Feasibility Study For A New Medium-To-large Sized Supermarket in

University of Montana
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1975
Feasibility study for a new medium-to-large sized supermarket in

Great Falls Montana
Jon William Thompson
The University of Montana
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FEASIBILITY STUDY FOR A NEW MEDIUM-TO-LARGE SIZED
SUPERMARKET IN GREAT FALLS, MONTANA
By
JON W. THOMPSON
B.A., University of Washington, 1972
Presented in partial fulfillment of the requirements

for the degree of
Master of Business Administration
UNIVERSITY OF MONTANA
1975
Approved by:
C _______
Chairman, Examining Committee
Dean, Gradate Schodl
Reproduced with permission of the copyright owner. Further reproduction prohibited without permission.
UMI Number: EP38860
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ACKNOWLEDGEMENTS
I would like to express my sincere appreciation and

gratitude to Dr. Clyde W. Neu, my advisor and friend, for
his time, effort, and scholarly guidance. His assistance
was invaluable in the preparation of this feasibility study,
I also wish to thank Mr. F. J. Raucci, Vice President, Labor
Relations, Buttrey Foods, Inc., and all other businesses,
institutions, and individuals of the Great Falls area who
contributed to this paper.
In addition, I am indebted to Mrs, Cindy Merrigan
and Mrs. Nancy Smith, my typists, for their help in preparing
this paper.
11
TABLE OF CONTENTS
ACKNOWLEDGEMENT S
Chapter Page
I. INTRODUCTION .................................. 1
Industry O v e r v i e w ......... . .............. 2
II. POPULATION......... 1?
III. GROCERY STORE SALES .......................... 22
IV. POSSIBLE LOCATIONS FOR A NEWS I T E ............... 31
V. FINANCIAL ANALYSES AND CONCLUSIONS ............ 46
APPENDICES............................................ 58
SOURCES CONSULTED ................................... 70
111
LIST OF TABLES
Table
1-1 PERCENT RETURN ON NET WORTH BY INDUSTRY...... 13
1-2 HOW CHAIN MANAGEMENT PERFORMED IN 1973...... 15
2-1 GREAT FALLS POPULATION ESTIMATES............. 18
2-2 CASCADE COUNTY POPULATION ESTIMATES.......... 19
3-1 INDUSTRY CONCENTRATION— WHOLESALE AND
RETAIL.......... 23
3-2 GREAT FALLS POPULATION AND RETAIL FOOD
SALES CHARACTERISTICS....................... 25
3-3 CASCADE COUNTY POPULATION AND RETAIL
FOOD SALES CHARACTERISTICS...... 26
3-4 GREAT FALLS RETAIL GROCERY SALES..... 2?
3-5 GREAT FALLS GROCERY STORES................... 30
4-1 STATISTICS FOR IMMEDIATE TRADE AREA OF
SITE NO. 1 AND GREAT FALLS METROPOLITAN
AREA........................................ 34
4-2 COUNT AND PERCENT OF SELECTED OWNER-
OCCUPIED UNITS BY DOLLAR VALUE FOR SITE
NO. 1 AND CITY OF GREAT FALLS............... 36
OCCUPIED UNITS BY VALUE OF UNIT AND
INCOME OF OWNER FOR SITE NO. 1 .............. 37
4-4 RESIDENTIAL BUILDING PERMITS................. 38
4-5 STATISTICS FOR IMMEDIATE TRADE AREA OF
SITE NO. 2 AND GREAT FALLS METROPOLITAN
AREA......................................... 41
OCCUPIED UNITS BY DOLLAR VALUE FOR SITE
NO. 2 AND CITY OF GREAT FALLS............... 42
OCCUPIED UNITS BY VALUE OF UNIT AND
INCOME OF OWNER FOR SITE NO. 2 .............. 43
iv
LIST OF MAPS
Map
1 GREAT FALLS MEDIUM-TO-LARGE SIZED
SUPERMARKETS.................... 29
2 POSSIBLE SITE LOCATIONS...................... 32
3 AREA SURROUNDING SITE NUMBER 1 ............... 33
4 AREA SURROUNDING SITE NUMBER 2 ............... kO
CHAPTER I
INTRODUCTION
The retail food industry in Great Falls, Montana closely

