SOME ECONOMIC IKPACTS OF FROZEN HEATS ON HEAT RETAILING By Austin Benson Egzell A THESIS Submitted to the College of Agriculture Michigan State University of Agriculture and Applied Sciences in partial fulfillment of the requirements for the degree of MASTER OF SCIENCE . Department of Agricultural Economics 22:3 ACKI‘EOWLEDGi-EI‘JTS The writer wishes to express his sincere appreciation to all who assisted in this study. Special appreciation is expressed to Dr. Harold M. Riley for his patient and helpful guidance of the study and his counsel in the preparation of this report. To other members of the Agricul— tural Economics Department staff who provided assistance and encouragement, appreciation is also expressed. Dr. E. A. Brand of the Department of Economics and General Business gave freely of his time as a counselor and his suggestions as to how frozen meats may be fitted into retail food store organ- ization were very helpful. Last, but by no means least, the writer is grateful to his wife and sons who gave assistance and encouragement constantly throughout the period of this study. .\Lv.\I.V.V._V.V.V.v.~I.\I. A A A A A n l\ l\ n l\ 1\ ii SOME ECONOMIC IMPACTS OF FROZEN MEATS ON MEAT RETAILING By Austin Benson Ezzell AN ABSTRACT Submitted to the College of Agriculture I‘viichigan State University of Agriculture and Applied Sciences in partial fulfillment of the requirements for the degree of MASTER OF SCIENCE Department of Agricultural Economics Year 1956 Approved % M/fl’] Mag! ABSTRACT This study was an attempt to estimate some of the economic impact of frozen meats on meat retailing. Costs associated with meat depart- ment labor, equipment, rent or space, and wrapping supplies account for more than 80 per cent of all meat retailing costs. These costs will likely be affected to a greater extent than costs associated with ot er factors of meat retailing. Much of the preparation necessary for merchandising meats is done in the retail food store. In this respect, meats have lagged behind most other major groups of foods which now are processed and packaged in centralized plants before they are delivered to retail stores. Recent deveIOpments in frozen meats hold out some promise for permitting the meat industry to take advantage of economies inherent in such centrali- zation of processing and packaging. If retailers change to the sale of more frozen meats the impact of this change will be felt in differing degrees by retailers of different sizes. Furthermore, in making the change-over to more frozen meats, retailers may change to various levels. This will result in variations in the impact of such changes upon the costs associated with labor, equipment, rent, and wrapping supplies. Since the change to more frozen meats is a relatively new practice in food retailing it was not practical to secure primary data on costs of handling frozen meats under actual store conditions. However, iv considerable information on current meat retailing operations was avail- able from previous studies which could be compared with similar information on the handling of frozen foods. A budgeting procedure, based upon three store size classifications and three levels of change- over to frozen meats, was used for estimating the effects of changes to more frozen meats on the four factors under consideration in this study. It was found that at least 60 per cent of labor costs may be saved by shifting completely to frozen meats. About 55 per cent of total space costs and over 90 per cent of_preparation and storage Space costs can be saved if all red meats are sold in frozen form. Though display equipment costs may not be reduced, neither should they be increased by‘a complete change to frozen meats. About 75 per cent of the costs of storage facilities and 100 per cent of the costs of preparation equipment and wrapping supplies can be saved by'a change to retailing all red meats in frozen form. This means an aggregate saving of about a 60 per cent in labor, equipment, Space, and wrapping supply costs and about a 50 per cent saving in total meat retailing costs. TABLE OF CON”3N”S IAPTER Page I IT‘I'ITEiODUCTIOI‘JO0.0.0.0....OOOOCOOOOOOOOOOOOOOOOOOO0.0.000... H Importance of Meats to Food RetailerS.................. Trends in Food Retailing............................... Heats Still Packaged in Retail Store................... Frozen Meat Possibilities.............................. Objectives of This Study............................... Nature of Study and Source of Data..................... Need for Study......................................... Order of Presentation.................................. CDN O‘xULUlw [\J H II HISTORICAL BACI'iG-ROIHID or mom: arms 9 Early History.......................................... 9 Trends in Frozen Food Production....................... 9 Frozen Food Lockers and Home Freezers.................. 12 Effect of Supermarkets on Frozen Foods................. lu Commercial Frozen Food Storage......................... 17 Frozen Food TranSportation Facilities.................. 19 Recent Developments in Frozen heats.................... 20 III PROCEDURES USED FOR COKPARING COSTS BETWEEN RETAILING FRESH HEATS AND FROZEN KEATS........................... 23 Some Economic Questions................................ 23 Comparisons Based on Degree of Change to Frozen heats.. 2h Comparison Based on Average Size of Store.............. 28 Budgeting Procedure.................................... 53 IV EEPE‘ECfl‘S OBI LMOR COSrI-‘SOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOO. 3' Use of Labor in Meat Departments....................... 3h Labor Productivity Varies With Volume.................. .55 Trends in wage Rates................................... bl Effects of Frozen Meats on Labor Costs................. hl Cost Variations Due to Types of Employees.............. 9 Comparison of Labor Costs for Fresh and Frozen Meats... B6 v armors or FPOZEN BEATS or EQUIPILENT cosrs................ 19 Equipment Commonly Used in heat Departments............ b9 Equipment Investment................................... 90 vi TABLE OF CONTENTS - Continued CHAPTER Page Equipment Costs......................................... 52 DiSplay Equipment....................................... 56 Equipment Need for Fresh heats....................... 56 Equipment Needs forFTczeniieats.... ................. 58 Case Needs Compared for Fresh and Frozen Neats....... 60 Display Equipment Costs................................. 63 Storage FaCilitieS.....c........o......................- 67 Values of Cooler Investments............................ 70 Cooler Costs............................................ (h Preparation Equipment................................... 75 Preparation Equipment Costs............................. 78 VI ETERECEPS OIJ liEldT COSTSOOOOOOOOOOOOOOOOOOOOOOOOOOO0.00.0.0... 8]— Importance and Nature of Rent Costs..................... 81 Space Needs for Fresh Meats............................. 83 VII EFFECTS ON WRAPPING SUPPLY COSTS........................... 91 VIII SUT'AARY Mu) COI‘JCLUSIOI‘ISOOOOOO.o00.00.0000.000.000.000...000 95 smimlary...OOOOOOOOOOOOOCOOO00.0.0.0...OOOOOOOOOOOOOOOOOO 95 Conclusions............................................. 99 LITERATURE CITED.................................................. 102 APPENDICES........................................................ 10h Appendix A.............................................. 10h AppenCfi—x B...0......00.00.000.000...OOOOOOOOOOOOOOCOO... 106 Appendj—ji C.O...OOOCOOOOOOOOOOOOOOOOOOOOOOCOOOOOOOOOO...O 109 vii a s n S . n n 3 n F n C a I .7 i A Q . \ . c a i A w .. ~. w I a. n . A . fi \ Q n p n .v a _ . ‘ O I p O a r .. I r a. . a . a . .. a n a I . 7 _. I I ‘ . a ~ ~ 1 ~ . n III IV VI VII VIII-A VIII-B VIII-C XI Page Increases in the Production of Selected Frozen Foods in the United States, 1946 to 1955.00.00ooooooooooooooooooooo Annual Sales of Home Freezers and Estimated Capacity, 19146-195'5’.OOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOCOOOOOOOOO Refrigerated Space by Type of warehouse and by Temperature Designation, United States, Specified Years, 1923-1953.... Composition of Meat Sales in the North Central States in May 1955, and Proportion in Items Not Expected to be P‘rozenOOOOOOOOOOOOOOOCOOOOOOOOOOO0.00.00.00.0000.0.0000... Number of Stores, Average Sales Volume of Meats and All Foods, and Percentage of All Meats Handled by Small, Medium, and Large Stores in the North Central States, May, r'“ 19);...OOOOCOCOOOOOOO0.0.0....0......OOOOOOOOOCOOOOOOOCOOC Allocation of Floor Space in Retail Stores Handling Meats in the North Central States, May, l95j.................... Labor Costs Related to Store Volume, North Central States, 1953.00.00.00.0000000000000000000000000000000000COOOOOOOOO Labor Requirements for Handling Meats in Retail Stores When No heats are Frozen as Compared with 25 Per Cent FrozenOOOOOOOOOOOOO0......0.00.00.00.0000.0.0000...0...... Labor Requirements for Handling Meats in Retail Stores When No Meats are Frozen as Compared with 50 Per Cent l‘flrozenOOOCOOOOOOOOOOO0.00000000COOOOOOOOOOOOOOOOOOOOOOOOO. Labor Requirements for Handling Meats in Retail Stores When No Meats are Frozen as Compared with 75 Per Cent E‘rozenOOOOOOOOCOIOOOOOO00.0.0.0...OOOOOOOOOOOOOOOOOOOOOOO. wages of Meat Department Personnel, Detroit, Michigan, 19u9’ 1953, and 19550000.00.0000000000000000000000.0000000 Labor Cost per Pound of Frozen Meats Handled in Retail F.00d StoreSOOOOOOOOO00.00.000.000. Per Cent of Stores Having Various Items of Equipment in Retail Meat Departments, North Central States, May, 1953.. viii IO kl) 0\ ho h2 LIST OF TABLES - Continued TABLE XII XIII XVI XVII XVIII XIX XXI XXII XXIII XXIV Estimated Equipment Investment for Meats in Retail Food Stores, North Central States, 1953......................... Estimated Equipment Costs for Meats in Retail Food Stores, North central States) 1953000000000000000000000000000...coo Linear Feet of DiSplay Equipment Needed for Selling Meats in the North Central States in 1953, By Store Sizes........ Display Space Needs for Merchandising Fresh and Frozen IvieatSOOOCOOOOO0..OOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOO Costs of Display Cases for Fresh and Frozen Meats on Basis of Both Length and Cubic Capacity, Michigan, 1956.......... Equipment Investment and Costs in.Hetail Meat Departments, Iowa and Illinois, 1952.................................... Savings in Cooler Investment Because of Changes to Frozen HeatSoooooooo Savings in Cooler Costs Because of Changes to Frozen Meats. Savings in Preparation Equipment Investment Because of Changes to Frozen Meats.................................... Savings in.Preparation Equipment Costs Because of Changes to Frozen Meats... 'Weekly Sales of Meats in Total Pounds and Dollar Volume, Sales Per Square Foot of Space Devoted to heat Departments, and Rent Charged in Small, Medium, and Large Stores........ Meat Department Space Savings Possible with 25, 50, and 75 Per Cent Change to Frozen Meats............................ Added Gross Sales From Space Released by Changes to Frozen IvieatSIOOOOOOOO0.0.0COOOOOOOOOOOOOOOOOOOOOCOOIOIOOOOOOOOOOOO wrapping Supply Costs in Relation to Meat Sales............ Page 53 55 57 62 71 73 76 79 79 8h 87 89 9h CHAPTER I INTRODUCTION Importance of Meats to Food Retailers Meats account for about 25 per cent of the average consumer's total food expenditure. This makes up a larger portion of the total food bill than is spent for any other of the major commodity groups.1 Successful food retailers recognize meats as one of the most im- portant merchandising attractions in bringing shoppers into their stores. This is evident from the prominence given to meat items in retail food advertising. Apparently this advertising and other merchandising efforts are based on the belief that meats are an expensive but basic food around which many home managers plan their meals and their shopping lists. Fresh red meats (beef, veal, pork, lamb and mutton) are among the most perishable of all foods sold in retail food stores. They must be handled carefully from the time they reach the store until purchased by the consumer if they are to be attractive, palatable, and safe for consumption. This is largely responsible for the complex and costly system which has been developed for retailing these products. This places heavy demands on management to provide the special kinds of facilities and labor necessary to maintain meat quality and perform the merchandising services demanded by meat customers. 1 Progressive Grocer, Vol. 35, No. 5, May 1956, p. 83; and NARGUS Bulletin, Vol. LB, No. 2, February 1956, p. 31. Trends in Food Retailing There have been a number of important changes in food retailing during the past fifty years, most of which have implications for meat retailing.2 One of the most noticeable changes has been the increasing importance of the large supermarket. This has been associated with a change-over to self-service selling of most grocery items and, more recently, to meats and produce. Sharp increases in real consumer income during the last 15 to 20 years have been associated with changes of many consumer habits as they affect food shopping. More automobiles and better roads and streets have enabled consumers to shop over wider areas. More homes have refrigeration equipment which will permit home storage of a week's supply of perishable foods. These factors, combined with the larger retail food stores, have encouraged many shoppers to buy most of their foods at one store. Demands have developed for more foods which are processed and packaged in consumer sized units. Food shoppers buy more "convenience" with their foods than ever before. These trends, in turn, have been associated with the development of centralized processing and packaging.3 Practically all items sold in the grocery departments of supermarkets are processed and packaged into consumer sizes and several meats and produce items are now being packaged in convenient home sizes before 2 R. W} Hoecker, Marketing, Year Book of Agriculture, The United States Department of Agriculture, washington, D. C., l95u, pp. 61-6h. a Technology in Food Marketing, Agricultural MonOgraph No. 1h, The United States Department of Agriculture, washington, D. 0., 1952, p. 75. delivery to the retail store. Demands for frozen foods in consumer sizes have grown very rapidly in recent years. Some fruits and vegetables which once were sold as fresh products are now sold largely in frozen forms. More recently, demands have increased rapidly for frozen Special- ties such as pies and even complete dinners. Centralized processing and packaging needed to meet consumer demands has enabled food manufacturers to take advantage of specialized machinery and labor because of the large volume which can be handled at one time and place. Overhead costs are spread over greater output, resulting in more economical production. Economies are also realized in selling and 4 transportation costs due to larger volumes. Brand names have become more important which improves the effectiveness of sales promotion. Meats Still Packaged in.Retail Store Despite these changes in food retailing, fresh red meats are still being fabricated into consumer units in the retail food store. A question arises, then, as to why there has not been a more complete shift of meat processing and packaging to centralized operations, either by packers or at warehouse levels. Some of the reasons which may be advanced to answer this question are indicated below; Consumers apparently place a high value on "freshness" of meats. In a recent study which attempted to appraise the relative preference for prepackaging and butcher service, this seemed to be an important 4 Ibid., p. 76. factor.5 "Quality" was the reason most frequently given by consumers as the deciding factor in the selection of a store in which to purchase meats in a Baltimore, Maryland survey in 1950.6 These and other studies, though not designed to measure consumers' preferences for "fresh" meats, indicate some of the major characteristics consumers seek in the meats they purchase. Another reason why most fresh meats are still processed and packaged in retail stores is that meats are highly perishable. These items deteriorate so rapidly that they must be merchandised very soon after they are cut and packaged into retail units. Even when cut and packaged in the retail store, meats must be held at low temperatures to preserve their freshness and eye appeal. Shelf life for packaged red meats varies from one day to three or four days, depending upon the cut. Rewrapping is necessary for about seven to ten per cent of all meat packages pre- pared in the store.7 The foregoing are some of the reasons why centralized cutting and packaging of red meats has not proven practical. Perhaps new and radically different technologies must yet be found and perfected before central packaging, which has proved so economical for many foods, will hold much promise for red meats. 