How I Buy Groceries Like a Value Investor

Before I hit financial independence, most of my career was spent in the grocery business.

I followed a pretty unconventional path. I started off stocking shelves on the night crew at my local supermarket, rising to a junior level of management just a few years later. I did that for a little while, got frustrated by the lack of promotions (among other things), and left to work for one of the store’s suppliers.

I made my way back to the same company about a decade later. I started rising through the ranks again, this time a lot faster. I ended up running the entire company’s grocery department, an all-encompassing position that included everything from setting up new stores to training new grocery managers, with about a million different responsibilities in between.

If you want to read more about my career (plus a whole lot about how I invest), check out How I Retired Before 40.

I wasn’t an easy job, and I only lasted a couple of years before I decided to do my own thing. Although I left relatively quickly, it was a massively positive experience. I learned so much in a small period of time, lessons I’ll continue to use for decades to come.

One of the more interesting things I learned was all about grocery flyers, pricing strategy, loss leaders, and the science of using price to get customers to behave in a certain way. I learned about techniques that get people into the store, get them to buy multiples of the same item, and that persuade them to add impulse items to their basket without even realizing what they were doing.

This hasn’t been wasted knowledge, either. I use that knowledge every day with my own grocery bill, using the very same techniques against stores. This saves me thousands each year in groceries.

I no longer keep close track of how much I spend on groceries, but for a while I did. In 2023, I crunched the numbers, and revealed that we spent about $350 per month for groceries. At that time, the average Canadian couple spent about $615 per month. That’s a 43% savings versus the average couple. 

And now, for the first time, I’m revealing my secrets in depth. Here’s how I do it. 

First, understand flyers

Flyers are the biggest grocery savings tool I use, but you must be careful. Not all flyers are created the same, and not all items featured in the flyer are actually a good deal.

First, some thoughts on how a supermarket will put together a flyer. Each company has their own specific strategy, so there will be a few differences. But they mostly follow the same big themes, and understanding them will help you immensely.

Think of a flyer as real estate. There’s the best real estate — the front page, sometimes the back page — and then there’s the rest. Grocers know that many people will only look at the front page, so they reserve their best deals for that page.

Many people only view flyers digitally these days, but the same concept applies. The front page always loads first, therefore it’s the best real estate.

Remember, a flyer is really about price perception. It’s a way for the retailer to show you, the customer, all the good deals that are available. If they only have five seconds to do so, they’re going to put all the best deals in the easiest place to find them. That gives them the best bang for their buck, perception wise.

The second easiest place to find deals is on the back page (it’s far easier to flip the flyer over than it is to actually start reading it), so the back page usually has the second-best deals. Many grocers don’t actually utilize the back page of their flyer, especially these days. So it’s more retailer-specific here.

The middle of the flyer is kind of crummy space versus the rest of it, and so the deals in the middle aren’t as good. Many retailers view the middle pages as cart filler items — these are discounted but still profitable, impulse items that the retailer wants you to buy to help make up for the loss leaders on the front page.

Now, before we get too excited about using this plan, one caveat. There is no guarantee that every item on the front page is a good buy. Sometimes grocers put mediocre deals on the front, knowing that people are inclined to buy front page deals. You have to be disciplined here and realize that most of the flyer isn’t really that great of a deal.

Okay, so how does one go about finding great deals on the front page? Especially when it’s not an exact science?

Here are some ways to separate the proverbial wheat from the chaff:

1. Look for some sort of identifier that tells you there’s a deal. If the item comes with a label like GREAT DEAL or HOT PRICE or WOW, chances are it’s either a loss leader or something close.

2. Look for items with limits. Limits are used by retailers who want to limit their loss on an item. A limit (especially a low limit, like one or two) tells you that the company is losing money on the item.

3. Know the prices of things. If you know the average price in the marketplace for a front page item, you can quickly identify whether it’s a good deal or not.