resembles that of other U.S. metropolitan areas the same size.
Individual businesses must constantly be aware of market
changes. One of the ways these businesses can measure future
demsind is through the use of a feasibility study. These
studies help retailers maintain maximum efficiency in the
market place. Since building a new supermarket requires
many different resources, the potential new owner must be
certain that demand will be sufficient before beginning.
Along with forecasting demand, a feasibility study also pro
jects the proper revenues and costs involved in opening a
new store.
The purpose of this study was to determine whether or
not it would be feasible for a new supermarket to open in
Great Falls. In making this determination, major considera
tions included: (1) the economic and demographic trends
in Great Falls, (2) the existing retail food store situation,
and (3) the selection of a possible site location. The
analyses utilized a pro-forma balance sheet, income state
ment, break-even analysis, and an analysis of debt service
capability.
INDUSTRY OVERVIEW
The majority of today's retail food distribution in

the United States is accomplished through large corporate
chains. These companies own several stores located through
out a geographical region or r e g i o n s T h i s food chain concept
dates back as far as 1849 when the Great American Tea Company
was founded in New York City. Starting out as tea wholesalers,
this company later sold directly to consumers, and eventually
added a line of groceries. Succeeding years brought many
changes. A name change to the Great Atlantic & Pacific Tea
Company occurred, and today the company is known by its many
A&P supermarkets throughout the country.
The first chain was quite primitive in nature. Most
stores were small one man operations which sold dry groceries
only. Many other companies followed the A&P example such as
Kroger, Grand Union, Jones Brothers and Safeway. The number
of stores has grown steadily over the years with the exception
of the depression period. The original A&P was the largest
chain for several years with as many as 4200 stores.
/ Another innovation which has been successful in the
food industry is the food discount store. Originating in the
early 6 0 *s, these stores sell a more restricted line at lower
than average prices. The major chains were quite reluctant
to recognize this new form of marketing, but after noted
measures of success, the industry leaders realized future
3
potential and converted many of their existing supermarkets.
)Apart from large discount stores lies still another
innovation* the convenience store which is seen almost
everywhere these days. These stores operate on hiî margins
for a very limited line of products. Overhead is kept to a
minimum, and the stores typically stay open long hours, 7 days
a week. Examples are Circle K and Seven— Eleven stores which
are located throuôut the country.
Even more recently, another method of food distribution
has developed. Within the last couple of years, large cities
have shown the growth of food co-ops. These usually operate
out of someone’s garage or basement and include anywhere from
1 to 2 5 families. Pooling their efforts, these families
purchase large quantities of food from wholesalers and are
able to save sizeable amounts of money and obtain fresher
perishable food.
In surveying the retail 'food industry’s market structure,
issues to consider are buyer and market concentrations,
vertical integration, economies of scale, and product differen
tiation. Interacting with one another, these factors prescribe
how firms will compete, how they will view the customer, and
how a potential firm will view the industry’s opportunities.
Market concentration has grown steadily over the past
2 or 3 decades. Statistics show the number of independent
grocers in the U.S. dropping since the mid 30*s.^ Chain stores.
Âdams Walter, The Structure of American Industry.