5 H. M. Riley and R. C. Kramer, What Consumers are Saying About Pre- packaged Fresh and Frozen Meats, Special Bulletin h06, Agricultural Experiment Station, Michigan State University, East Lansing, Michigan, 1955,6p. 6. S. C. Shull and M. R. Godwin, Consumer Shopping Habits, Extension Bulletin 137, Extension Service, University of Maryland, College Park, Maryland, 1950, p. h. 7C. E. Dobbins and.R. W} Hoecker, Costs Of and Reasgns For Rewrapping Prepackaged.Meats,;Poultry, and Cheese, Agricultural Information Bulletin No. 77, United States Department of Agriculture, washington, D. C., 1951, p. 1. Frozen Meat Possibilities Although centralized processing and packaging of fresh red meats has not as yet reached a sizeable volume, there are leaders in the meat industry who believe that frozen meats may make such changes possible.8 Frozen meats retain many of the characteristics consumers like best in freshly cut meats. They can be fabricated and packaged in centralized plants, which enables distributors to take advantage of economies of scale in processing, packaging, and transportation inherent in centralization. For many reasons (explained in detail in Chapter II) frozen meats have only recently become an important factor in meat retailing. Within the next few years there may be rather rapid expansion in the sale of frozen meats if the possibilities are as great as some of the evidence presented in Chapter II would indicate. Objectives of This Study? Since frozen meats show promise of becoming more important, this study was made to measure some of the economic impacts frozen meats may have on meat retailing. Special attention was given to possible changes in costs associated with labor, equipment, space, and wrapping supplies as frozen meats become a larger portion of total meat volume. These costs account for approximately 80 per cent of present meat retailing costs. No effort was made to measure cost changes for advertising, in— surance and licenses, and other factors associated with meat retailing, 8 I a See statements from meat packing industry and food retailing leaders quoted in Chapter II. since they make up a small portion of total costs and are not likely to be greatly affected by changes to more frozen.meat sales. Nature of Study and Source of Data Relatively few retailers have reached a volume in sales of frozen meats which would permit a complete survey of cost adjustments resulting from such shifts. It was apparent at the outset of this investigation that even a case study approach in which only a few retail meat depart- ments would be studied was not feasible. On the other hand, various research studies have reported useful information on current costs of operating retail meat departments, improved methods of handling frozen foods in retail stores, and other closely related subjects. It was apparent that much of this information could be related to changes in the cost structure which may occur if retailers add more frozen meats to their present meat operations. Various publications were used as sources of information and are listed in the bibliography. Three research reports were used to such an extent that it seems appropriate to list them here, along with a brief description of each of them.9 1. Costs of'Retailing Meats In Relation To Volume by Edmund Farstad ahd V. John Brensike, United States Department of Agriculture. This report deals with meat retailing costs in Topeka, Kansas; Bridgeport, Connecticut; and Harrisburg, Pennsylvania in 1950. It undertook to measure the various costs of meat retailing and to relate these to size of stores. 9 Each of these publications is fully documented in footnotes and listed in the bibliography. 2. Retailing Meat in the North Central States was assembled by the North Central Livestock Marketing Research Committee. The objectives of this study were to describe and analyze some of the more important general characteristics of the retail meat industry in the North Central Region. Information was obtained from 1351 stores in the North Central States. 3. Comparison of Costs of Service and Self-Service Methods in Meat Retailing by Fred H. Wiegmann, E. S. Clifton, and Geoffrey Shepherd, Iowa State College. The objective of this study was to compare the costs of service and self-service methods of selling meats and to show the relationship of cost to volume of sales. To fill some of the maids which existed in the literature studied and to strengthen the application of information drawn from various publications, the writer also turned to meat packers and other meat industry leaders, refrigeration equipment dealers, and retailers. Many suggestions from these various sources are included in this report but it was impossible to give adequate credit to all of them. However, an attempt has been made to do so wherever possible. Using the information from all the sources discussed above, a budget- ing type of analysis was made in estimating the changes in meat retailing that may be expected for three levels of change-over to frozen meats. The comparisons were projected for small, medium, and large stores. Need for Study Food retailers are faced with decisions of whether or not to shift from.freshly cut meats to more frozen meats, the extent of such shifts, and of how to fit these changes into their retailing operations. The results of this study should assist retailers in evaluating such changes. Extension personnel engaged in educational work on meat mer- chandising with food retailers will also find the information useful in their contacts with retailers and others interested in the meat industry. This study will also serve as a guide to future research as well as to provide ideas for much more thorough development of the areas included in this investigation. Order of Presentation The procedures to be followed in making cost comparisons as re- tailers shift to greater volumes of frozen meats are described in Chapter III. Actual comparisons of labor costs are discussed in Chapter IV, equipment costs in Chapter V, space costs in Chapter VI, and wrapping supply costs in Chapter VII. Chapter VIII presents a summary of the over-all impact on the complete meat retailing operation. CHAPTER II HISTORICAL BACKGROUND OF FROZEN MEATS Early History Frozen meats have been known and used by man on a seasonal basis in areas where climate provided refrigeration since the time when man first learned to kill and eat meat animals. Of much more importance to this study, however, is the fact that as late as 1890 mechanical ice- making was just becoming a well-developed industry in this country.1 Through developments in mechanical refrigeration since that time it has become more practical to freeze, transport, merchandise, and store frozen foods of all kinds. Experiments in quick-freezing of fruits and vegetables were made as early as 1860, using ice and salt as the freezing medium, but development of the quick-frozen-food industry was made possible by advances in the science of mechanical refrigeration in the latter part of the nineteenth century. Experimental operations were carried on in various parts of this country and in Europe, out of which emerged freezing methods which 2 are now in commercial use. Trends in Frozen Food Production Frozen seafoods, poultry, and some fruits and vegetables have become more important in channels of food distribution than red meats but in 1 A. E. Stevens, Quick Frozen Foods, Vol. 3, No. 12, p. 28. 2 H. Carlton, The Frozen Food Industry, University of Tennessee Press, Knoxville, 19D1, p. 2. 10 recent years frozen meats seem to be gaining a foothold in food markets faster than many of these other types of frozen foods. Table I shows increases in production of selected frozen foods in the United States from 19h6 to 1955. Poultry is the only food of this group which has grown more rapidly than meats as a frozen food during this time. TABLE I INCREASES IN THE PRODUCTION OF SELECTED FROZEN FOODS IN THE UNITED STATES, l9h6 TO 1955 Total Pack Fruits Citrus Pre-Cooked Poul- Sea- Year and Berries Vegetables Juicesa Dishes tryb Meatb fggd l9h6 519 h50 18 h? 170 20 280 19h? 3hh 3&6 26 SO 130 15 2h? 19h8 370 hh6 10b 50 150 25 292 19h? 35h 563 500 60 22h 27 286 1950 h72 587 1,212 75 hll 35 287 1951 N30 770 1,583 135 582 55 326 1952 A20 896 2,273 200 800 80 313 1953 5&2 1,103 2,583 325 850 125 275 l95h 523 975 3,289 h50 900 175 303 l955° 575 1,000 3,1h1 625 875 250 299 aIncludes single-strength juices and concentrated juices returned to a single-strength basis. bEstimated, quick frozen. Preliminary figures for 1955. Source: Frozen Food Factbook, 1956, National Wholesale Frozen Food Distributors, Inc. 11 Fruits and vegetables were being frozen commercially in the North- west as early as 1918 as a means toward capturing more of the Eastern Seaboard market for these products.3 Frozen fish of various kinds also have been produced for many years in order that this highly perishable food could be moved into more distant markets with less danger of spoilage, and could be marketed over a long time span. Some of the most significant efforts toward introducing frozen meats into normal channels of distribution date back to 1929 when Swift and Company undertook to place a line of quick-frozen meats on the market. At that time very few retail meat markets had frozen food storage and there was practically no home storage space for frozen foods. This effort to introduce a pre-cut and prepackaged line of meats by one of the nationally known packers may have contributed to pre- cutting and, eventually, prepackaging in the store. It also may have served as a suggestion to the food trade as to the possibilities of frozen foods in general, and thus aided in paving the way for the rapid de- velopments in handling frozen foods which have occurred in the last quarter century.4 Consumers in 1929, besides having no facilities in their homes for storing frozen meats, also knew little about frozen foods of any kind. Frozen foods for institutional users had not gained a foothold then. No doubt the depression of the early thirties seriously slowed the attempts which were being made to acquaint consumers and institutional 3 H. Carlton, 49. cit., p. 3. 4 Quick Frozen Foods, Vol. 7, No. 3, October 1955, p. 3b. 12 buyers with frozen meats. In brief, frozen meats had yet a while to wait before enough would be known about them to insure a broad market. Frozen Food Lockers and Home Freezers Although frozen food lockers had been in use by merchants in this country since 1903 and by farmers since 1908, it was not until around 1937 that the frozen food locker industry began its growth all over the country.5 Its rapid development in the next several years coincided with a rapid shift in population from rural farm areas to urban industrial areas. Many of the people who had learned about frozen meats and other frozen foods while they were patrons of a frozen food locker plant in a rural area were now urban consumers. Furthermore, they had more money in their pay envelopes and were willing to pay for convenience in foods. A 19h8 study in the North Central States, where more than one-half of all the frozen food locker plants in the country were located, indi- cated that 36 per cent of locker patrons resided in towns.6 This number, plus the locker patrons who have since moved from rural areas into cities and towns provides a substantial segment of the urban population who are quite well acquainted with the nature and convenience of frozen foods. In the l9h8 study, 31 per cent of home freezer owners who furnished information lived in urban areas. Of this group, 35 per cent also rented 5 R. C. Kramer, An Analysis of Michigan's Frozen Food Locker Plants, (Unpublished Master's Thesisj, Michigan State University Library, East Lansing, Michigan. 6 o o 0 Frozen Food Lockers and Home Freezers in Meat Distribution, Agri- cultural Experiment Station, Bulletin h90, University of Wisconsin, Madison, Wisconsin, p. 6. 13 lockers and 55 per cent had rented lockers before buying home freezers.7 This further points up the influence the frozen food locker industry may have had in conditioning consumers in many areas of the country for acceptance of frozen meats and other frozen foods. As an illustration of the rapid growth of frozen food lockers and their influence on the development of frozen foods, there were 1,200 locker plants in the United States in 1938, 3,000 in l9hO, 6,500 in l9h5, and 11,600 in 1953. These locker plants provide processing and freezing service for farmers' home-produced meat products and Space for storing food supplies. In these plants there are more than five million lockers, or about 32 million cubic feet of freezer space. The plants handle-- for slaughtering, dressing, cutting, wrapping, freezing, curing, or rendering-—more than 1 l/h billion pounds of meat and poultry each year.8 Some difficulty is encountered in finding satisfactory information as to how much frozen food storage space exists in home refrigerators and home freezers. An indication of the amount of this type of space is found, however, in studies which have been made in Michigan and Arizona. In Flint and Grand Rapids, Michigan, 99 per cent of the homes contacted in one study reported home refrigerators, more than one—half of which had frozen food 9 storage Space. Thirteen per cent of the homes in this study owned home freezers. (One and one-half per cent rented frozen food lockers.) 