How Aldi Keeps Its Beef So Cheap

Aldi is known for offering a number of high-quality items at a lower price, especially its beef. No wonder Aldi's steak selection has a leg up on competitors like Walmart, and why it is often ranked among the best grocery stores in the U.S. But how does the German grocery chain, which has become an American household name, manage to keep its beef prices so low? There are several factors behind it, but perhaps the primary one is that you won't find beef sourced from many popular brands at Aldi. The grocery chain instead focuses on supporting the local economy. A majority of its products come from local meat suppliers who provide high-quality cuts at a lower price. This gives the brand a chance to negotiate with the suppliers and also ensures the beef stays fresh. Though some ground meat options at Aldi aren't always the best in terms of quality, you can still be assured you're not getting stale beef. This also helps cut down on transportation costs, and Aldi uses all those savings to reduce the final cost of the product. 

Sourcing from local suppliers allows Aldi to sell its beef under proprietary private labels. In contrast, traditional grocery chains often carry branded meat from suppliers like Sysco, which means you're also paying for the brand name. Costco is a bit of an exception, selling meat under its own house brand, Kirkland Signature. But with Aldi's private label approach, that extra cost never makes it to your cart.

While sourcing from local suppliers and selling under private labels are the main reasons why beef is cheap at Aldi, there are a few other factors that contribute to its suspiciously reasonable pricing. Aldi stocks far fewer items than most grocery chains. The average supermarket carries around 31,000 products, but Aldi limits its selection to about 2,000. By narrowing its number of items and instead increasing the quantity of the limited ones, the chain is able to negotiate lower prices from suppliers as its purchases are made in greater bulk.

Aldi also skips the deli counter and doesn't have a designated butcher, which means fewer employees and lower overhead costs. Most Aldi locations operate with just six to eight employees on the floor at any given time. Its shorter operating hours further support this cost-cutting approach. This lean staffing model helps keep the prices of the groceries — including its beef — down, helping the popular grocery store sell its beef at a cheaper price than most others.