(New York; The MacMillan Company, 1971.) p. 34.
4
while not growing greatly in number, have integrated both
vertically and horizontally, merged and diversified. This
has lead to the typical large shopping complex of today.
Supermarkets are packed with everything from flowers to food
to furniture polish. Large supermarkets are primarily owned
by chains, while small grocery stores are still run by independ
ents, and the market share enjoyed by grocers is controlled
primarily within geographical regions. Although most super
market shoppers arrive by automobile, they generally limit
themselves to one certain area.
A look at the concentration of local food suppliers
shows them to be smaller in size than regional suppliers.
Most retailers deal solely with one wholesaler for their
grocery line as it is inefficient and costly to do otherwise.
Smaller independent grocers typically form buying co-operatives
to allow them greater price reductions and a better service by
wholesalers.
The retail food industry has also been successful with
vertical integration. It is not uncommon to find larger
chains manufacturing their own bakery, dairy, and canned
goods. Since these products have high delivery costs, most
large chains also own delivery systems. An excellent example
of this is Safeway which owns its own dairy and distributes
its own products. Meat is another item typically processed
by larger chains, although on a more selective basis. Location
is very important due to spoilage. If a chain is highly
concentrated in a beef producing area, it is advantageous to
5
have its own meat plant. An excellent example of this is
Buttrey Foods Incorporated in Great Falls, Montana which
manages its own processing plant to supply beef to several
stores within a five state region.
Overall, about three-fourths of all chain manufacturing
goes directly to its own stores. The remainder is sold to
other food retail and wholesale outlets. Various firms which
do their own manufacturing are keenly aware as to which products
to produce. Economies of scale are different for various
products, and volume must be high for some such as jams,
jellies, and mayonnaise. Baked goods and dairy products can
be profitable at lower levels of turnover.
Other scale economies once enjoyed by the larger chains
are becoming less significant today. As larger chains have
had more money to pay buying experts, they have enjoyed
higher profits from better purchases and better knowledge.
Independent supermarkets have formed buying co-operatives to
get around this, however, allowing them greater savings.
Another scale economy enjoyed by larger firms is adver
tising. Since supermarket advertising is primarily accomplished
in newspapers, one can easily see the cost savings of having
all stores of a particular chain in a local area covered by
•a single set of ads. Television advertising is also cheaper
for the chain store as the name can be conveyed over a larger
geographical region including many stores.
Another important phase of market structure which
directly affects the industry's concentration is mergers.
6
Food retailing first saw a major merger movement in the early
1920's. The most pronounced effects of this movement were:
(l) greatly expanded size and scope of operations for several
leading chains, (2) increased market concentration on a
national scale, (3) widespread market extension of merger
activity, and (4) the establishment of industry leaders who
have remained dominant up to the present time. More recently
(late 5 0 's and early 60*s) merging has consisted primarily
of larger chains buying out smaller ones.
The grocery store of today typically carries a much wider
variety of items than it did prior to the chain store movement.
Large chains have diversified into high-margin general merchan
dise lines such as in-store bakeries, delicatessens, liquor
sales, pharmacies, flower shops, and photo processing. Some
chains have gone into convenience stores, family centers,
drug stores, and restaurants. Standard & Poor's lists the
three most diversified food retailers as Jewel Co., Inc., Lucky
Stores, and Supermarkets General.^ Jewel Stores are opening
restaurants, bakeries, delicatessans, drug stores, and con
venience stores. Lucky Stores have recently opened family
centers, department stores, drug stores and sporting good
stores. Buttrey Foods, a division of Jewel Company, Inc.,
has an in-store bakery, delicatessen, and. small restaurant in
its Holiday Village store in Great Falls. Buttrey*s also
own and operate a chain of Osco Drug Stores. Obvious advan-
^Standard & Poor's Industry Surveys, "Retail Food Industry.

(December I3 , 1973)t P» RI6 7 .
7
tages of these acquisitions arei (l) they complement existing
facilities, and (2) it is easier to acquire already established
facilities than build new ones.
Most chains offer their own brand of items. Companies
such as Grand Union, Safeway, and Supermarkets General do
twenty percent or more of their annual business in private
labels.^ Since this industry is primarily a service industry,
differentiation of any great amount is difficult to achieve.
Most exclusive promotions and drawing features may be imitated
by someone else. Where an in-store delicatessan may not be
extremely profitable, it is another feature designed to bring
in customers. Games and trading stamps represent still another
attempt by retailers to differentiate their service.
A final facet of the food industry's market structure
is barriers to entry. With the expansion of large supermarkets,
(both vertically and horizontally), it is expensive to enter
the industry today and effectively compete. An independent
would have to be more than adequately capitalized and have an
excellent market before he could seriously consider opening
a large supermarket. The establishment of co-operatives has
helped independents build small stores and later expand with
growing markets.
Other barriers to entry besides costs are prevalent also.
A chain store carries an established name and image among its
customers. Customers tend to be loyal for reasons of
Âdams, Walter The Structure of American Industry.