7 Ibid. 8 James A. Mixon, and Harold D. Johnson, Marketing, Yearbook of Agriculture, l95h, p. 382. 9 Riley and Kramer, pp, cit., p. 17. it In Phoenix, Arizona, 72 per cent of households in one study had home refrigerators, but no other cold storage Space. Seven per cent had home freezers or rented frozen food lockers, but had no refrigera- tors. Fourteen per cent had both home refrigerators and home freezers or rented frozen food lockers. Seven per cent reported no refrigeration.10 Annual sales of home freezers seem to have reached their peak, at least temporarily, about 1952 and have declined somewhat since that time. This may be accounted for in a number of ways, but perhaps it represents only a Slow-down following the postwar boom in freezer sales. No doubt the added frozen food Space in many models of home refrigerators also has influenced the sale of frozen food cabinets. Table II provides some information based on figures collected by the National Electrical Manufacturing Association, which indicate the growing importance of home freezers. Effect of Supermarkets on Frozen Foods Other important developments in food distribution which have a bearing on how fast frozen meat sales may increase include the rapid growth of the supermarket industry in this country. So long as most foods were distributed through small stores with severe limitations on Space and financing for specialized merchandising equipment, frozen food distribution could not develop very rapidly. But as more and more of the total volume of foods was retailed through supermarkets on a self- service basis and from expensive display cases, frozen foods became a more important part of the total food picture. With supermarkets striving 10 . . R. E. Seltzer, Consumer Preference for Beef, Bulletin 267, Agri- cultural Experiment Station, University of Arizona, Tucson, Arizona. TABLE II ANNUAL SALES OF HOME FREEZERS AND ESTIMATED CAPACITY, l9h6-l955 15 Sales (thousand units) Capacity Year Under 13 cu. ft. (1000 ‘(Million 13 cu. ft. and over Total cu. ft.) Pounds) 19u6 7h 27 101 825 25 19k? 258 31 289 2,075 62 1988 358 93 887 h,238 127 1989 227 82 309 3,h11 102 1950 h3h 205 639 7,733 232 1951 hon 319 723 9,661 290 1952 389 882 791 11,126 338 1953 261 502 763 11,855 388 1958 205 hhl 686 9,688 291 19558 202 A97 699 10,615 320 Ten-year Total 2,768 2,639 5,807 70,827 2,127 Ten—year Adjusted Totalb 8,152 3,959 8,111 106,2h1 3,191 aPreliminary figures for 1955. bFifty per cent added to figures collected by National Electrical Manufacturing Association to account for sales by non-reporting manufacturers. Source: Frozen Food Factbook, 1956, National Wholesale Frozen Food Distributors, Inc. 16 to provide the wide variety in foods demanded by food shoppers and the maximum in packaging and preparation convenience they desire, many frozen foods fit well into their merchandising schemes. By 1955, food chains reported h.3 per cent of their total volume was in frozen foods, which was divided percentage-wise as follows: vegetables 27.0; juice 19.0; Specialties 18.53 pOultry 15.03 fish 10.53 meat 5.53 and fruits 1.5.“ One writer who has kept in close touch with food retailing in recent years said recently, "This past year (1955) saw the first major push in the frozen red meat line. Tests on some hO frozen red meat items indi- cate that they may be on the threshold of a top place in the frozen food line. Frozen meats may make those food chain optimists, who predicted ten per cent of total store sales in frozen foods by 1959, look like rank pessimists."12 Frozen food stores, department stores, appliance dealers, and various other types of businesses undertook, in the late forties and early fif- ties, to develop profitable sales in frozen foods in general, but especially frozen meats. Short meat supplies, and high prices stimulated this sort of thing with consumers for a period. But most such ventures were Short-lived and a very large portion of all frozen foods now finally reach the consumer through retail food stores, principally super- 13 markets. 11 Chain Store Agg, Vol. 32, N0. h, April 1956, p. 125. 12 M. M. Zimmerman, The Super Market, McGraweHill, New York, 1955, p. 1&9. 1 3 James A. Mixon and Harold D. Johnson, 4p. cit., p. 38h. 17 Commercial Frozen Food Storage Still another factor affecting the rate at which frozen meats may expand is the growth of frozen food warehouses in recent years. Because of the upward trend in frozen food production and other changes, the warehousing industry found it necessary in the thirties to reappraise its ability to provide the kinds of space needed under these changing 14 conditions. With greater demand for freezer space and a slackening demand for cooler Space, especially in concentration and terminal markets, the ware- housing industry began to convert all or a major portion of cooler space to freezer space and to build new freezer facilities in areas closer to points of production. By October 1, 1953, this conversion and expansion had brought gross freezer Space up to 3h?,328,000 cubic feet from 201,750,000 . cubic feet in 19h3 and 169,753,000 cubic feet in 1933 (Table III).15 The rate of growth from l9h3 to 1953 was almost five times as great as it was from 1933 to 19h3. From 19h3 to 1953 there was a net increase in private and semi-private freezer Space of more than hh,OO0,000 cubic feet. During this period the industry almost quadrupled its freezer capacity.16 Another type of storage Space for frozen foods important in the development of frozen meats are wholesale warehouses--both independently owned and chain—owned. Food wholesalers and chains have necessarily 14 . ‘ Melvin R. Banks, Capacity of Refrigerated warehouses in the United States, United Stat es Department of Agriculture, 1953, p. 5. 15 Ibid. 16 Ibid., p. 9. 18 ..w .m ndmma ..0 .Q «mm copmcflnmNB «mhdeSOHam4 mo pamEppwmoQ mmpmpm popes: seafl>pmm mmflpmxpmz HSHSPH50flaw< «and .02 :Hpmaasm Hecapmfipmpm .mmpwpm popes: onp ca mmmooempmz.pmpwwmwflammm mo NWflowmmo “meadow .SOHon use .moma Coon meme hemp «mmma ocean mzoamn new .momm who: mmudpwnmdsmp someway .mmma op wofipm o .omodaoxm mes omam woman Eoop wcflxosm new weHMSO ammma ca memosaoxm mes oommm mewxpos ompmpmmflwmou «mama SH mcflneflwmm Q .mmmdon madam modeoSH m Nma.oos wmm.ssm Asm.ms Nsm.mm mam.msa mam.oe Noe.m0m wem.amm mmaa mom.mss ems.aom www.6ma maa.ms 0mm.ma smo.ea Nso.~sm 0mm.msa mama awa.msm mme.aea on.mmN mms.ae sea.sa www.mm mam.amm eao.mm mmma mom.oss wa®.saa 6mm.msm mmm.mm ame.os mme.mm mmo.oma som.mm mama .et.so oooa .ee.se coca .sa.so oooa .pm.so oooa .em.so oooa .pm.se coca .ea.so coca .em.se oooa H teeoeso poaooo pmummpm noaooo ponoopm hoaooo hmummmm nmaooo pommmhm homeogmamz ompcmflm mcflxomm momsonmpmz mpm>wpm mmmmsonmpmz aflandm meow eeewsewatmmm Had ewes erasem use memssto mmafi-mmaa .maamw mmHaHommm .mmeaem ameHz: .ZOHeaonmmm mepeaemmame em nee mmsommaaz so mews am moamm mmaaamonaem HHH mgmde 19 increased their warehouse capacity for frozen foods in recent years. But satisfactory data upon which a quantitive measure of these increases may be based apparently have not been collected. Frozen Food Transportation Facilities Along with increases in freezer storage Space have also occurred increases in frozen food tranSportation Space and facilities. By the end of 1955, railroad-owned refrigerated carlines had in use approximately 1,133 mechanically refrigerated cars designed specifically for transport- ing frozen foods.17 This compares with only 615 such cars in use in l95h. The carlines had an additional 1,376 mechanically refrigerated cars on order, which will bring the total number in use up to more than 2,500 cars. Besides these mechanically refrigerated cars there were approximately 32,300 heavily insulated ice-bunker and fan cars in use in transporting frozen foods. Many of these probably would not be economical or satisfactory for transporting frozen meats under adverse temperature conditions. Mechanically refrigerated cars can transport a maximum of 127,000 pounds of frozen foods at one time. They cost approximately $22,000 each. Conversion of a heavily insulated ice-bunker car to mechanical refrigeration costs about $10,000.18 Motor truck capacity for handling frozen foods also has been in- creased substantially in recent years. A survey of truck lines by Quick Frozen Foods Magazine indicated that there were 7,590 trailers in 17 Quick Frozen Foods, Vol. 18, No. 7, February l9h5, p. h26. 18 Ibid. 20 use in 1955 for hauling frozen foods. They were divided into h,875 mechanically refrigerated and 2,715 dry ice trailers. This compares with a total of 6,820 of both type in use in 19514.19 The survey also indicated that 87 per cent of the truck lines expected to handle a greater volume of frozen foods in 1956 than in 1955. The average in- crease expected was hO per cent. Recent Developments in Frozen Meats Before proceeding to compare some of the costs involved in retailing fresh and frozen meats, a brief statement as to the present position of the meat industry with respect to a shift from fresh to frozen meats seems in order. The impact of frozen meats on meat retailing is a topic of considerable interest to practically all food retailers as well as to most other firms having any interest in merchandising meat and in industries related to food retailing in general. At this particular point in time, it is obvious that the most expert management in existence in the food industry cannot foresee all the in- fluences upon meat retailing which will be exerted by frozen meats. Statements as to how fast the growth may be expected to be in retailing frozen meats within the next few years by some of the present leaders serve to point up the wide divergence of opinion held at this time. N. L. Chaplicki, Vice-President of the National Tea Company, said in November, 1955: 19 Ibid., p. I421. 21 we know that in our past experience of selling frozen meats we have already reached the figure of five per cent of total re- tail sales in one group of stores that are now selling a complete frozen meat line. Therefore, it seems to me that we can look for somewhere between 30 and 35 per cent in three years, and I believe as much as 50 per cent in five years.20 At the same time, Glenn R. Curtis, Vice-President, Independent Grocers Alliance, said: I don't think this is going to be a revolutionary change. I think it will be an orderly evolution, and we shall do well if we can get in between 12 and 15 per cent of our tonnage within the next three to five years.21 Meat packing company Spokesmen have also Shown a considerable dif- ference of opinion as to the prospective rapidity of growth of frozen meats. Speaking on the program with the two retail leaders quoted above, Paul A. Goeser, Head of Fresh Meats Division of Swift and Company's Research Department, expressed the opinion that frozen meat volume would not exceed 15 or 20 per cent of total meat sales within the next five 22 years. D. B. Love, General Manager of the Frosted Meats Division of Armour and Company, predicted that the proportion of all meats which are 23 sold in frozen form may reach 15 per cent within five years. Leonard I. Berkowitz, General Manager of the Frozen Fresh Meat Division of the L. B. Darling Packing Company, at the same time was more optimistic as to the development of frozen meats. He predicted that within five years 24 30 to 35 per cent of total meat sales would be in frozen meats. 20 The National Provisioner, Vol. 133, No. 22, November 1955, p. 183. 21 Ibid. 22‘—“‘ Ibid. 23 Ibid. 24 Ibid. 22 These few predictions, although possibly not representative of all the leaders who have made public predictions about the future of frozen meats, at least indicate how greatly different opinions can be about such important changes as those which frozen meats may bring to food retailing. Perhaps it is worth noting here that if volume in frozen meats reaches only the lowest percentages predicted by these leaders in the next five years, this will represent a substantial change in meat retailing. Alert meat retailers no doubt will follow frozen meat develop- ments very closely, even if changes are made rather Slowly. Perhaps it may be said that frozen meats are following a pattern set by other frozen foods in that substantial growth is found in institu- tional use before retail distribution becomes important. Carlton found institutional packs of fruits and vegetables in use in 1935 to a much greater degree than were retail units of these foods.25 Among an esti- mated 100 firms which were producing frozen meats in late 1955, Wesley Hardenbergh, President of American Meat Institute, said, "the leading item probably is portion-control, frozen meat cuts prepared especially for the institutional trade. A number of hotel and restaurant purveyors have entered this field, and some are finding it possible to tap a part of the retail trade where very high quality, but relatively expensive 26 cuts, are demanded." 25 . H. Carlton, pp, 333., pp. 6, 7. 