   3b. Come up with ‘rules of thumb’ to easily figure out if there are deals. For instance, we buy chicken thighs a lot. A good deal is under $1 per thigh. If I can get that, I’m loading up.

4. Spend the majority of your time on meat and produce items. That’s where you can save the most money. Plus, centre store items are usually more competitive. It’s easier to save money there.

Here’s a recent Real Canadian Superstore flyer that illustrates what I’m talking about.

The items at the top (chicken, blueberries, bacon, and soup) range from good deals (bacon) to great deals (chicken, soup). I’m unsure about the blueberries because I don’t buy them often. The four items underneath are fair-to-good deals, but they’re nothing I’d get too excited about.

Therefore, I’d start with chicken and soup, and then check out the rest of the flyer to see if there are any good deals in the middle. The nice thing about Superstore is they match other flyers on the shelf, making it a good place to buy your snacks, junk food, etc. So I might see a good deal on chips or granola bars from another store and pick them up at Superstore to save myself a trip.

Get aggressive

Once you’ve identified the best deals, it’s time to get aggressive.

Let’s use butter as an example. I know that $7 for a pound is the regular price for butter. $6 per pound is getting better, but it’s not great. $5 per pound? Now we’re talking. That’s a great deal.

Butter will freeze for a long time without losing quality. So go to town and buy six months worth of butter. Or a year’s worth. If there’s a limit, either enlist a friend to help you get around it, or go back a few times. It’s okay to be slightly shameless here, stores know what’s happening.

Sure, you might regret this in a month if there’s an even better deal, but that’s the wrong way to look at it. If you’re buying butter for 30% off, you’re guaranteeing yourself a 30% return on your investment. You should do that all day long, even if there’s a small chance that you might get a 40% return in a few weeks.

Everyone says when a stock you like is on sale, you should load up the proverbial shopping cart. Do the same with groceries. If anything, you should be more aggressive with groceries versus an investment, since the return from the former is virtually guaranteed. All you have to do is remember to eat it before it gets freezer burnt. And it’s likely a much lower percentage of your net worth, so the risk is far lower.

Next, be flexible

Just before he falls asleep at night, Galen Weston thinks happy thoughts. And he’s happiest when he thinks about Loblaw’s dream customer.

This person usually has the following characteristics:

1. He buys the same thing every week

2. He’s not price conscious at all

3. He doesn’t join the frequent shopper program

4. He has a list based on his needs

5. He’s happy to buy impulse items displayed around the store

Now let’s do a little Charlie Munger inversion magic, and flip this list around to create a customer profile that stores hate.

A store’s worst customers will:

1. Buy only the loss leaders

2. Be hardcore price conscious

3. Exploit the loyalty program

4. Make his list based on what’s the best deal

5. Ignore all the impulse items

You want to be the store’s worst customer. Your goal going in should be for the store to lose money on you. 

Sorry, Loblaw shareholders, but every time I walk into my neighborhood No Frills I’m looking to screw over that poor franchisee as much as I can — short of breaking the law, anyway.

So, after saying that, what are the strategies that you can use here?

Firstly, I know you might like chicken breasts, but you can’t just buy them at the same store every week. You have to be disciplined if you want to save money. If nobody has your favourite protein on sale that week, you have to walk away. 

Second, use seasonality to your advantage. For example, in the fall, both potatoes and carrots are cheap. I go to town and load up on both, since they’ll both keep for months if you know how to store them. Citrus is cheap in the winter, as is broccoli, cauliflower, and brussels sprouts. You want to buy watermelon in the summer. And so on. You’ll pay extra if you insist on watermelon in December, so get your fill in July and August.

Certain types of meat will often go on sale at certain times of the year, too. Christmas is a good time to load up on turkeys. Easter usually has great prices on ham. Prime rib is often cheap around Thanksgiving. Hot dogs and burgers will be cheap in the summer, and both will freeze just fine.