(New York; The MacMillan Co. ,^^71. ) p. ^4.
8
geographical location* prices, brands, and other intangible
factors. As mentioned, advertising is much more costly for
the independent. These are important factors to consider in
the establishment of a new supermarket,
A second area to consider in establishing a new store
is market conduct. "Market Conduct consists of a firm's
policies toward its product market and toward the moves made
by its rivals in that m a r k e t . T h r e e major areas of signifi
cance are prices, product quality, and policies toward competition
in the market. Prices are very important in that they directly
affect the consumer's demand for the product. This in turn
regulates the retailer's demand from wholesalers and wholesaler's
demand from manufacturers. Jfeinufacturers are then responsible
for the efficient allocation of the industry's raw materials.
If a retailer is not always aware of pricing against his
competition, he can quickly lose many customers and possibly
his whole business. One author says, "It is the margin
between his payment to wholesaler or manufacturer and the
price to the customer that is the price of the retailer's
2
service. "
Food retailers are very aware of the items which shoppers
regularly price. They competitively price these items to
bring shoppers into their store. Once in a certain store-,
it is very unlikely that a shopper will go elsewhere. To the
4
Caves, Richard American Industry: Structure. Conduct.
Performance. (New Jerseyt Prentice— Hall, 1972. ) p. 36.
2
Adams, Walter The Structure of American Industry.
(New York; The MacMillan Co., 1971.) p. 4?.
9
extent that shoppers will do a weeks shopping once in a cer
tain store, retailers are seen as monopolists (over this set
of shoppers).
Many analyses of pricing patterns in the food industry
have shown irregular methods to be used by various dealers.
Margins have varied from slightly below cost (at a loss) to
very high markups. In overall economic terms, retailers try to
price at the theoretical point of profit maximization (where
marginal revenue equals marginal cost). They use a "price
loss" to lure shoppers into the market and then make up the
loss with higher mark-ups on other items. Among items most
frequently featured as specials in supermarkets throughout the
country are coffee, ground beef, sirloin steak, mayonnaise,
sugar, and soap.^ These products are marked at a price loss.
Alongside these products many other fillers on weekly
newspaper ads are priced at no discount.
The food retailer can price in many different combinations
which will result in the same overall profit percentages.
Among the msoiy things which leave the grocer free to manipulate
prices in the market place is the general lack of knowledge by
the buying public. The average retailer is also a victim of
incomplete knowledge. He must make determinations on how much
shelf facing to allow, which items not to carry, what products
to put on end displays, etc.
Another likeness of the food industry to other industries
Âdams, Walter, The Structure of American Industry.

(New York I The MacMillan Co., I9 7 I.) p. 5 0 .
10
is that of price leadership. Many of the larger chains will
price after one another with the independents either leading
or following depending on geographical area. The recent trend
of these operators to experiment with prices has lead primarily
to a generally accepted low price-high volume selling technique.
Pricing competition has shown other tactics to be rela
tively successful. Included is the use of multiple unit
pricing. This is the case of the 190 can of. beans which is
changed to a price of 3 for 590* If the customer elects to
purchase only one can, he is charged the penalty price of 200,
Either way he has lost while the retailer's price margin rises.
Even in face of the special promotion techniques used by
large chains, a proven fact remains in the industry that
independents have higher profits than chain stores. This is
true even though the industry is oligopolistic in nature
because food retailers have not been known to outright collude
on prices. Possible reasons for the fairly competitive nature
of the food industry includei (1) relatively free entry and
exit, (2) competitiveness in price cutting and a long time
lag between price changes and sales and (3) differences in
product lines and geographical location. Since most areas
have more than one large supermarket to patronize, managers
must be competitive in all areas of pricing or they may be
surpassed sufficiently to jeopardize their market position.
Today's grocers as well as those of the past compete
in areas other than price. One competitive tactic is to
improve the store in which consumers make purchases. Comfort
11
items such as air conditioning, parking lots, automatic doors,
music, check cashing and stamp service are common examples.
Although actual results are hard to measure, it is thought
that a brand new or newly renovated store will have an inherent
advantage over its competitors. It is also a well known fact
that most grocery stores a^re laid out in similar format
designed to get the customer completely th r o u ^ the store.
Meat, dairy and produce sections usually get the outer sections
with frozen foods and dry items lining the aisles. .Certain
h i ^ demand items are located within easy reach to get customers
in a good buying mood. The remainder of high demand— low
margin items are then strategically located so as to give
maximum exposure to all h i ^ margin items.
Other techniques commonly employed make use of gifts and
bargain sets. Customers are lured back to the same store by
offering sets of dishes, encyclopedias, cookbooks, silverware
offers etc. Safeway is a firm which readily comes to mind
when mentioning this technique. Still amother technique which
has been employed for many years is that of redeemable trading
stamps. Stores hope to enhance loyalty through the distribution
of these stamps. Stamps have been declining in recent years
as consumer incomes have risen. Stores have employed other
techniques and found them to work just as well.
Product brands are also used in the competitive methods
of grocers. The battle is f o u ^ t between national and private
brands. Chain stores are partial to private labels for two
reasons. First, they can maintain lower prices because of
12
less cost in distribution and promotion and second, they can
build customer loyalty if the product is satisfactory to its
buyers.
A third and final area of industry overview is market
performance. The retail food industry is measured in terms
of its efficiency, progressiveness, and overall industry
practices.
With respect to the industry's utilization of resources,
one must consider profits, costs, and industry capacity.
History indicates that profits are not excessive and therefore
the industry may be operating quite well (Table 1-1). Other
considerations should be b r o u ^ t out thouî. Over the past
few years, stores and their related services have been changing.
As the size of stores grows, many of the previous individualized
services go by the wayside. During the period 1964 th r o u ^ 1968,
personalized services were almost non-existant. Only during
the last couple of years have large stores paid the extra cost
of persuading customers to patronize by again offering more
personalized services.
Grocery stores can also be more efficient with respect
to operating costs. Stores stay open during periods when
relatively few people patronize them. They often are located
very close to one another, detracting from each others
efficiency. The industry could in the future locate stores
a certain distance apart. They could also only stay open
fewer hours per day and in this way be more efficient cost
wise. It is likely that at the same time they will sell the
13
TABLE 1-1
PERCENT RETURN ON NET WORTH.