26 'W. Hardenbergh, "Frozen Meats and Vacuum Packaging--Where Do We Stand?" Address at Twenty-Second Annual Meeting, National Association of Food Chains, Chicago, Illinois, November, 1955. CHAPTER III PROCEDURES USED FOR COMPARING COSTS BETWEEN RETAILING FRESH MEATS AND FROZEN MEATS Some Economic Questions "Will it pay?" is one of the most important questions to be answered relative to any change in methods of operating a business. Unless the answer to this question is affirmative, most other questions which could be raised and their answers fade into insignificance. There are two important economic questions involved in the determin- ation of whether or not a change will pay. They are "What will be the additional costs of making the change and what additional returns can be expected from it?" Food retailers need reasonably good answers to these questions before deciding whether or not to Shift to frozen meats and how rapidly they should make this change. Many other questions also can be raised about frozen meats for which retailers will want answers. How well conSumerS will like frozen meats, the effects of selling frozen meats on releasing management for greater merchandising efforts, and the relative advantages in changing to frozen meats before most competitors do are typical of these questions. Answers to some questions such as these must await future developments. Perhaps other studies will soon reveal answers to some of them. This study has attempted to measure only the economic impact on costs of retailing fresh meats as compared with costs of retailing frozen meats. Even here, all costs were not considered. Only costs associated with labor, equipment, 2h Space, and wrapping supplies used in retail meat departments have been studied. Answers to other cost questions as well as to questions dealing with many other phases of meat retailing which will influence shifts to more frozen meats are left to further research. Even such factors as whether or not total meat sales volume is likely to change were not brought into this study. It was assumed, rather, that total volume would remain constant in order that comparisons drawn here could be more precise. Since comparisons are based on averages of rather wide ranges of sale volumes, information in this report must be adjusted to each individual retail Operation on the basis of its relationships to the averages, and on the basis of present and prOSpective sales. Comparisons Based on Degree of Change to Frozen Meats It would be impractical in such a study as this to compare costs associated with factors under consideration on the basis of a11- conceivable combinations of fresh and frozen meats. For purposes of this study, it was assumed that some retailers may want to sell 25 per cent of all the meats they handle in frozen form, others 50 per cent, and still others 75 per cent. Data from the Michigan State University Consumer Panel indicate that only about 75 per cent of all the meats sold in the average retail meat department are meats which would likely 1 be frozen if 100 per cent of the red meat items were frozen. This takes 1H. M. Riley, Some Measurements of Consumer Demand for Meats, un- published Ph. D. Thesis, Michigan State College, 195E, pp. 82, 120, 156. (Also see L. Milkovic, "Best Selling and Most Profitable Meat Cuts," Progressive Grocer, Vol. 3h, No. 11, November, 1956, pp. 57-67.) 25 into account the smoked, cured, and otherwise processed meats which at present are seldom frozen. About 60 per cent of the pork and all the luncheon meats and smoked sausages would thus be excluded from the items which normally are not frozen at the present time. They make up about 25 per cent of all meat items in the Medium and Large Stores group of this study and about 35 per cent of the meat items sold by the Small Store group.2 (Table IV) The assumption that some retailers may sell 25 per cent of all their meats in the frozen form is tantamount to the assumption that they would sell 33 per cent of their red meats in the frozen form. If it is assumed that some retailers will sell 50 per cent of their total volume of meats as frozen meats, it also is assumed that this would represent 67 per cent of their red meats. If retailers sell 75 per cent of all their meats as frozen meats, this would be the same as 100 per cent of their red meats. As was pointed out above, the average retailer in the Small Stores group of this study could sell 100 per cent of all red meats as frozen meats by selling 65 per cent of his total volume in the frozen form.3 With this exception noted, the analysis here has been made on the original 2 North Central Livestock Marketing Research Committee, Retailing Meat in the North Central States, Station Bulletin No. 622, Agr. Exp. Sta., Purdue University, Lafayette, Indiana, 1955. 3This value is derived by subtracting the 35 per cent of total volume which would not be frozen from 100 per cent of the total meat sales (Table IV). In this case 25 per cent of total sales is equivalent to 38 per cent of red meat sales and 50 per cent of total is equivalent to 77 per cent of red meats. 26 .m «m .mgxwmmma ammmflneH «oppohmwmg whoflmpo>fldb mooosm «Goapmpm meEmemxm Headpadoflpm< amwo sflpoaadm GOHpmpm “mopmpm Hmapnoo £9902 one SH memos mmwfiflmpom «ooppflEEoo gopmomom wqflpoxpmm xoopmo>flg Hmppcoo appoz b “meadow .mm>o$on «on has ommmsmm smog snowy 680m .comoam an op oopoomko mam moans mpmme SH poodaoCH mH owwmomm smog smopm no: mwmmsmm omonm ponpflmzn “mma .oNa .Nw .aa .smma .eweaaoo opwpm :mmfleoflz «Amflmmne .Q .sm oosmflaosmcbv «memos pom pdmsoq1Wosdmcoo mo memEowdmon oEom «moaflm .2 .mm . .Hm >0 ma.em 66.0H mm.ea oo.ooa aH.H ao.m se.a 68.0H cm.am ms.a ce.m No.6s use oom.maa-ooo.ma . wees em.am we.aa wm.ma oo.ooa mm.a mm.e Hm.m we.aa em.mm ma.a ww.m mm.®: amm.sa-ooo.aa ED HQHS Sm.em ao.SH mq.aa oo.ooa mH.H mo.m am.a mo.~a ma.mm :4. 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AmpSSomv AmoSSoQM 11111 smetm HHS Smopm poSm mpmoz mmSH>mm oo>mm pSoSOQEoo pSoSomSoo HHS mam S033 SSom pSmo Sam mSSom Hmpoa Souopm SmOSm mpmmZVSmSB usz Sod mmmHmm mNHm mpopm oSmNOSm ohm mpmom SopmH mo omHosz ppm: 1 1-16.1.2 SS 8.118. meme was to 8878p messes Memeuammwsl ZMNofim 9230 mmm Om :HHB QHmSmEOD mS ZhNQmm mmS WHSHS OZ 2mm3 mHmOHm HHSamm 2H mBSHS UZHHQZS: mom mazpzflmedmx momSH mIHHH> MHmSB ho .mH .NH .SS .AmaH .eseHeeH .ceecaepea .aeHmscSHse tsessm .scpeepm eseeasmawm HetspHscHtaa .mmc sHchHsm coppepm xhlllII-II. ' '8' amopmpm HmSpSmo SpSoz esp SH mpmmz vSHHHmpom AooppHEEoo Sommmmmm mSHpmxsz xoopmo>HH HmSpSmo Sppoz “meadow .pwop SH SOHpmSdeKo mom .SSOSISSE Sod omHoSmS mp_Swo mpmoE Sowopm mo mpSSom Smm peep wSHSSmmSo .NH .S .aesem Heseeco assess .HH> memB Sopm popmmom SOHmeSomSHm Sobo SSS He o.omH ¥ o.aHH N.Hs m.ap eon mo.ms cmoan oom.NHa1ooo.ma momSH me «.06 s.mm a.m m.mm NOH So.om Hmo.m mam.sa1ooo.Ha . EDHQME ow N.mm m.mH m.m m.OH m: mm.wH QHN mmmmuommm Seep mmmH HHSEm 11111 11111111111 111 11. NneSSomv Amwmdomq1 Smopm HHS SmoSm beam mpmoz mmSHsmm pmbmm pSmSodSoo pSoSanoo HHS mum Son: SSom 1mmwminm mSSom Hmpoe Somoam Smopm mpmmz.SoS3 1SS2 pom mmOHmm mNHm opopm 11. oSoNomm1mmm mpmo: SopmH mo SOHeSmm pmmz l 111211.118 281mm me marketed. abmwfiwmsr AIMSWMF 88s senses 1 11 111 ii‘l" .Ii‘l' ZMNOSm Bzmo mam mw mBHB Qmmszoo mS Emmomm mmS mHsz oz ZHSE mmzoem HHSBmm 2H mBSwE UZHHQZSm mom meszHmeamm momSH DIHHH> mquH "' r'V-Ii'i "'1' -"II‘ '"j' 1L 3"." - .- . _ _ am‘a"~ iii "'1 "' V "I—v A1 338 to 189 for the Small Stores group, from.$107 to $253 for the Medium 5 Stores group, and from $h75 to $6h3 for the Large Stores group. Trends in wage Rates Attention is called here to the fact that all the labor costs dis- cussed above are based on studies made in 1950, 1952, and 1953.6 wages have increased substantially since then. One food chain in the Detroit area was paying $0.99 Per hour for clerk wrappers in its meat department at the end of l9b9. At the end of 1955 wages for comparable employees was $l.h7 per hour, or a h8 per cent increase (Table IX). For a butcher in this chain at the end of l9h9, hourly wages were $1.26. At the end of 1955 they were $1.7h, or a 38 per cent increase. Meat cutters at the end of l9h9 were earning $1.h9 per hour and at the end of 1955 their hourly wage was $1.97, an increase of 32 per cent. Meat department managers for this chain were paid at the rate of 38h per week at the end of 19h9 and $128 per week at the end of 1955, a 52 per cent increase. Table IX also compares 1955 wage and salary rates for meat department personnel with 1953 rates for this same chain. Effects of Frozen Meats on Labor Costs One of the questions for which retailers need answers in deciding if it will pay to sell more frozen meats is, “How will a change to selling more frozen meats affect my labor bill?" 5 North Central Livestock Marketing Research Committee, 0 . cit., p. 13 and unpublished data from the North Central study. 6 I The three-city study by Farstad and Brensike was made in 1950, the Iowa-Illinois study by Wiegmann pp pl., in 1952, and the North Central Study in 1953. A2 .SmmHSOHz npHOSpom «mopopm m_monHS3 Eopw ooSprpo SOHmeSoHSH nooSSom am me we SJ.H as.H om.H cm.H mH.H NH.H mm. :m. mm. Smppdo pwoz soroesm Sodmmpz xpmHo .mOE 0 .moE 0 pew one emH pea meapseem am am SNH mHH sHH OOH om.mm mm 1 1 1 1 1 1 1 1 1 1 1 1 1 1 mSmHHom11aSmem hHsomB 1 1 1 mH mm Sm.H mm.H :m.H SS.H m©.H Hp.H mH mm SS.H S0.H ow.H Hm.H ::.H Sm.H mH m: NJ.H NS.H Sm.H :m.H mH.H SH.H mmmH mmmH 11. .11111. .1 .oS p .02 p pmmH pmmH .woS p .moE p .moe 0 .mos p “Eopm mmmH USN SSH 1mmHIWSm wSHpSmpm SSm1wSm. pmH SSH mSHpSmmm. mSpSoE 1 1 1 1 1 1 1 1 1 11w H.1 1 mSmH o 110 m, omm3.hHSSom 1 me pmmH H D p r z mmmmSoSH 111111111 111 mmmpSmOSom mmmH mmmH mSmH moAOHgEm Ho make '- TI mmmH ecu .mmmH .SsmH .zaonoHa .HHomHmS .szzomrmu Hemmpeemmo Hams So mamas NH mquB h3 To provide answers to this question it is necessary to consider several factors. One of them is the relative amounts of frozen meats to total meats which will be handled. Another is the relative amounts of labor required to handle a given volume of fresh and frozen meats. Still another is the relative cost on a man-hour basis of labor needed to handle fresh meats and that needed to handle frozen meats. As was outlined earlier, an effort was made in this study to measure the impact of labor costs on retail operations which sell 25 per cent, 50 per cent, and 75 per cent of all meats in frozen form. In undertaking this budgeting operation, however, it was necessary to develop a frame of reference for use in calculating costs of handling frozen meats in retail stores similar to the analysis presented above for handling in-store fabricated fresh meats. Acceptable data for this analysis is quite limited Since frozen meats are relatively new as major retail food store items. Data on handling costs for other frozen foods in retail stores, therefore, was adapted to this present need. In a study conducted by the United States Department of Agriculture, it was found that retail stores can handle an average of from 13 to 18 cartons of frozen foods (vegetables, fruits, concentrates, etc.) per man- hour. The amount depended upon the organization established in the store for handling the various operations necessary to move the products from the unloading platform to the display case.7 Anderson believes that it is more difficult to handle frozen meats than frozen vegetables 7 D. L. Anderson and P. F. Shaffer, Improved Handling of Frozen Meats in Retail Stppes, Marketing Research Report No. 10h, ANS, USDA, washington 25, D. C., p. 19. Ah but made no estimates as to how many cartons of meats may be handled per man-hour. He has estimated that the average carton of frozen meats may contain 18 packages, weighing an average of 1.25 to 1.50 pounds each.8 Information supplied this writer by W} C. Haase of Swift and Company, indicates that the closely trimmed and boneless cuts which Swift is now selling in some markets average about two pounds each in weight. The list of items upon which this estimate is based is shown in Appendix A. Taking into account the many other packages of frozen meats which are on the market such as steakettes, chopped meats, and other items which weigh as little as eight ounces, the estimate of 1.25 to 1.50 pounds per package seems reasonable. Based on these estimates and assuming that only 80 per cent as many cartons of frozen meats as of frozen vegetables may be handled per man-hour, it may be calculated that about lO.h cartons containing 18 packages which weigh an average of 1.25 pounds each can be handled per man-hour of labor.9 This will result in a total of 23h pounds of frozen meats which may be handled per man-hour of labor. If the bulk of frozen meats reaches the retail store in packages of standard weights it will be possible for meat department employees to Estimates as to number of packages per carton and average weights were based on information contained in a letter dated June 13, 1956, to this author from Dale L. Anderson, Marketing Specialist, USDA, washington, D. 0., who collaborated in the study upon which the publication described in footnote 7 was based. 9This presupposes that the lowest of the range of number of cartons found in the study of footnote 7 is handled, and that the lowest weight of the estimated range per package prevails. (Fatigue allowances are made in the original study and are carried over to meats in the estimate that only 80 per cent as many cartons of meats as of vegetables may be handled per man-hour of labor.) AS handle a considerably greater volume in a given time period than if the packages are not uniform in weight. There was not sufficient data available at the time of this study to indicate the relative amounts which may be handled in packages of uniform and odd weights. Cost Variations Due to Types of Employees Personnel assigned various tasks relative to handling frozen meats no doubt will vary all the way from stock boy to meat department manager. Since this introduces a wide variation as to wage rates, labor costs for handling frozen meats will depend to a considerable extent upon the relative amounts of time that more costly and less costly types of labor are employed. Table X was prepared to serve as a source of reference in the analysis made here of labor costs. It Shows the labor cost per pound of frozen meat handled by workers whose wages vary from 80 cents per hour to $2.50 an hour, assuming that each worker can handle 23h pounds per hour. Labor costs for handling frozen meats by stores which sell only 25 per cent of their total volume in the frozen form may be higher on a per pound basis than for stores handling 50 per cent or 75 per cent of their total volume in frozen meats. In stores where only 25 per cent of total meat volume is frozen, regular meat department personnel likely will handle the frozen meats. At the higher percentage levels, less expensive labor may be substituted for handling more of the frozen meats. The same situation may apply generally to the different sizes of stores. Stores in the Small Stores group under consideration here will likely have a higher per pound labor cost for handling frozen meats 86 TABLE X LABOR COST PER POUND OF FROZEN MEATS HANDLED IN RETAIL FOOD STORES ”*‘uw wage Rate Labor Cost wage Rate Labor Cost wage Rate Labor Cost (é/hr.) (221b.) (A/hr.) (ézlb-) (AZhr.) _lféllb.l__ 80 .3818 180 .5982 200 .8587 90 .3886 150 .6810 210 .8978 100 .8273 160 .6837 220 .9801 110 .8700 170 .7268 230 .9829 120 .5128 180 .7692 280 1.0256 130 .5555 190 .8119 250 * 1.0683 Note: It is assumed that 238 pounds of meat can be handled per man-hour. since relatively higher priced labor may be all that is available in the stores. In stores handling larger volumes of meats, there may be more labor available which is paid a lower wage and which can handle the various jobs of receiving, price marking, and displaying frozen meats. Comparison of Labor Costs for Fresh and Frozen Meats Comparisons can now be made of labor needs in the average store of each of the three size groups of this study and at the three levels of change-over to frozen meats. For the average of the Small Stores group, 9.7 hours labor per week can be saved by handling 25 per cent of total 10 meat department volume as frozen meats. (Table VIII-A) This 9.7 10 Volume measured in pounds of meats sold. 87 man-hour or 23 per cent saving may be calculated by first determining how much of the h2 man-hours of labor needed to handle the 716 pounds of fresh meats sold weekly in the average of the Small Stores group will be needed to handle 