Steaks are very often on sale around Thanksgiving, so I’ll load up then and stick them in the freezer until next spring. They’ll easily last that long in the freezer, provided you invest in the proper storage.

There’s no doubt that we eat a lot of cheaper cuts of meat. Chicken thighs and drumsticks are staples at our house, and I’ve gotten to the point where I prefer thighs over breasts. Pork chops can be acquired at ridiculously cheap prices, especially if you’re willing to buy a whole loin and cut it yourself (don’t worry, it’s easy). They’re delicious when grilled on the bbq. Beef wise we eat a lot of ground beef because it’s very often on sale for a good price.

The point is we base our diet on what’s cheap, and then we go from there. Once we’ve done that then there’s plenty of room left over to splurge on more premium cuts. And you can still get good deals on premium cuts if you’re patient.

Ultimately, you’re treating food like value stocks, and you’re an investor looking for the best bang for your buck. To accomplish this, we must look around and buy what’s cheap. We can’t just dollar cost average into the same company each week. Then, when the deal is good, you buy with both hands and slowly consume the proceeds over time.

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While you’re there

This strategy will mean that you visit multiple stores per week, and will involve a small time commitment.

I probably spend 4-6 hours per month implementing my grocery savings strategy, stopping at stores in the neighborhood while I’m out doing errands. I’m fortunate that I have about 8 different stores within a 10 minute drive, including a Walmart and Costco.

Here’s what I do:

1. Go into a store with my list of loss leaders. This is usually a very small list, and I’m prepared to buy in bulk if the price is good enough.

2. While I’m there, I keep an eye for in-store discounted items. Depending on the chain, these discounts will take a different form, but most chains will have some sort of in-store discount program. You’ll want to focus on meat and produce mostly, but this is also a great way to get snacks at 50-75% off.

3. I visit mostly weekday mornings — these are the slowest times and usually you’ll have the best selection of deals.

4. I focus most of my energy on discount chains like No Frills or Freshco. They’re the most aggressive discounters.

After a little while, you’ll start to figure out each store’s particular tactics. Some might only discount meat. Some might only discount items that go outdated that day. Some might discount produce, dairy, and be more proactive on inventory. Figure out the stores that are most likely to discount what you want and the best times to go, and focus your efforts there.

I buy mostly discounted meat, which immediately gets repackaged and then fired into the freezer. You can’t put it in the freezer as is, it’ll get freezer burnt quickly. I’m also a fan of buying discounted salad kits, and I’ll buy a little cut fruit at 50%+ off. I’ll also buy fresh pasta at 50% off, but even after the discount I can buy dried pasta at a better deal.

The key when buying the stuff you can’t freeze is to be careful you don’t buy too much and then eat it immediately.

Get a Costco membership

Anyone who is serious about saving money on groceries needs to have a Costco membership.

But it’s not quite that simple. You have to be incredibly selective at Costco if you’re going to save money. It’s just too easy to fill that giant-ass cart with impulse buys, and since Costco’s average item is so much more expensive than your local supermarket, they add up a lot quicker.

Costco knows this, of course, and it’s a key part of its business model.

Here’s a list of items I regularly buy at Costco, deals that are consistently much better than the competition:

1. The hot dog. Obvs. Getting lunch for $1.50 is a game changer.

2. Rotisserie chicken for $7.99 is the best deal in the store. I’ll get 6-8 chicken servings from one bird, plus you can use the carcass for soup.

3. The 60 pack of eggs is the cheapest in the marketplace

4. Milk and butter are also excellent deals

5. The toilet paper is a great value

Other than that, I’m relatively picky at Costco. Meat and produce prices are usually good, but can be beaten by front page flyer items at other stores. Grocery items are often a great buy if you wait until they’re on sale, but it’s easy to buy too much and have food go rotten in your fridge.

What I eat

Let’s put it all together and look some examples of what I might eat. Everything here is x2, since I’m cooking for both me and my wife, but I’ve broken it down by serving.