BY INDUSTRY
:....
Industry 1964 1965 1966 1967 1968
Food chains 12.5 1 2 .5 1 2 .3 1 1 .0 1 1 .5

Manufacturing 12.6 1 3 .8 14.2 1 2 .5 1 3 .1
Electric Power 11.0 11.4 1 1 .5 1 1 .5 1 1 .2
Finance 5.6 5 .4 5 .4 6 .0 5 .6
Wholesale 11.4 1 3 .4 1 5 .2 1 5 .1 1 6 .5
SOURCEI Adams Walter, The Structure of American

Industry. (New York; The MacMillan Company, 1971. ) P« 55*
14
same amount of food as before. All things considered though,
employees would have less income and the very nature of
competitiveness would be gone*
Looking to progressiveness, the food industry has made
giant strides over the past few years. Stores have changed
drastically in size, composition, and services offered*
Strictly in terms of the time taken by the housewife to do her
one-stop shopping, one can see remarkable changes* Continual
changes are also taking place internally within today's super
market* A recent method of ordering is all computerized. The
grocer walks along the isles punching his orders by code number
into a recorder. He then dials a telephone number and puts the
playback over the line* The main terminal reads the tape which
automatically provides the warehouse with the weekly order* All
of this is done in a fraction of the time taken just 2 or 3
years ago. A compare can earn substantial profits if it is
very efficient in applying the new technologies of the indus
try (Table 1-2)* Return to net worth averaged 12JÈ (food) industry
wide for 1973*^ When compared to previous years, little change
can be seen but one must realize that the industry has grown
in size over the years. Even t h o u ^ the industry has grown and
is performing much more efficiently,' Adams feels it is far
from utopia* 2 He contends the average housewife still wanders
^"How Chain Management Performed in 1973"t Chain Store Age.

Headquarters Edition, (New York, March 1974) p. Eéé.
2
Adams, Walter, The Structure of American Industry.
(New York; The MacMillan Company, 1971* ) p. 6 3 *
15
TABLE 1-2
HOW c h a i n m a n a g e m e n t
PERFORMED IN 1973
...... ^ ....
Return % %
on Return % Earnings
Total on Sales per share
Chain Capital Equity Growth Growth
1. Longs Drugs 23.1 23*7 33.5 28.7
2. Winn-Dixie 20.2 22.3 35.7 39.0
3. Melville Shoe 19*8 24.7 39.2 28.3
4. Jack Eckerd 19*8 21.6 59.4 60.0
5. Weis Markets 17.3 17.4 20.5 9 .7
6. Dillon Cos. 17*2 22.3 99.9 6 5 .1
7. Kings Dept. S. 16.9 17.4 14.0 9 .3
8. S, S. Kresge 16.4 17.1 40.3 38.5
9. Revco 14.7 17.0 1 0 9 .0 3 7 .6
10. AlhertsoA's 13.8 19.7 4 3 .2 41.5
11. Lucky Stores 13*8 21.4 2 5 .4 11.0
12. J. C. Penney 13*5 15.6 2 4 .9 24.7
13» Lane, Bryant 13.3 15.6 1 9 .0 1 9 .7
14. Sears, Roebuck 12.7 14.9 1 9 .2 1 5 .9
15. Edison Bros. 12.6 1 6 .1 2 5 .5 3 4 .4
l6. Federated Dept. S. 12.6 13.9 22.4 1 9 .1
17* Mercantile Strs. 12.6 15.2 24.8 18.6
18. Levitz Fum. 12.5 16.3 5 2 .0 2 6 .1
19. Rite Aid 12.3 16.7 5 5 .5 4 5 .5
20, Safeway 12.1 14.4 2 0 .5 9 .6
SOURCE I "How Chain Management Performed in 1973",