75 per cent of the volume in fresh form and 25 per cent in frozen form. As shown in Table VIII-A, 31.5 man-hours of labor is all that will be needed to handle the 537 pounds (75 per cent of 716) in fresh meats if 25 per cent of the meats are frozen. t 0.8 man-hour will be required to handle the 179 pounds of frozen meats (25 per cent of 716). This makes a total of 32.3 man-hours needed for handling the combination of 75 per cent fresh meats and 25 per cent frozen meats. This is roughly 77 per cent of the 82 hours needed when all meats were fresh,or a saving of 23 per cent. Similar calculations can be made for each of the three sizes of stores represented by the averages of the Small, Medium, and Large Stores groups of this study and on the basis of 25, 50, and 75 Per cent of total meat volume in frozen meats. The results of such calculations are shown in Tables VIII-A, VIII-B, and VIII—C. The reader's attention is directed to these tables for a comparison of the number of man—hours needed and the savings possible under eaph combination of store size and relative amount of total meat volume/TSLTH frozen form. Assuming further that the savings in man—hours of labor as outlined above may be realized, how much does this mean in reducing costs? Again, this depends upon how much difference there will be in the rate of wages paid for labor which will handle frozen meats as compared with the wage rates for fresh meat personnel. If, for instance, the 9.7 man-hours which may be saved by the average in the Small Stores group through a 88 shift to 25 per cent frozen meats results in less use of a wrapper which is paid $1.h7 per hour, the savings could be $18.26 per week in labor costs. On the other hand, if the 9.7 man-hours saved mean that much less time for a meat cutter who gets $1.97 per hour, the cost savings would amount to $19.11 per week. For a Large Store selling 50 per cent of its total volume in frozen meats, weekly savings of 126.7 man-hours could vary from $186.25 in the case of the wrapper whose wage is $1.h7 per hour to $289.60 for the journeyman at $1.97 per hour. At the extreme, the average in the Large Stores group which has changed over to 75 per cent frozen meats and has dispensed with all its most expensive meat personnel, might save as much as $350 per week on its meat department labor bill. This would assume that about 119 man- hours (see Table VIII-C) per week would suffice to handle all the meats sold in the store. It would further assume that no meat preparation would be done in the store. CHAPTER V EFFECTS OF FROZEN MEATS ON EQUIPMENT COSTS Equipment Commonly Used in Meat Departments Due to a high degree of perishability in fresh meats and the amount of processing needed to convert wholesale cuts and carcass meats into retail units, equipment necessary in modern meat departments represents a relatively large investment and accounts for a sizeable weekly cost. In the Iowa-Illinois study by Wiegmann pp p1., computed equipment costs accounted for almost seven per cent of total meat retailing costs.l Equipment for handling meat in retail stores may be categorized as: (1) preparation equipment, (2) storage facilities, and (3) display cases. Various studies have indicated that most meat departments use about the same kinds of equipment with the exception of power saws and walk-in 2 coolers. However, large and small stores do not use the same amount or sizes of the various items.3 In the North Central States study it was found that only 27.8 per cent of the retailers in the Small Stores group (as described in Chapter III) used band saws, whereas 100 per cent of the Large Stores group used band saws. In the Small Stores group, 90.9 per cent of the retailers had mechanical meat slicers as compared with 100 per cent of the Large 1 '—I Wiegmann, pp p1,, _p, cit., pp. 259, 261. 2 Farstad and Brensike, _p, cit., p. 16. 3 I North Central Livestock Marketing Research Committee, p. Cit., p. 18. 89 50 Stores group. A rather complete comparison of the equipment used in the three groups of stores into which this present study is divided is shown in Table XI. TABLE XI PER CENT OF STORES HAVING VARIOUS ITEMS OF EQUIPMENT IN RETAIL MEAT DEPARTMENTS, NORTH CENTRAL STATES, MAY, 1953 Store Size Meat Meat Band Mechanical Meat Grinder Slicer SaW' fiMpat Cuber Cooler SMALL STORES Less than.$250-$999 88.h 90.9 27.8 58.8 67.1 mum STORE 381,000-811,999 99.8 97.3 77.9 91.7 96.8 LARGE STORES $5,000-$12,500 and over 100.0 100.0 100.0 97.0 100.0 Source: North Central Livestock Marketing Research Committee, Retailing Meat in the North Central States, Station Bulletin 622, Purdue University, Lafayette, Indiana, 1955, pp. 18-15. Equipment Investment In 23 self-service markets in Iowa and Illinois, Wiegmann ppppl. found that display equipment4 accounted for 62 per cent of total equip- ment investment. Coolers accounted for 22 per cent of the investment, and preparation equipment the other 16 per cent in these self—service stores. These percentages applied uniformly to self—service markets of all Sizes ranging from weekly meat sales of #500 to $7,000. 4 See Appendix C for an explanation of equipment investment. 51 Such uniformity in percentage composition of total equipment in- vestment was not found in 26 service markets ranging in Size from weekly meat sales of‘95OO to $11,750. For very low volume service stores, coolers accounted for roughly the same percentage of the total investment as did display cases. This was due to relatively less linear footage in display cases and less expensive cases than was found in self-service markets of comparable sizes. Some over-capacity in coolers in some small service markets also contributed to the high proportion of the total investment in coolers. For low volume stores, coolers and display cases each accounted for roughly 80 per cent of total investment, and preparation equipment accounted for about 20 per cent. In service markets with progressively larger weekly meat sales, the proportions of total equipment investment in each of the three components more nearly approximated the proportions found in selfjservice stores. For use in this study, equipment investment found in the.Iowa- Illinois study were adjusted to amounts applicable to each of the size groups used. This was done by deriving an average of equipment invest- ments for stores in the Iowa-Illinois study which, by weekly meat sales volume, would be classified in each of the size groups used in this study. Then by converting this_average investment for each size group to an investment-per-dollar—of-sales factor, it was possible to relate it to the particular sales volume represented by each size group in this study. ' One example as to how this was done will enable the reader better to understand the procedure used. There were three service stores in \ 52 the Iowa-Illinois study which had a meat sales volume of less than' $1,000.5 This placed them within the range covered by the Small Stores group of this study. ‘Weekly meat sales in these three stores averaged $517 and average equipment investment was flh,200. Equipment investment per dollar of meat sales averaged $8.12 (h,200 divided by 517) for these stores. Using 8.12 as a factor and multiplying it by $h00, the average weekly sales volume of the Small Stores group of this study, equipment investment for the average of this group would be $3,2h8 (Table XII). By similar calculations, it was found that equipment investment ‘ for the average at the Medium Stores group of this study was $6,783, and for the average of the Large Stores group it was $17,360. (See Table XII) Equipment Costs In the Iowa-Illinois study an attempt was made also to allocate costs of meat department equipment on a weekly basis. (See Appendix C for an explanation of equipment costs). This data adjusted so as to apply to the Small, Medium and Large Stores in this study. Based on the volume (3f sales and estimated weekly equipment costs in the three stores included in the Iowa-Illinois study, which measured by their sales volumes, fall within the Small Stores group of this study, average equipment cost per dollar of meat sales per week amounts to $0.01876. SWiegmann,.gt.§l.,‘gp.‘git., p. 261. (Two self-service stores with meat sales of’fi500 and $950 respectively were not included in these averages to avoid the complication which would arise in later analysis of costs due to a variation in percentage breakdown of total equipment 'into its component parts). 53 .Hom .m .mmmH .mon mms< mmeHoo spasm mROH Co.HHdpm PCmEHCmQHm HmuCpHCo.HCm4 NNJICHCQHHCm Comwommm mpCmEHCmomm Ham; HHmpmm CH mUngo: oOH>ComumHom pCm mOH>hqm Ho! mpmoo «o COmHCmmEoo pCmCmoCm .o pr aCopHHHo .m .m nCCmEsoHS .m .m .0 oQ «mmmfi amCmHCCH HoppoHdeH «kHHmCm>HCD msfipdm flCOHHmpm pCmEHComxm HmCCHHCOHHmC ammo CHpmHHCm COHpmpm ‘I’ni‘ i. mopmpm HprCoo Cptoz ope CH pmm 3a7wCHHHmpmm hmeLHEEoo Cohmmmmm mCHpmewz xoopmm>HH HmeCmo Cppoz ”mochdom .hwdpm HmeCmo Cppoz cCH Comm mmmmthp .CopmmCo mHCp «m mpoCHoom mom .CcUCHoCH PoC mam: msoam mmhopm HHmEm 0C9 CH mmmopm m0H>homnHHmm 035 .mpspm mHCp Ho mmsohw mNHm me CHCsz HHmH COHCS hpCpm mHoCHHHHIQBOH CH monopmm t! {E I." ||||||P Cm>o CCm oem.HH ooo.w HH.N Hme.mH moN.H a oom.NHa-ooo.ma momCH mHCBnCH mmhopm HmeoQ Com pCmEpmmbCH wmmpopm ommCe pCmEQHCqm Ho mmHmm pmcz pCoEpmo>CH pCmEQHCqm mo mmem pwo: mmopopm Hmpoe pmamswpd memmB mmwpm>< pCoEmHCqm mmwpmbfl thomz mwmpmba Ho Confidz muHm whopm Amv.nx q1¢ramv ;v..u Haw m Amy .bwv mmmH .mmeaem CzH HzmzmHeam mmeaaHHmm HHN mHmde Sh This figure is obtained by dividing the average estimated weekly equipment cost for the group of stores in the Iowa-Illinois study, which fall within the Small Stores group of this study, by the average sales volume in dollars of the same group of stores. A comparable figure for the 37 stores in the Iowa-Illinois study which fall within the size range of the Medium Stores group of this study is $0.00873 per collar of meat sales per week. For seven stores of the Iowa-Illinois study which have meat sales volumes that place them in the Large Stores group of this study, the equipment cost per dollar of meat sales per week is $0.00502. (Table XIII). Based on equipment costs on a per-dollar-sales basis from the Iowa- Illinois study, weekly equipment costs for the average of the stores in each of the three groups of this study were estimated. For the Small Stores group with average sales of 9h00 per week, equipment costs would be $7.50 (hOO x 0.01876). The average weekly equipment cost for the Medium Stores group, through similar calculations, would be $16.59, and for the Large Stores group, $h0.l6. (Table XIII) Since equipment costs are another type of costs which will be affected by shifts from meats prepared in retail stores to frozen meats that may occur in some retail meat departments, an analysis was made as to the possible impact of such shifts on equipment costs. Here, these costs were studied by groups of equipment. .FD f2 .Hom .m Mnan «mon .mmsd qmmoHHou opwpm CCOH fiCOHCSm CCQCHCQQHC HCCCBHCQHCU C mm: CHCmHHCm CoCmmmmmC nm+CoCCCmCmQ pm9C HHmpmm CH moonpm '5‘!" moH>CmmuHHmm UCw moHCCmm Ho mpmou Ho ComHCammqo pCmCCmCm .0 CCC nCOPHHHU .m .m nCCwsmon .m .H F. 00 0Q hmmmH aowHdCH .mHHmHmHmH nHpHmCmCCHC: mCdCCm «COHHmCm CCmEHComHa HmCCHHCOHCmC nmmw CHpmHHCm CoHpmpm “mopmpm HmeCmo CHCoz 6C8 CH pwo: wCHHHmH om «mmpHHEEoo Conmmm: mCHpmemE HoopmmbHH HmeCoo CHCoz CmmOCCow .HUCCm HprCou CpCoz 6C9 EOCH mmem>¢Q .CmpmmCo mHCH «m mpoCHOOH 0mm .CoCCHoCH poC mCmS QCOCm mmCopm HHmEm me CH mmCopm oOH>ComzmHmm 03H .mpdpm wHCp Ho mQCOCm mNHm 6C9 CHCCHB HHmH COHCS AUCpm mHoCHHHHICSOH CH mmCopmw Cmbo UCm 6H.os coo.m Homoo.o HH.QH moN.H H oom.mHa-ooo.ma mcm< pCmEQHdvm Hmemz mmeo>< mmem>< Ho CmQECz . how E1 E 3 E E ‘il mmmH «mme¢em HmC mommo mCCCmCoCCoC HCECoC moCHm poms mH m©.H Ho CopomH Co .3H .m ahpspm mopwpm HmeCoo CpCozC .mH .C ampspm mmpmpm HmeCmo CpComm mam 0.0m o.moH H46 HON 0%.? e93 a. HH w . 3H 0 . m: H. 8 SH 50. m E52 H. H m. H ,6. Hm m. HH am 3H 3% Apmow AMWmHV 1|!a1l Npmmmq INmUCmmmv xlI AmpCCqu mGoH 3. 486333.38 . .583 e882 e982 OASH x m .33? HS u H .88 3mm C0 pooC afiemmz ammo omooCCm omwo CmNOCh pmwmmz ammo pmpmmz mmwo CwoCHH Com CHom eHom Cams omHm mCopm uHmCm Ho CmeoH Co CCmCmH Ho poem oHCCo Ho CmemH pmmz mo mCCCom Ho mpCCom I i.‘.l He ILC..H| He II! llli held}; .18 16 xii... mBsz Zamoxh Q24 mmamh oszHQzN mqua 63 Display Equipment Costs Frozen food diSplay cases cost more than "normal-temperature"14 cases per linear foot, installed. But as was pointed out above they have greater cubic capacity per linear foot than normal temperature cases. Based on prices quoted by refrigeration equipment dealers in Lansing and Grand Rapids, Michigan (see footnote 8), one l2~foot normal temperature case installed will cost an average of about $l,h00. This amounts-to a cost of $118 per linear foot and about $73 per cubic foot of display capacity. For a 12-foot frozen food case installed the price averages about $1,950 which is about $163 per linear foot and $57 per cubic foot of display Space (see Table XVI). Dual-purpose cases which can be used for either normal temperature display or for frozen meats, if installed with sufficient compressor capacity to handle frozen meats, cost approximately the same as regular frozen food cases. The capacity of dual-purpose cases on a cubic footage basis is slightly more than that for the average of frozen food cases. The installation cost on a cubic footage basis, therefore, is slightly less for the dual-purpose case than for the frozen meat case, and a great deal less than for the normal-temperature case. It would seem from the above comparisons that retailers may be able to change to frozen meats with little or no added cost in new display equipment, provided they do not shift faster than their needs for installing new cases develOp and they are not forced to abandon normal 14 . . The term "normal temperature" is used in this discu851on to describe meat diSplay cases 05 the self-service type designed for hold- ing temperatures at around 36 F. temperature cases before they have given a normal period of service to the store. Actually some less diSplay Space may be required if Shifts to as much as 50 or 75 per cent frozen meats are made since more cubic capacity per linear foot is provided in frozen meat cases than in normal temperature cases. Further study needs to be done on this subject. At least at the present time this writer is not acquainted with any data which have been collected that would provide a very meaningful basis for an estimate as to the ratio of frozen meat space to fresh meat space which will be needed if considerable shifts are made to frozen meats. As was pointed out above there appears to be little reason for retailers to expect added long-run costs in meat departments due to dis- play case needs which may be created by Shifts to frozen meats. For short-run and intermediateerun decision making, however, the matter of display case costs may be considerably different in nature from the