The candidate should calculate that costs rose by about $330,000 per store year-over-year. Labor and inventory waste account for most of this increase, growing significantly faster than revenue. Labor now represents nearly one-third of total revenue, which is high for a regional grocer.

Focus on labor and waste as the primary cost issues. Labor costs increased by 18 percent and waste by 29 percent, together explaining nearly all of the margin decline. Other categories such as rent and utilities are stable and less likely to drive change. The next step is to explore the operational root causes behind these two categories—staff utilization, scheduling, and inventory management efficiency.