Chain Store Age. Headquarters Edition, (New York, March 1974)
p. E66.
16
blindly down the isles just as she did years ago. Adams*
opinion could be disputed, however. The use of unit pricing,
consumer awareness, and stricter labeling have all contributed
to enhancing the market in the sense of shopper awareness.
All of these components are important considerations for
the prospective supermarket owner. The retail food industry
is fairly uniform throughout the United States. Great Falls
and Montana markets do not differ much from other midwestem
or western cities, with respect to the issues discussed above.
CHAPTER II
POPULATION
The population of Great Falls has grovm significantly

in the last 30 years. During the fifties and early sixties
( 1 9 5 0 - 1 9 6 3 ) total population grew by more than seventeen
thousand persons (Table 2-1). More recently, growth has

slowed. Population has failed to meet projected levels since
1961. The 1 9 7 0 census of population showed significantly
lower levels than had been anticipated and current estimates
show the city of Great Falls grew less than 1% between year
ends 1 9 7 2 and 1973»
Coupled with this small percentage in growth is the fact
that Cascade County showed a drop in population over the same
period (1972 - 1973)* While the city gained an estimated 1,081
people, overall county figures showed an estimated decline of
some 5 0 0 people (Table 2-2). The county losses were primarily
in the age groups of 20 - 40 years.^ This phenomenon is partly
explained by the fact that Great Falls natives migrate to
larger urban areas when they reach working age. These
losses may be directly correlated with the individuals seeking
education, training, employment, and fulfilling military
Cascade County USDA Committee for Rural Development,

Cascade County Situation Statement— 1972 with Special Emphasis
on AgricultureI (Cascade County, Great Falls, Montana, I9 7 2 ),
p. 8 ,
17
18
TABLE 2-1
GREAT FALLS POPULATION ESTIMATES

Year Population
1940 ............................... 29,928^
1950 ................................. 39,214^^
i96 0 ..... .......................... 55,357®^^
1963 ............................... 5 6 ,7 7 7 ^
1967 ................................. 38,670b
1970 ............................... 6 0 .0 9 1 ^^
1972 .............. ................. 6 1 ,1 7 3 ^
1973 ............... ,
6 2 254^1
1975 ............................... 63,183^
1980 ............................... 6 6 ,6 7 1 ^^
®-U,S. Department of Commerce, Bureau of the Census,

1940 Population. Number of Inhabitants. Vol. 1, State of
Montana,(Washington B.C.* Government Printing Office,)
p. 6 1 9 .
Q-^1960 Population. Number of Inhabitants, p. 28-13.
^^1970 Population. Number of Inhabitants, p. 28-13.
bAssuming a Straight Line Trend i9 6 0 - 1970, 473.4
Per Year.
Êditor & Publisher Company, 1972 Editor & Publisher
Market Guide. (New York: Editor & Publisher Company, Inc.,
1 9 7 1 ), p. 2 3 0 .
Gll971 Editor & Publisher Market Guide, p. 2 7 7 .

^Figures obtained from The Department of Intergovern
mental Relations, Research and Information Systems Division,
State of Montana.
19
TABLE 2-2
CASCADE COUNTY POPULATION ESTIMATES

Year Population
1940... ............................... 4l,99f
1950 ............................... 53,027^-1
i 96 0 ..................... .......................................................... 7 3 .4 1 8 ^ 1
1963 .................................. 75,934b
19 67 ............................................................................... 7 9 ,2 8 6 b
1970 ................................................................ .. 8 1 ,8 0 4 3 -2
1972 ................................................................................ 8 4 , 2 0 0 0
1973 ...................................... 83,700c
1975 ............................... 87,171^^
1980 ............................... 93,213^^
Û.S. Department of Commerce, Bureau of the Census,