long- run considerations. In a store such as the average of the Small Stores group of this present study, for instance, 13.3 linear feet of display case is needed (Table XV). Since cases are rather large discrete units, it is difficult to provide exact display space needs. Some items such as luncheon meats, Sliced and packaged bacon, and some sausages may be displayed in a "dairy" case or even in a case devoted chiefly to fresh - fruits and vegetables in order to relieve pressure on limited meat diS- play space. But if all other departments have heavy demands upon the refrigerated cases alloted to them, it may not be easy to shift a portion of the meat load 'to their facilities. TABLE XVI COSTS OF DISPLAY CASES FOR FRESH AND FROZEN MEATS ON BASIS OF BOTH LENGTH AND CUBIC CAPACITY, MICHIGAN, 1956 Cubic Capacity Installed Costs Type of Case Total Per Total Per Ft. Per Linear Ft. Cubic Ft. (cu.ft.) (cu.ft.) (dollars) (dollars) (dollars)_ l2-foot normal- temperature l9.h5 1.62 l,hlh 118 73 l2-foot frozen food 3h.50 2.88 1,953 163 57 l2-foot dual- purpose 36.72 3.06 2,000 167 5h 8-foot normal— temperature 11.50 l.hh 1,13h lh2 99 8-foot frozen food , 25.60 3.20 1.675 209 65 8-foot dual- purpose 2h.h8 3.06 1,675 209 68 Source: Refrigeration Equipment Dealers in Grand Rapids and Lansing, Michigan. With a multiplicity of sizes of frozen food cases on the market, however, if retailers shift to more frozen meats, cases of whatever Sizes that are needed may be added. Though many objections may be raised against displaying frozen meats in facilities used jointly by other departments in the store, actually this is a common practice in smaller retail stores. To a large extent it is dictated by the needs for handling a wide variety of foods and the fact that display cases 66 represent sizeable outlays, even if purchased in the smallest units available. It is obvious from the foregoing that various means may be employed by retailers in fitting their display equipment to the needs which may develop if substantial shifts are made from in-store preparation of meats to more frozen meats. Only limited data are available relating to costs of cases in sizes other than l2-foot normal-temperature, frozen food, and dual-purpose cases. In the lower part of Table XVI some com- parisons are made for 8—foot cases of each type. It will be observed that costs per linear foot or cubic foot for the smaller cases are higher than they are for the l2-foot cases. Information from refrigeration equipment dealers also indicates that costs per unit of display space run considerably lower on installation in multiples of l2-foot cases than the figures in Table XVI indicate. Differences normally are in about the order of 90 per cent as much as the one l2-foot case installa- tion when two lZ—foot cases are installed, and about 87 per cent as much if as many as four l2-foot cases are installed. Such factors as the joint use of display cases by two or more de- partments, as well as the wide variation in sizes and prices of frozen food cases available, renders it almost impossible to budget case needs and costs with extreme accuracy within the limitations of a study of this nature. This is especially true for small stores, and even perhaps, larger stores which shift to frozen meats by an amount as small as 25 15 ' . Estimates based on information from refrigeration dealers mentioned in footnote 8. 67 per cent. Retailers who shift to frozen meats by as much as 50 per cent may find it desirable to make considerable adjustments in diSplay case investment. They may need to replace some normal-temperature meat cases with frozen meat cases. If they do, information discussed in the earlier parts of this section (and illustrated by Tables XV and XVI) may be useful in budgeting the display case needs for the particular store under consideration. Storage Facilities Coolers accounted for 22 per cent of total equipment investment for meats in self-service stores and as much as hO per cent in some service 16 stores studied by Wiegmann‘gt_al, Over three-fourths of all stores in the North Central States study had meat coolers.17 Even in the Small Stores group of this study over two-thirds had coolers.18 (Table XI) In addition to coolers, storage space also is provided in the lower portions of some display cases.19 No measurement of this space nor cost relationships for it has been reported in any of the publications on meat retailing costs which have come to the attention of this writer. Such use of space accounts, in part, for the fact that almost one—third of the retailers in the Small Store group of this study did not have 20 cooler space. 16 Wiegmann gt al., 22. 213., pp. 255, 256. 17 North Central Livestock Marketing Research Committee, gp, cit. p. 15. 18 Ibid. 19 Ibi_d_., p. 114. 26_" , Ibid., pp. lh-lb. 68 In the North Central study, the average space in coolers reported for stores which had coolers in the Small Stores group was 58.6 square feet, in the Medium Stores Group 107.6 square feet, and in the Large Stores group 2hh.1 square feet.21 Wiegmann'ep‘gl. found more cooler space than was needed in many service markets, especially the smaller ones.22 Part of this was because some of the service markets had pur- chased second-hand coolers which had not been built with the needs of the particular market in view. Through careful planning, cooler space usually can be varied to fit the actual needs of the store. Many cooler manufacturers pre-fabricate coolers in various standardized dimensions. Others fabricate coolers to order and can make them in various desired sizes. Compressor units are not as divisable into Specified sizes as is cooler space. 'Within rather broad limits, total cooler investments can be more or less tailored to the needs through the variations which are possible in the insulated space, the size of refrigeration units, and by purchasing used equipment. All these variations may be found expedient as retailers face into the uncertain possibilities of shifting more and more to frozen meats. They may be able to move one step at a time by investing in only the absolutely essential storage capacity, pending further directions which time and changing merchandising practices may dictate to them. Balanced against some reductions in normal—temperature cooler space investment, if retailers shift to more frozen meats, would be the need 21 Ibid., p. 15, Table 23. 22 ,, Wiegmann.§t_al,, _p, cit., p. 255. 69 for frozen-meat storage Space. Needs for this type of space will depend ’ upon at least two important factors: (1) how often deliveries can be made to the store, and (2) the kind and amount of display equipment used. More detailed studies than any which have come to this writer's attention will be necessary before very accurate measurements can be made of the effects of either of these factors. It is obvious that less storage Space will be necessary in retail stores which may call for deliveries of frozen meats at any time they are needed or which receive deliveries several times a week than for stores in more isolated areas where deliveries are less frequent. The exact nature of the relationship of frequent deliveries to necessary added costs.in frozen meats is un- certain at this time. AS has been pointed out earlier in this Chapter, frozen food display equipment has a much greater capacity per linear foot than has normal temperature display equipment. It may be safe to assume that some re— tailers will depend to some extent upon this extra Space for "storage- while-on-display." It probably would be impractical at the present time to estimate even approximately the extent to which this may be done Since relatively few retailers have added sufficient quantities of frozen meats to permit the measurement of such use of Space. Simply recognizing that such combinations 0f resource use are possible and need to be studied carefully by any retailer who is striving to keep abreast of the most profitable growth factors in his industry may be sufficient at this time. The attention of the reader is directed to Chapter VI and to Appendix A for other information about frozen meat storage space needs. 70 Values of Cooler Investments Based on stores surveyed by Wiegmann gt g1. in the Iowa-Illinois study, average cooler investment varied from about 931,299.?3 for the Small Stores group to $3,819 for the Large Stores group, with the Medium Stores group averaging $1,h92. (Table XVII) Since only about 75 per cent of all meats are likely to be frozen even if retailers sell their red meats only in frozen form, some normal- temperature storage Space will be needed in stores that change to frozen meats to the greatest extent that is probable at present. This factor was taken into consideration in budgeting storage facilities to the average of each Size group and each degree of change to frozen meats which were analyzed in this study. It was assumed that approximately 75 per cent of all fresh meats are red meats which may be frozen. The other 25 per cent, made up of smoked and otherwise processed meats, presumably will not be frozen. This, in effect, separates storage need into two distinct categories. Perhaps it is not completely accurate to divide the facilities on the basis of 75 per cent needed for red meats and 25 per cent for other meats. Actually, red meats when handled in fresh form may require proportionately greater amountsof storage space than do the other meats. But since no data were available upon which to base a more accurate estimate, it was assumed that storage facilities can be allocated on the basis of 75 per cent to red meats and 25 per cent to other meats. guThese averages are proportions of the adjusted total equipment investment derived in Table XII. For the Small Stores group, coolers represent hO per cent of total investment. For the Medium and.Large Store groups, coolers represent 22 per cent of total investment. This difference is explained in the text. Also see footnote 5, this chapter. 71 00 CAM “mmmnfl -.- II .nnsa .aSOH “amae .mm mHHoo opmpm l1! -lll'll'l'l mBOH nCOHpmom smmEHmmaHfl HmmdeSSHmw¢ mm: mem-HHdm Lommowom choEpmeoa Pmo S; IHHmpor‘ CH mpogpmi ‘IIL mOH>momI HHmm one 06H>mcm Ho memoo Ho momHMImwoo ppmsmmmm .0 one ACOPHHHQ .m .m «acmemmHE .m .m “mmoHSOm .momopm HHmEm mom Hmpop Ho pmoo mom Om mmmaopm mmth ocmw EdHooE pOH Hence Ho psmo mom cooprm o .mmmo +m HHmEm HOH Hmpop Ho Pcmo mom on monOHm mm HmH one SdHooE mom Hmpop Ho Hume mom oszmpmozeo .mmmopm HHmEm 90H Hmpop Ho Hume mom 0: mmeOHm mummH new ESHooE 90H Hmpop Ho pceo mom oszHJKHmo .HHNI OHQmB @ GESHoom mo>o new ms.@ aw.w oa.am oa.oa maa.m maw.m mma.oa own.aa oom.maa-ooo.ma mwm< meEpmo>cH HmmEmHSUm mmmmm>¢ l..l'l'l' 'Il .' liiiiII'lill-‘C'I'Ii. [I‘ll ill. I I!" Ill I I" 1| 1 mmmH :mHOHHHHH 92¢ §3OH Hm zmzem¢mma HZH Bzmzmedm HH>K HHm¢B 72 By setting aside 25 per cent of storage facilities in each store Size under consideration of this study as necessary for meats which will not be frozen, it was then possible to budget the remaining 75 per cent on the basis of the percentage change which may be made to frozen meats. In the Small Stores group of the North Central study, for instance, the average investment in storage facilities of’31,299 (Table XVII) was first divided into two categories, 25 per cent and 75 per cent. The 25 per cent category of $325 was set aside for meats which likely will not be frozen. Then the 75 per cent category of $97k was left for budgeting according to the percentage of all red meats which may be sold in frozen form. Further assuming that storage facilities can (in the long run at least), be adjusted to the needs of the store, the retailer who has meat sales near the average of the Small Stores group can dispense with 33 per cent of the $97h investment in fresh meat storage facilities or $325 by changing to 25 per cent frozen meats. If he changed to 50 per cent frozen meats he could dispense with 67 per cent or $653 worth of this category of storage facilities. If he changed to 75 per cent frozen meats he would need none of the original $97h investment in storage facilities set aside for red meats. By Similar procedure, investment savings were calculated for the Medium Stores group and the Large Stores group. This information is summarized in Table XVIII. Though sufficient data are not available upon which to base esti- mates as to the installation costs of frozen food cabinets of various 73 .mmmH aNEOH mos¢ nmm oHHoo opmpm mBOH «COHpmS m pmoEHpomau HmHSPHSoHnmd mm: choHHsm 2opmom o2 .ms.aospam m2 pmo2 HHmpoz.mH moo2pm; II" “ I.-I1i‘l"1‘l. oponomI HHom 22m mpohmm Ho mpmoo Ho ComHammaoo 2262mm2m .0 one nmopHHHo .m .2 accmEmmHB .2 .2 .0 .2 AmsmHHEH m.pponHwH «thmLo>HQD odomsm «COHpmpm onEHmommm HmpdeSOHmw2 ammo chmHHsm 202mmmo2 «mops rpm Hmmpfimo 2Hpo2 o2p 2H mpmo2 JQHHHmpo2 ooppHEEoo 202mmmo2 manoxpm2 xoopmobHH Hmtpmmo 29202 ”moomsom HHsa meaHs hobo 22m Jew.a aHa.H mam asa.w mma aHa.H oom.NHa-ooo.ma mode mHH.H ems mom aHH.H mam NHH.H mam.:a-ooo.Ha 22H222 Ham mmo Ham Ham mam mam.H HHHHIQmNa can» mama HH<2m I I I I I HIM I I LIHII I I I‘M.I I I I I mmmemo I I I I I I I I I I I I I I I I I I I.II pamo 262 mp #260 mom om Heme 2mm LAN mpmo2 cmuomm £2 mpmm2 so Noam 9H c.2m2 mam mommm2o pmoo mom mm I202 90H oUHmd mpmospmmSEH mNHm omopm 2623 mHQHmmom psoapmobcH mmHooo no mme>mm wchHmEm2 pom pcoo hem mm hoHooo I II I‘ .‘ ‘I' ' [I O .i. ii I'II 1‘ .II'LII .' 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III) I- ill I: I I mefii: szo m 09 mljz 0H HOHHmHmm :H mHm mHH d‘HHHmHmm Ho mHmoo mmeCmHm .w .> paw omHmmmm .m .mmmH «mmeocH «eHmemeH «AHHmHe>Hc: mdopsm nSOHHmHm HcmEHpemam HdeHHSOHHmd mmo QHHmHHsm SOHHmHm «mmHmHm Heme Geo q.HHoz eHH mH.mmmmg1HwHHHmHom ammHHHEEoo Hommome: mnHHmaam: AoOHmmbHH Hmchmo HHHoz “mmoHSOm .AmeHOHm mmmmH n.oH\\&om. o paw AmmHon ESHem: ..bH\uom. o nmmLOHm HHmcm mow .HH\&m. HV >pmgm >HHouomp£H «o mHmmH do Umwpmno Haemo .HHH empameo He oHpmH genes .>H mem9 809% pepcsomw .I.‘. ‘l', .7’8‘“ il.‘ llll emo.o ,o@.ee om.e on.H coo.w oNo.mH . memeq omo.o . OH.HH ao.e OH: ooa.H Hwofim 32H me @m0.0 04.0 m©.H QJN OOJ . QHN HH meHmm thmez. meHmm kamm3 I7"! ‘1‘. ‘1'... I 1 ‘II'..I‘.|II!"‘\‘ .ull $.88." [I 7‘" I .