“I know now that you need to come in with 20 to 30 points of contra revenue assumption. If you're barely scraping by before contra revenue, you're going to be in the red after you pay the distributors and retailers.”
Grocery Pulse Podcast by Innovar Marketing Agency | Insights for Retailers · Food & Beverage · November 2026
Context
Asked about his earlier remark that he didn't know his margins for a long time, the Yellowbird founder explains that on day one he only nailed cost of goods. He says early food brands should plan for 20 to 30 percent of revenue going to distributor and retailer deductions.
Transcript
…that's for sure me and Aaron founded this as more of a passion project than a hey, we did the numbers and we found a white space and whatever. But I will say that like not nailing the unit economics on day one was probably hurt us more than any single other thing that we did or didn't do, you know?
…I forgot which podcast you did, but it was like saying, you said you didn't know like how much it cost. You just knew like people's. Someone started to start liking it. And that was like validation for you. Is that kind of like what you were referring to, maybe knowing the margin of, I don't know.
Well, just knowing the whole, like the whole, all of the unit economics, right? Like, because there were things, there's a bunch of different categories like in your unit, right? You've got your materials, you've got your labor, and then you've got your, you know, you've got all of the like deductions, all the stuff that's going to come out of it in retail or food service or whatever. So you've got your kind of like contra revenue, which is like, okay, well, if I'm making this unit and it's a like the only thing that I, the only thing that I nailed on day one was like cost of goods. So like, what does the bottle cost? What do the ingredients cost? What I didn't calculate, what I wasn't calculating in was like, what is my, like, what's my fixed cost in here? Like, what's the utilities, the incremental utilities cost of like getting that in the bottle? What's the labor cost? Because I was doing all the work and me and Aaron were like doing all the like physical labor. I wasn't billing it. I wasn't…
Yeah, I think they're, I think that's one thing as like I'm learning as well. Like I'm doing, you know, I'm doing pop-ups and I'm like doing demos and I'm like, well, I'm saving myself $300 because I don't have to pay someone to do the demo. I'm selling the product in the store. I'm, I push myself…
mean, I would do it. I mean, I think that you're think like the way that I would think about it is that I want my, you know, and you can determine this for your own business, but like I want my marketing support. Like it doesn't, I'm not a finance guy, so I'll say this is a non-finance guy and then…
no, definitely. And then
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