1940 Population. Number of Inhabitants. Vol. 1, State of
Montana, (Washington D.C.: Government Printing Office, 1942),
p. 619
3-11 9 6 0 Population. Number of Inhabitants, p. 28-15.
3-2i970 Population. Number of Inhabitants, p. 28-13-
bAssuming a Straight Line Trend I9 6 O - 1970, 8 3 6 . 6 per
year.
CU.S. Department of Commerce, Bureau of the Census,
Current Population Reports. Population Estimates, P-26, No. 53,
(Washington D.C. : Government Printing Office, February 1974),
p. 3.
^Figures obtained from The Department of Intergovernmental
Relations, Research and Information Systems Division, State of
Montana.
20
obligations. At the same time, young people from Monteina's
rural areas migrate to Cascade County for employment in or
near Great Falls.^ This migration serves to further limit
the job market for young adults in Great Palls.
The overall declining population growth has been caused
by various other factors in the local economy. A 1970 merger
between Great Northern and Burlington Northern Railroads was
2
the cause of many job losses. Burlington Northern closed
their car repair shop and the main line for rail traffic was
moved. Moving this main line, which connected the south,
midwest, and west coast to Great Falls, increased shipping
time enough to discourage a few businesses. Two wholesale
parts businesses curtailed their Great Falls operations as
a result.
In 1 9 7 2 , expectations for a defense-related economic
boom were raised and obliterated. Northern Montana was chosen
for the site of a safeguard anti-ballistic missile system.
There were expectations for at least 3500 employees who would
initially live and shop in Cascade County. However, the 1972
Strategic Arms Limitation Treaty with Russia was signed and
the project was closed. At about the same time, the Anaconda
Company closed its zinc and aluminum wire plants causing a
layoff of almost 900 employees.
^THK Associates, Inc., Economic Base Study. 1974 Citv of

Great Falls and County of Cascade Montana. (Great Falls, M T ,
Great Falls City/County Planning Board, October 1974.) p. 3 6 ,
Îbid., p. 7 .
21
The State of Montana and various independent agencies

have made population projections through 1980 for Cascade
County and the City of Great Falls (Appendix Tables 1, 2, 3 ,
4, 5)» When looked at collectively, obvious discrepancies
can be seen in the magnitude of these different projections.
Most of the estimates were high for the early seventies
and it is likely they are high for the years 1975 through 1980.
For purposes of this study, the conservative figures
obtained from the Research and Information Systems Division,
Department of Intergovernmental Relations, State of Montana
are thought to be a more realistic reflection of what will
happen in Great Falls in the near future (Table 2-1), A
continuing sales pattern in agriculture and a stable population
for Malmstrom Air Force Base should produce this projected
growth.
The 1980 Great Falls population is forecasted to reach
6 6 ,6 7 1 persons. Assuming no major changes in current food
consumption patterns, this small amount of population growth
may or may not warrant a new supermarket. Retail food sales
forecasts for the Great Falls area are developed in chapter
three as part of this feasibility analysis. However, alterna
tives to a new supermarket must be carefully examined.
Perhaps the existing market can easily be penetrated and a
new store can be profitable. Another possibility is serving
the existing market with a better geographical location.
These and other pertinent factors are examined throughout
this paper.
CHAPTER III
GROCERY STORE SALES
Wholesale distribution of groceries in Great Falls

is done primarily by the chain stores supplying themselves
(Appendix 6). All of the larger stores are vertically
integrated to the point of self-sufficiency. They package
and distribute their own meats, canned goods, baked goods,
produce, and even some dairy goods. Also, greater savings
are made through purchasing large amounts of other brands.
The remainder of distribution for all of the smaller
stores is handled by three firms. Circle K and Rosauers are
the only chain stores served by another firm. Along with two
other cooperative type stores. Circle K is supplied by Associated
Foods from Helena, Montana. Super Save IGA and all of the
independents are served by Ryan Merchantile Company of Great
Falls.
The wholesale and retail industry growth pattern, as
indicated by the number of outlets, is unique (Table 3-1).
While wholesale units dropped substantially in I9 6 7 , they
increased to their previous level in I9 6 9 and dropped again
in 1 9 7 2 . Throughout this period, though, the size of the
units, as indicated by number of employees, continued to
grow. This growth in size, especially for 1972, indicates a
larger more concentrated industry structure.
While retail units increased by only one in I9 6 9 , they
22
23
TABLE 3-1
INDUSTRY CONCENTRATION
WHOLESALE
Total Number of Reporting Units by Employment-Size

