excess or unsold stock which is liquidated to recoup cash flow. A store filled with salvage food will prove to be very profitable for anyone looking to operate a successful business. Add a few aisles of general merchandise closeouts and watch your business grow!

The Closeout Industry is your resource for salvage grocery distributors. We have completed the research spending countless hours on the telephone talking with reverse logistic companies, food wholesalers and salvage food liquidators. We have put together a list of the top salvage food contacts in the industry. Our list contains some of the largest distributors of banana boxed groceries in the Country. In addition to our contact list we have written about our salvage grocery store, banana-boxed grocery pricing and other related subjects.

Salvage food information can be found in our 137 page guide below:

Looking for a category of salvage and closeout merchandise to retail? How about reselling a line of merchandise that everyone “must have”? When times are tough [as they are currently in our Country] the average family is continuously looking for ways to save money. If you think about it…when money is “tight” consumers can decide to put off purchasing name brand apparel or electronics, but food is a staple that we all must have to sustain life. If you are reading this blog chances are you have already or will eat sometime today.

The closeout and salvage food industry is a multi billion dollar option for consumers to turn to when times are tough. Small and large chain closeout grocers are springing up all around the Country selling products that manufacturers have discontinued, seasonal items that are outdated and goods that are near the date when manufacturers expect freshness to wane. Many such grocers also sell products that were damaged in transit but remain edible, such as a dented box of Cheerios. Prices tend to be significantly lower than those at conventional stores and big discounters like Wal-Mart.

Do you want a steady stream of customers?

Maybe retailing salvage food is the answer…..do you have a discount salvage food retailer in your hometown?

Salvage groceries including canned goods, dry cereals, pastas, food mixes and other food related items are sold to reclamation centers by large retail chains which deem certain items as “unsellable” do to several factors including: damaged packaging, short or near dating (close to expiration) or discontinued altogether. Often this merchandise is re-packed into Banana boxes and stacked on pallets ready to purchase at below wholesale pricing. Banana boxes filled with salvage food will typically sell for $6 to a high of $12 per box in quantity. Some pallet loads are manifested, but a majority of banana boxes are bought blind or “un-inventoried”.

Buying pallets and truckloads of banana boxed salvage food might be the “Niche” you have been looking for. You could sell at the flea market or lease a small storefront. A small store between 1,000 – 1,500 square feet could be adequately stocked with a truckload or two.

Own a salvage grocery store or opening one up? Big or small grocers can stay updated with a Free Subscription to InStoreBuyer…. The B2B magazine of the supermarket bakery, deli and food service industry. You get eight issues at no charge, this is a free subscription!

The Closeout Industry is your resource for salvage grocery distributors. We have completed the research spending countless hours on the telephone talking with reverse logistic companies, food wholesalers and salvage food liquidators. We have put together a list of the top salvage food contacts in the industry. Our list contains some of the largest distributors of banana boxed groceries in the Country. In addition to our contact list we have written about our salvage grocery store, banana-boxed grocery pricing and other related subjects.