‘I. I'll mmeoam momma nee .eeHmHa .aaezm 2H ameeemo Heme aze.mezmeeeammm Heme OH mmeoemm moemm mo Boom mmaeem mum mmaem .meegoe eaaaom nee mazeom HHHOH 2H mHHHz mo mmaem Haemmz HHNN MHmHB 85 dispensed with in stores which shift to the sale of 75 per cent of their total meat volume in frozen meats. But an estimate as to how much space can be given up in the meat departments which shift only to 25 per cent or 50 per cent frozen meats is not as easily made. Storage Space needed for frozen meats will vary quite widely, depend- ing first on the size of the meat department, and also on the type of fixtures and the amounts of them installed for displaying frozen meats. This was analyzed more fully in Chapter V. How often it is practical to have deliveries of frozen meats is still another consideration in decid- ing upon how much storage space will be needed. For consideration in this chapter dealing with rent or space cost, perhaps it is enough to say that a six foot by eight foot walk-in cabinet eight feet high (inside dimensions) is sufficient Space for storage of around 10,000 pounds of frozen meats at one time.8 Since the average of the Large Stores group in this study handles only 13,020 pounds per week, this size of cooler will be adequate for storage even if deliveries are limited to once a week. DiSplay cases, of course, will serve in a dual role in that they will hold a considerable volume of meats which will relieve some pressure on storage facilities. The reader is again referred back to Chapter V for a more complete discussion of this characteristic of frozen meat display cases. Space requiredfbr51frozen food cabinet is not likely to exceed 65 square feet even in stores which require a 6' x 8' cabinet (inside 8Estimates based on information received in a letter from.w. C. Haase of Swift and Company to this author, dated April h, 1956, which is explained more fully as it relates to the space consideration of this report in Appendix A. dimensions). For stores shifting to more frozen meats, it should be comparatively easy to adjust space in the meat department to allow for this cabinet space since less Space will be needed for fresh meat preparation and storage. Since it is impractical at this time to budget display Space and shopping space adjacent to it with accuracy due to uncertainties as to exact relationships between case needs for frozen and fresh meats,9 only the non-sales Space will be affected by the space budgeting in this chapter. This will include Space devoted to meat preparation and storage. Furthermore only 75 per cent of the storage Space is likely to be affected by changes to frozen meats, as was explained in the discussion of storage facilities in the preceding chapter. This means that 25 per cent of total storage space may be set aside for the meat items which are not likely to be frozen. Total non-sales Space for the average of the stores in the Small Stores group of this study was 15h square feet (Table VI, Chapter 111). Average cooler space for the same size of stores was approximately 59 square feet.10 Subtracting 25 per cent of 59 or 15 from 15h, a total of 139 square feet remain for budgeting according to changes which may be made to frozen meats (Table XXIII). If, for instance, a retailer changes to 25 per cent frozen meats he could diSpense with 35 square feet (25 per cent of 139) Provided he could change his Space in exact 9 v See the discussion of display cases in Chapter V. 10 .' ' . North Central Livestock Marketing Research Committee, _p. Cit., p. 15 (average of all stores that had coolers). 87 .mmmH ammmHUcH anHoAmmmH anHmmm>Hmb empmsm nGOHHmHm HQmEHHmQNa HmHSHHdoHHmd ammo :HHmHH5m QOHHmHm dill-I tumHHHmHom t.“ 1.1%. New 0mm mom :mH mmH ow Heme pom we Heme Ham on all. ‘.|' me 50 m <*\ i ameHmHm Hthcoo SHHoZ msH SH Hmmm Hcmo mom mm :;ssmNn mHmmz Gomomh 0H ovum.mp¢ mmmcmso meg: mead mmHmmnst CH mmcH>mm new i i1Lei nmw qmoHHHEEoo somwommm mcHmepwE xooammbHH HmHHGeo meoz wow wow mMH Ho Fm mH Ham woa mm .Ol ”meadow wow mmm HmH 'uHmemmeHmswm:auuuuunuunnuuunnnalu memE ammonmucoz Am.Hoo - H.Hoov mchomesm How HmpmHmEmm mHHHa Hemoem OH eczema Hzao Ham ma 92H .om .mm :HHz mHmHmmom moszam moamm Hzazmmamam Hams I III," Awe HHHNM mqmde pom meHmH Hem mowmm HmHoou hmv mommm mo Hmmo hem mm mmHooo Amy emmd mmem Icoz Hcme -Hhagom puma nww pmbo paw oom.NHa -ooo.ma HQHH mma.ae -ooo.Ha aeHmHz mama-omma qmmH mmmH HHHzm mNHm oHOHm 88 proportions to his change to frozen meats. 0n the same assumption, he could give up 70 square feet of non-sales space if he changed to 50 per cent frozen meats, and would need none of the 139 square feet if he changed to 75 per cent frozen meats. Through a similar procedure, non-sales space was budgeted to the Medium and Large Store groups of this study. All these calculations are summarized in Table XXIII. Since it is likely that total meat sales will remain as high in terms of dollar volume as they are before any shift to frozen meats, these shifts in the use of floor space mean that sales per square foot devoted to meats will increase. The main significance, then, of these changes in the use of floor Space to the meat department is that the rent now charged to the non—sales area each month will not be charged against the department sales. This would amount to roughly $1.60 savings per week (25 per cent of $6.h0, as shown in Table XXII) for the average of the Small Stores group when a shift has been made to 25 per cent frozen meats, $3.20 per week at 50 per cent frozen meats, and $6.h0 per week at 75 per cent frozen meats. For the average in the Medium Stores group, the savings would amount to roughly $h.28 per week at 25 per cent change to frozen meats, $8.55 at 50 per cent frozen, and $17.10 at 75 Per cent frozen. The Large Stores group could average saving around $11.20 per week at 25 per cent frozen, $22.h0 at 50 per cent frozen, and $hh.80 per week at 75 per cent frozen. (Table XXII) 89 ittl .HHHMH mapmem mo.mo NH.N: HN.HN HNH.N Hoe emaopm puma pom ma Ho.mm em.HN mm.oH mmo.H omm goaonm.pemo Hem om mo.@H ©©.OH :m.m 3mm wwH Emmopw Hcmo pom mm meHHH :m.mm mm.mH mm.> amp mom mmuomH Hume hog mp @o.mH Ho.m No.3 No: :HH neaopm Heme mam om no.e mo.: Ho.m How He cmaopm puma peg mm HSHQBH Hm.mH am.® HH.H SH: amH amaopm ammo ham ma cm.o Om.a 0H.m OHN OH mmaopm Hsmo wag om mH.: OH.N mo.H mOH mm gamete ammo Hem mm HHHHm I. NWHHHHquqflmHSHHme Ammmflwmwu AmpmHHopv .idwmmm mmmdmmv Hoom mmmdqm nun Haw .bmm Hdv ARH Hmp. pom oo.mm Hm mHmmz cmuomm mo ch:oE< a mmHmm Ham: ammomm mpHHoem Hm; HHammz mo mmmHCmohmm cam mNHm QHOHm mmHHm mmomo mSOHmm> :HHB pm>mm mommm“ 1" I ‘l-'.i ll 1'4 I 1| it 1"; i ll lull-l meHxx mqmme 90 For store management, the main significance lies in the fact that these extra square feet can be put to other valuable uses. If, for instance, an average of 93.00 per square foot11 can be realized in added sales each week, the gross sales could be increased by approximately the following amounts, assuming that space diversion will be made in the same proportion as shifts to frozen meats occur: For the average of the Small Stores group shifting to 25 per cent frozen, gross sales could be increased $105 per week; at 50 per cent frozen, $210 per week; and at 75 per cent frozen, $h17 per week. For Medium Stores, comparable figures would be $201 per week at 25 per cent frozen, $h02 at 50 per cent frozen, and $798 at 75 per cent frozen. Weekly increases for the average of the Large Stores group would be $53h at 25 per cent frozen, $1068 at 50 per cent frozen, and $2121 at 75 per cent frozen. (Table XXIV) Net profits on this gross income, of course, would vary with the general level of net profits made in the entire operation of the food store and the particular use to which the space is put that is saved by changes to frozen meats. Calculations based on a one per cent, a two per cent, and a three per cent net are shown for each amount of extra gross sales in Table XXIV. 11 . 0 Jr-’ A total of 79 per cent of supermarkets which opened in 1955 treported sales averaging from.§2.00 to $h.00 per square foot per week. ‘Eacts About New Super Markets Qpened in 1955, Supermarket Institute, Chicago, p. 7. CHAPTER VII EFFECTS ON WRAPPING SUPPLY COSTS Paper and other meat wrapping supplies accounted for h.2 per cent of total costs in retailing meats in stores surveyed by Farstad and 1 Brensike. In the Iowa-Illinois study, Wiegmann gt al. found supply costs averaging 0.8 per cent of sales in service stores in the Small Stores group, and 1.8 per cent of sales in self-service stores of about the same size. For service stores in the Medium Stores group, supply costs averaged about 1.0 per cent of sales and in self-service stores of this group, the average was 1.5 per cent of sales. Service stores in the Large Stores group had supply costs of about 1.2 per cent of sales, and self-service stores of the same group, supply costs were about 2 1.6 per cent of sales. The average retailer in the Small Stores group of this present study had a wrapping supply cost of'$5.50, the Medium Stores group averaged $2h.h5, and the average of the Large Stores group $107.8h per week for wrapping supplies. These are averages for all stores, both service and self-service included in the Iowa-Illinois study and adjusted to the sizes of the average store in each of the three size groups in this study. This was done by converting wrapping supply costs to a per dollar of sales basis and then multiplying this factor by the average weekly sales of each of the sizes under consideration. 1 Farstad and Brensike, 2p. cit., p. 5. 2 Wiegmann gt gl., pp, cit., p. 261. 91 92 For instance, the average weekly sales volume in the stores of the Iowa—Illinois study was $621 and the average weekly supply cost was $8.5h. Dividing 8.5h by 621 gave the factor of 0.01375 (which is the same as 1.375 cents per dollar or 1.375 per cent 0f sales). BY multi— plying this factor by the average sales volume of the average of the Small Stores group, or $h00, the adjusted weekly supply cost of $5.50 for the average of the Small Store group was obtained. Similar calculations were used to develop the same kind of inform- ation for each of the other groups of stores. The results of all these calculations are summarized in Table XXV. Though there is quite a wide variation in the amount of wrapping supplies used by retailers with approximately the same sales volume, it Should be possible for most retailers to reduce wrapping supply cost in almost exact proportion to reduction in the amounts of meats which are packaged within the store. This should be true for both service and self-service meats. And, although this may not result in a net reduction in total packaging costs, since prepackaged frozen meats may actually be wrapped in more costly materials, it nevertheless will reduce the cost for supplies at the retail store level. This makes the matter of calculating the savings in wrapping supply costs on the basis of the various amounts of frozen meats sold a very simple one. In the conventional pattern of this thesis of assuming shifts to 25 per cent, 50 per cent and 75 per cent of total meat volume in frozen form, the reduction of wrapping supply costs can be fitted exactly to it. For instance, $1.38 of the $5.50 weekly wrapping supply cost of the average store in the Small Stores group can be saved weekly by shifting to 50 per cent frozen meats; and by shifting to 75 per cent frozen meats, all the weekly cost of $5.50 can.be eliminated completely. The average store in the Medium Stores group can save $6.11 of its 2h.k5 cost by shifting to 25 per cent frozen meats; $12.23 by shifting to 50 per cent frozen meats; and by Shifting to 75 per cent frozen meats, can eliminate the entire $2h.h5 cost. For the average store in the Large Stores group a saving of $29.96 can be made in the weekly wrapping supply cost of $107.8h by a Shift to 25 per cent frozen meats; $53.92 by shifting to 50 per cent frozen meats; and the entire $107.8h can be eliminated by a shift to 75 per cent frozen meats. (See Table XXV for an easier comparison of these costs.) 3 This assumes that no packaging of non-frozen meats would be done in the store in which 75 per cent of all meats are frozen. 9h .mmmH .memeeH .eHHemmHmH HHHHmmmmez edemdm .QOHHmHm HcmEHaemNH HmHSHHdoHHmm ammo mHHmHHdm COHHmHm it..- ' I :. '1'41’!‘ I.‘.'I'. .mmmewsHmmHeoo :Hmoz esH CH Hmmfl mQHHHmHm: nemHHHEEOU mommmmem mGHHexmm: HOOHmmbHH HmHHCeo :Hmoz . mmH HmEOH «mead HeweHHoo eHmHm .. *‘IIL‘I 0| ( mBOH HQOHHmHm HmeEHmemxu HmHSHHSOHHwH nwm: mHHoHHSm sommemem HcheererQ Hmez HHmHmm CH mpomHm: -III‘ .I' i I" i ii 60H>meIMHmm pew eoH .mm mo mHmoo mo momeweeOo apposmeem .0 pam aCOHHHHU .m .m .qememHB .m .m .Aemeasopv HHH pmpaaeo .>H mHamH ache "mmomdom n .hUSHm mHocHHHHumBOH H< HHUGmmgd Somme In." t {.i’"".l‘.l’l I‘ll am.eoH Na.mm ea.em am.HOH ooo.m mm.H wamHo.o mH.Hm m0m.e Heeaq ma.am HN.NH H.e ma.am ooa.H am.H HmNHo.o 6:.wm nwa.m anmm: om.m mm.m mm.H om.m 00: wm.H mHMHo.o dm.m Hmo Had: JNWHWWWMHXMUWHHOUVAmmmHHopV xwmmmHmmww NmpmHmmquldwcmo mmmmmmeWQMflflNmmmwmmmq. AmHmHHQDM HmHoe HHHOB HwHoe eH moHOHm deHm mHza we flue Mo Mon Ho anm 90H Hmoo 9 CH mmmOHw mHmoo “ewe mHHmMW.u HHQQdm pom mOHem meHmm Heme MHmmdm mmeeoz eemomm 26:3 mHmoo mHmmdm HmemE HHamez. HHMemB pmHHoa memmB UmHeemm mHmmz Ho eNHm omOHm Mmeos ommme>¢ mH mmchmm emmme>< emmmo>m Hem mHmoo hHdem mwmmm>¢ mEdHo> ommmo>< '| .II' 0 ‘I’I'ilu '8'..." II|1 i."lt'l'n'l'.'.-ll' -I‘ 'li 41"; "Ill' ‘0“! 'I‘il’ 'I'. IIIIIII ’1' il'n i'- I 1 ll. ' "O.Il‘n“‘ll.l.i.‘ i ‘1 mqum Hafiz OH ZOHHdgmm 2H mHmOU qumbm oszmdmz >Hx mqmde SUEHARY AND CONCLUSIONS Summary This study was an attempt to estimate some of the economic impact that the sale of more frozen meats may have on meat retailing. Since DJ costs associate with labor, equipment, Space, and wrapping supplies account for more than 80 per cent of total meat retailing costs, this study was directed towm?d an analysis of changes in these factors which may occur if retailers sell a greater proportion of their meat volume in frozen form. Though other components of total meat retailing costs were recognized as being important, they were not included in this study since they may not be affected as much by changes to more frozen meats as the costs associated with the four factors listed above. Hany changes have occurred in food retailing in the last 50 years, most of which affect the sale of meats. Aetail stores are larger and handle a wider variety of foods. More feeds are sold on a self-service basis, more convenience foods are demanded by consumers, and more food processing and packaging are now done in centralized plants. Yet, most fresh meats are still fabricated and packaged into retail units within the retail food store. Since frozen meats may enable the meat industry to more nearly fit the distribution of meats into this changing pattern of food retaili g, it was felt that retailers and others interested in meat retailing will 95 96 need more information about how frozen meats may affect costs of store operation. Relatively few retail stores have changed to frozen meats to any appreciable extent. Therefore data upon which to base cost compari- sons of factors employed in selling fresh and frozen meats were not readily available. An attempt was made to overcome this deficiency in data by a budgeting approach in which data from various studies dealing with retailing fresh meats and other 3_es of frozen foods were used. After reviewing some of the historical background of frozen meats, a framework was established for studying the effects of changes to the sale of more frozen meats upon costs associated with labor, equipment, Space, and wrapping supplies. The following assumptions were made: 1) It was assumed that changes to more frozen red meats would not affect stores of different sizes in the same ways. Therefore, data from a meat retailing study in the North Central States were divided into groups representing three distinct retail store size classifications. An attempt was made to measure the impact of changes to more frozen meats for each size classification. 