Breakfast

For breakfast, we might have the following:

• 3 eggs ($1)

• 1 wrap ($0.33)

• Some cheese, bacon bits, hot sauce ($0.30)

• Total: $1.63 per serving

Or

• 2 slices of fancy sourdough bread ($1)

• Peanut butter ($0.20)

• Coffee ($0.33)

• Total: $1.53 per serving

Or

• Costco bagel ($0.75)

• Peanut butter ($0.20)

• Coffee ($0.33)

• Total: $1.28 per serving

Lunch

Lunches might look like:

• Leftover Costco rotisserie chicken ($1)

• Romaine heart ($1.67)

• Caesar dressing ($0.25)

• Total: $2.92 per serving

Or

• Can of Chunky Soup ($2.33)

• 2 slices of fancy sourdough bread ($1)

• Shredded cheese ($0.50)

• Butter ($0.10)

• Total: $3.93 per serving

Or

• Leftover Costco rotisserie chicken ($1)

• Wrap ($0.33)

• Shredded cheese ($0.50)

• Salsa ($0.25)

• Total: $2.08 per serving

Or

• Package of ramen ($0.50)

• Egg ($0.33)

• Green onions ($0.25)

• Leftover protein from the night before ($1)

• Total: $2.08 per serving

Dinner

Here are a few different dinners we’ve had over the last week or so:

• Discounted top sirloin steak ($4)

• Discounted salad kit ($1.25)

• Small potato ($0.33)

• Total: $5.58 per serving

Or

• 2 chicken thighs ($2)

• ½ cup of rice ($0.25)

• Brussels sprouts ($1.50)

• Total: $3.75 per serving

Or

• ½ pound pulled pork, including seasonings ($2)

• 1 bun: ($0.375)

• ½ pound roasted potatoes ($0.33)

• 1 carrot ($0.25)

• Total: $2.96 per serving

Or

• Family sized Kraft Dinner ($0.75)

• Package of cut up hot dogs ($2)

• Total: $2.75 per serving

(The secret is to grill the hot dogs, not boil them, and I will die on this hill)

Or

• ½ pound of bacon: ($2)

• 3 eggs ($1)

• ½ pound roasted potatoes: ($0.33)

• 1 slice fancy sourdough bread ($0.50)

• Total: $3.83 per serving

Or

• ½ pound beef cubes ($4)

• 1 potato ($0.33)

• 1 carrot ($0.25)

• ½ onion: ($0.25)

• Seasoning/beef broth ($0.25)

• Total: $5.08 per serving

Snacks

Snacks are probably the easiest place to save money. It’s super easy to compare alike items to each other, and stores love using key snack items as loss leaders to get people in. Big chains like Walmart and Loblaw will often have the best prices, and Costco is another excellent place to look.

Some snacks I might buy include:

• Granola bars ($0.40 per bar)

• Pepperoni sticks ($0.41 per stick)

• 3 Oreos ($0.125 per cookie, or $0.375 for 3)

• Banana $0.25 at Costco

• ½ pound of grapes: $1.50

The bottom line

The internet is filled with a million different guides to saving money on groceries, but I’ve yet to see one that went into the kind of detail that this one did. So hopefully I’ve delivered some value here.

Ultimately, it comes down to this. To actually save serious money on your groceries, you have to do things that most other people aren’t willing to do. You’ll have to change your diet somewhat. You’ll have to be shameless too; I’ve lost track of the number of times a cashier has rolled her eyes at me after I bring up a giant stack of discounted meat. And you’ll need to put a reasonable amount of effort into things, too.

But the rewards can be pretty solid, especially for those who want to get ahead.

We’re not as hardcore about this as we used to be, but these are still principles I use virtually every day. They’re just ridiculously easy, and I know that if I started feeling a little tight I could go more hardcore down this path.

Happy saving!

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