Grocery chain Trader Joe’s has opened up a legal can of whup ass on its self-professed “best customer,” Pirate Joe’s.

Vancouver, British Columbia shopkeeperMichael Hallatt, claims to have spent more than $350,000 at Trader Joe’s in the past two years. Trader Joe’s would like him to stop shopping there. What gives?

Hallatt, makes frequent drives across the border to shop the U.S. stores, then resells popular Trader Joe’s branded products in his own store, cannily called Pirate Joe’s.

Various commentators are at a loss to explain why Trader Joe’s would cut off its best customer.  But isn’t it obvious?  Trader Joe’s always had the option of opening a store in Vancouver. Because it never did, it must be that it would not be profitable. Now the joint profits between Trader Joe’s and Pirate Joe’s cannot be higher than the profit that Trader Joe’s would have earned if it opened its own store.  At worst Trader Joe’s could just replicate what Pirate Joe’s is doing, but probably it could do it more efficiently.  So Trader Joe’s which earns only a share of the joint TJ/PJ profit must be less profitable than it would be if it opened its own store in Vancouver which it has already calculated to be unprofitable.

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