2) It was assumed that, during the change—over, retailers would consider adjusting to various levels of frozen meat sales. In order that more precise comparisons could be made, it was further assumed that some retailers may change to frozen meats to the extent of selling 25 per cent of all meats in the frozen form, others to 50 per cent, and still others to 75 per cent. Since about 25 per cent of all meats sold by most retailers are not the types of meats which are likely to be frozen, it was assumed that retailers who sell as much as 75 per cent of all their 97 meats in frozen form would sell 100 per cent of all their fresh red meats in frozen form. Though data were not available for measuring direct labor costs on handling frozen meats, information about labor requirements for other frozen foods was adapted to this study. A comparison was made between labor requirements for handling fresh meats and the frozen meat labor requirements estimated on the basis of the data relative to other foods. It was apparent that a considerably greater physical volume of frozen meats than of fresh meats may be handled per man-hour of labor in the retail store. The extent to which this may affect costs with various changes to frozen meats, however, will depend upon several factors, some of which have not been thoroughly studied. However, under average conditions based upon the data used in this study, weekly savings in labor costs would range from.$lh.26 for small retailers who change to 25 per cent frozen meats to perhaps as much as $350 for large retailers who change to 75 per cent frozen meats. Equipment costs were divided into three categories: diSplay, storage, and preparation. It was not practical, within the confines of a study of this nature, to determine fully the ratio of the needs for fresh meat display equipment and frozen meat display equipment. It was concluded that there should be no added costs for display equipment because of changes to more frozen meats, due largely to the fact that frozen meat cases cost less on a cubic—foot-of-display—space basis than do fresh meat display cases. 1 Considerable changes can be made in the investment and costs of meat storage by shifting to frozen meats. In the long run, it may be possible for retailers to reduce storage space for fresh meats in about the same proportions in which they change to frozen meats, allowing for the component of fresh meats which will not likely be frozen. Since frozen meat cases have more cubic capacity per linear foot than fresh meat cases, frozen meat display cases may be used in a dual-role of storage and display. The extent to which this may be true was uncertain at the time this study was made. It may be necessary, however, for retailers to purchase some frozen meat storage cabinet space in order that adequate frozen meat supplies may be kept on hand in the store. Based on limited data, it was concluded that there may be some net savings in storage space investment and costs, even in stores in which sizeable investments must be made for frozen meat storage. Savings in preparation equipment investment and costs may be made, in the long run, in about the same proportions that changes are made to frozen meats. Savings in investments may range from as much as #215 in Small Stores which change to 25 per cent frozen meats to as much as $2,778 for Large Stores which change to 75 per cent frozen meats. Rent or space costs can be reduced substantially by stores that shift to frozen meats. This is because that preparation and storage space in the meat department can be reduced, in the long run, somewhat in pro- portion to changes to frozen meats. Perhaps of even greater significance, however, are the added gross sales and the added net profits from them which may result from the release of non—sales Space in the meat department 99 to be used for other food sales or perhaps backroom operations. Gross sales from this Space could range from $105 per week in small stores which change to 25 per cent frozen meats to $2,121 per week in large stores which change to 75 per cent frozen meats (at $3.00 per square foot gross sales). Costs for wrapping supplies will vary for stores of all sizes in almost direct proportion to the amount of change to frozen meats. With most bacon, luncheon items, and other meats which are not likely to be frozen reaching retail stores in prepackaged units, most wrapping supplies now in use in stores are used for wrapping the kinds of meats which likely will be frozen. Retailers who change to 25 per cent, 50 per cent, or 75 per cent frozen meats, therefore, can save approximately the same percentages of wrapping supply costs. In the stores under consideration in this study it was apparent that savings in weekly wrapping supply costs may vary from $1.38 for small stores changing to 25 per cent frozen meats to $107.8h for large stores changing to 75 per cent frozen meats. Conclusions Retailers who make a complete Shift to frozen meats may be able to reduce their meat retailing costs by as much as hO to 6C per cent. han- hour labor requirements may be reduced by as much as 60 per cent. If this reduction is accompanied by the replacement of more expensive labor with less expensive labor, reductions in labor costs may be even greater than 60 per cent. In addition to the monetary advantages from man-hour reductions, retail management also will find it possible to operate the meat department 100 on more nearly the same basis as other departments are Operated. Labor- management relations may be on a more uniform basis, and stock control will be less difficult than under present conditions. Less skill will be required in selling meats and the problem of maintaining skilled meat cutting personnel will be eliminated. By shifting to frozen meats, retailers may be able to reduce their needs for all space in the meat department by more than 55 per cent. A reduction of more than 90 per cent may be made in the needs for prepara- tion and storage space. Rent saved for the meat department and alterna- tive uses for the space thus released are both important in over-all store nanagement considerations. Though there may not be significant savings in diSplay equipment costs with a shift to frozen meats, neither should there be an increase. There will be very large percentage savings in storage facilities and preparation equipment costs although in absolute terms the savings will be much less than savings in labor or net savings in.Space costs. Savings in storage costs will be about 75 per cent and in preparation equipment costs, savings will be 100 per cent. wrapping supply costs will also be completely el'minated since no packaging will be done in the store if all red meats are frozen when they reach the store. For a hypothetical cost of $100 for retailing fresh meats, labor accounts for about $65.00, equipment about $7.00, rent about $8.h0, and wrapping supplies about $h.20, or a total of $8h.60. The remainder is trade up of costs not considered in this study. Of total. savings in lOl costs due to shifting to frozen meats, labor accounts for about #39.00, equipment about f2.12, space about $h.62, and wrapping supplies about fh.20, or a total of 9h9.9h. This is a 50 per cent saving in total costs and a 59 per cent saving in the costs made up of the four factors under consideration in this study. This information should be useful to retailers who are faced with decisions about shifting to frozen meats. It also may be useful to meat packers, processors, and distributors of meats and related products, and to manufacturers of meat retailing equipment and supplies in making decisions as to future Operations of their businesses. Extension personnel who work with livestock and meat marketing problems, especially at the retail level, will find this information useful. There are needs for more research in several areas with which this study is concerned. How best to utilize the labor necessary for handling frozen meats presents many problems for which apparently there are not sufficient data available to provide very satisfactory answers. The relative amounts of display case Space needed for fresh and frozen meats is another area in which more research may add some valuable information to present knowledge. Studies which undertake to measure he effects of changes to frozen meats on other segments of the meat industry than retailing also are needed in order that a complete appraisal can be made of the total impact of frozen meats on the meat distribution. More information also is needed about consumer preferences which may affect demands for frozen meats and merchandising practices needed in order that frozen meats may make their greatest contribution to more efficient meat marketing. LITli’iATUf—LE CITED Anderson, D. L., and Shaffer, P. F. Improved Uandling of Frozen Foods In Retail Stores, marIetin. Research heport No. 10h, ALS, USDA, Washington 25, D. C., 19 55, 2h pp. Anonymous, "Are we Building Too hany Centers," Chain Store Age, Vol. 51, No. 5, May, 1955, pp. 222, 225. , "Frozen Food Sales Rocket Upward," CIain tore A12, Vol. 52, No. h, April 1956, p. 125. , "How Do You Compare," Proqressive Grocer, Vol. 35, ho. 5, - i-’"/ ‘ .~ L'lay’ 1.9)O, p. 5). , "Iiow Super harkets Fared in 1955," Procressive Grocer, Vol. 55, No. 6, June 1956, pp. 82-8u. , editorial comment, Quick Froze Foods, Vol. 7, No. 5, October, 1959, p- 3M. "Efficient Layouts Speed Ieatflow," Super Market merchanc551ng, Vol. 20, No. 10, October 195 55, pp. 75- ' , Technolo~y in rood Larketine, A:ricul cural honograph IIo. 1h, US DA, washinggton 25, D. C., 1952, 115 pp. , "Consume Frozen heats Are On the Why, " The Iationa 1 Provisioner, Vol. 133, No. 22 (published weel:ly), hovezwer 26, -—-—-.—— .-“.¢—*~‘—.——-——TW -_-‘- Statistical Bulletin No. _IZE, A4~Sy JSDA, Washing ten 25‘ ,D. C., l9yh, 5a pp. Banks, h. 3., Capaci §y_of'”e1ricerated Warehouses in the United St Letes, Carlton, H., The Frozen Food Industg ,University of Tennessee P1 ess, Knoxville, Tenn., 19h1,1b{—pp.i Dobbins, C. E., and Hoecker, R. W}, Costs _of ”and Reaso_ s_fcr Iewratminrr Prepacka1e d heats, and_ghiese,Agricu1tuura1 in107hdblon Bulletin (7, USDA, Washington 25, D. C., 1951, 51; pp. Farstad, E., and Brensilce, V. J., Costs of_ Re tai11n1 heats in_ i elation to Volume harketing liesearch“ a Sport No . 24, USDA, Washington 25, D. C.,.19é2, 25 pp. Hoecker, R. W., "Where The Customer is King, " Larietinx Yearbook _of Agriculture, USDA, Washington 25, D .C., 195u, pp. 6l—eh. 102 103 Klein, R. L., Store Planning for Tomorrow's Competition," NAIGUS Bulletin, Vol. h3, No. 2, February 1956, pp. 30-33, 86—87. Kramer, R. C., An AnalIsis of Lichi~an's Frozen Food LocI: er Plants, (unpublished Master's Thesis} Michigan State Univers sity Library, East Lansing, Michigan, 19nd, 82 pp. Martin, H. 3., "How Much Rent-~And For What?" Chain Store Age, Vol. 31, No. 5, Ray 1955, pp. 22h-228. Mixon, J. A., and Johnson, H. D., "Eificiency in.Rei rigeration," IarI-uin~ Yearbook of Agriculture, USDA, Washington 25, D. C., 1954, pp. fi2C2-2bo. Lueller, R. W., "Food Store Sales Up 6. 95, In Year Farked By Sharp Competition, Mergers, Stamp Plans, " Prorres sive Gr oce£,'Vol. 35, No. 3, Larch, 195 6, pp. h6—53, 1u6. National Wholesale Frozen Food Distributor's Association, IWro en F‘ood Fact Book, 1956, Association Annual, 60 East h2nd Street, New YorI: 17, N. Y., 1956, 158 pp. North Central Livestock Marketing Research Committee, Frozen“ Food 0W4 LocIters and Home Freezers In Leat Distribution, Bu1-Letin “A90, -w——— gricultural “"periment Station, University oi Wisconsin, Ladison, Wis., 1950, 60 pp. ,R etailinc heat in the North Central States, Station Bulletin :1.“ .— _._-_.. 622, Ag3ricu1tur - .perimcrt Station, Purdue University, Laiayette Indiana, 1955, 32 pp. Riley, H. M., Some Fea surements of Consu1131D1nand for Le¢:__, (unpublished Ph. D. Thesis) Michigan State University'Liorary, East Lansing, Michigan, 195A, 218 pp. lL—x Rilev, H. M., and Hrar er, R. C. ., What Consumers are «Iin3 About Pre- pagked Fresh and Frozen Feats, Special Bulletin hoe, Agricultural HXperiment Station, hichigan State University, East Lansing, Michigan, 1955, 20 pp. Seltzer, R. E., Consumer_ Preference ior Beei, Bulletin 267, Agricultural Experiment Station, University oi Arizona, Tucson, Arig., 195 , 22 pp. Stevens, A. E., "Optimum Conditions for Refrigerated Storage," Quick Froz en Foods, Vol. 3, No. 12, July, 19ml, pp. 28—52. ‘Wiegmann, F. H., Clifton E. S., and Shepherd, G., Compa£1s9n_g£_Costs of Service and Se 1f -Service thhods in Retail I-I eat D123“LWODLS, Research Bulletin‘h22, Agricultural nxperinent Station, Iowa State College, Ames, Iowa, 1955, 17 pp. Zimmerman, M. H., The Super Harket, HeGraw—Hill, New York, 1955, 3h0 pp. APPEE‘JJICES APPEI‘HJL’; A 10h STORAGE SPACE FOR FROZEN HEATS Storage Space for frozen meats may be calculated from the inform- ation in the listing on the following page. Total space necessary for storage of this list of frozen meat items, for instance, is 8.h cubic feet. The total weight of this list is 36h pounds which, when divided by 8.h equals h3.3 pounds per cubic foot. In a storage cabinet which is 6' x 8' x 8' inside dimensions there would be a total capacity of 38h cubic feet. Allowing for a two-foot passage way from the door to within two feet of the back wall which would amount to 96 cubic feet, there would be 288 cubic feet in which frozen meats could be stored. If any meats such as those listed below made up the principal amount of meats to be stored, this could total 12,h70 pounds, (288 x h3.3). But since some packages will contain much lighter meats (chopped, cubed, etc.) allowance is made for them in the estimate that a cabinet of this size will accommodate the storage of 10,000 pounds at one time. w— -.—~~— ‘Wm a... .9 .—— —._.V Frozen Meat Item Total'Weight q Dimensions lOS ’_. -—.... -——.~-...--‘ ~ “W“ m-* n— “ .. - Snaceflheguired Pot Roast 12 pieces at h lbs. b8 lbs. 1b-1/b x 12-3/b x 8-1/b 15b2 cu. in. Rib Roast 12 pieces at h lbs. h8 lbs. same lSh2 cu. in. Rib Roast 6 pieces at 6 lbs. 33 1bs. 1b-1/h x 12-3/h x 6-1/8 1180 cu. in. Stew 2b pieces at 1 1b. 2b 1bs. 1b-3/1s x 12-5/8 x 6 982 cu. in. Sirloin.Roast . 12 boxes at 3 lbs. 36 1bs. 19-1/8 x 15 x b-1/b 1218 cu. in. 6 boxes at b lbs. 2b 1bs. 15‘x 9—3/b x 16—1/8 880 cu. in. Tenderloin . 2b - 1 1b. 2b lbs. 1h-3/16 x 12-5/8 x 5-1/2 982 cu. in. Veal Leg 6 - b lbs. 2b lbs. 19 x 11-7/8 x b-1/2 1015 cu. in. Butterfly Pork Chops 2b - 1 1b. 22 lbs. 17-1/h x 13-1/h x b-1/b 965 cu. in. Pork Roast , 12 - 2 1bs. 22 lbs. 13-1/3 x 12-3/b x 7 1205 cu. in. LmflnLeg 6 - 6 lbs. 35 lbs. 20-1/8 x 15 x 5 1510 cu. in. Lamb Chops , ‘ 2b - 1 1b. 2b lbs. 1b-1/b x 12-5/8 x 8-1/2 lhBO cu. in. 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