Reporting
Year Units 1-3 4-7 8 -1 9 2 0 -4 9 5 0 -9 9 100-249 2 5 0 -4 9 9
1964 22 a 6 7 1 - - —
19 67 17 5 6 4 2 — - -
1969 22 8 5 5 3 1 - —
1971 21 6 5 7 3 - - -
1972 17 4 4 6 1 1 1 -
RETAIL
1964 46 29 6 6 2 1 2 -
1967 42 24 7 6 2 2 - 1
1969 43 18 12 7 3 2 1 -
1971 42 14 14 9 2 2 1 -
1972 36 10 11 10 2 1 2 —
SOURCEt U.S. Department of Commerce, Social And Economie

Statistics Administration, County Business Patterns 1972-Montana,
comp. Bureau of the Census, CBP-72-28, (Washington D.C.: Govern
ment Printing Office, June 1973), p. 2 3 .
24
dropped substantially by 1972. They also showed a continued
growth pattern when looking at the increasing numbers of
employees.
Retail grocery sales have grown steadily over the years.
Total 1973 sales for Great Falls were estimated to be in excess
of $4l million.^ This represents almost $15 million dollars
of growth in a ten year period (Table 3-2). One obvious reason
for this increase is the growing population. Another is the
higher standard of living which people enjoy today.
In measuring growth characteristics for Great Falls smd
Cascade County, the population figures are correlated with
weekly sales volume (Table 3-2 and 3-3)» Dividing sales
volume by population yields food sales per person per week.
These figures will be used in chapter five in evaluating sales
potential for a new supermarket.
In addition, current sales are evaluated on the basis of
store square footage (Table 3-4). Both sales area and total
store area are used as criteria. Dividing annual sales
volume by the square footage reveals the revenue per square
foot of each store on an annual basis.
Great Falls grocery sales are distributed through a fairly
diversified network of stores. These stores can be categorized
under four headings (Appendix 6). The first and largest group
includes five different chain stores which account for 66%
4
Bill Communications Inc., Sales Management— 1974 Survev
of Buying Power. Monday, July 8, 1974, (New York, Bill Pub-
lishing Agency, 1974), p. D-66.
25
TABLE 3-2
GREAT FALLS POPULATION & RETAIL FOOD SALES

CHARACTERISTICS
Year Sales Sales Weekly

End Total (000) Weekly Population® Sales/Person
1975 46,886 9 0 1 ,6 5 0 6 3 ,1 8 5 1 4 .2 7 ®
1 9 73 4 1 ,2 0 5 b 792,404 6 2 ,2 5 4 1 2 .7 3
1972 33,8 1 ia 6 5 0 ,2 1 2 6 1 ,1 7 3 1 0 .5 4
1970 31,242^1 6 0 0 ,8 0 7 6 0 ,0 9 1 1 0 .0 0
1967 2 5 ,7 7 6 a! 4 9 5 ,6 2 2 58,670(1 8 .4 5
1 9 63 2 6 ,3 1 0 a2 5 0 5 ,9 6 2 56,777<^ 8 .9 1
2-U.S. Department of Commerce, 1972 Census of Business.

Retail Trade-Montana, comp. Bureau of the Census, Vol. 2,
Trade Area Statistics, (Washington D.C.: Government Printing
Office, 1973)I p. 27-8.
^^1967 Census of Business. Retail Trade-Montana, p. 28-16.
0^1963 Census of Business. Retail Trade-Montana, p. 28-18,
^Bill Communications Inc., Sales Management-197^ Survev
of Buying Power. (New York: Bill Publishing Agency, 1974),
p. D-84.
^^Bill Communications, Inc., Sales Management-1971
Survev of Buying Power, p. D- 6 6 .
^See Table 2-1.
(Âssuming a straight line trend i9 6 0 - 1970, I9 6 O =
55,357, 4 7 3 . 4 per year.
® 1973 figure of $12.73 adjusted for 12.1^ growth in
consumer price index--food component, 1 9 7 3 - 1 9 7 5 .
26
TABLE 3-3
CASCADE COUNTY POPULATION & RETAIL

FOOD SALES CHARACTERISTICS
Year Sales Sales Weekly

End Total (000) Weekly Population® Sales/Person
1975 5 1 ,4 9 4 9 9 0 ,2 6 3 8 7 ,1 7 1 1 1 .3 6 ®
1973 44,100^ 848,076 8 3 ,7 0 0 1 0 .1 3
1972 3 7 ,2 7 8 a 716,884 84,200 8 .5 1
1970 33,708^1 648,230 81,804 7 .9 2
1967 28,1313-1 5 4 0 .980 79,286(1 6.82
1963 27,625a2 5 3 1 ,2 5 0 75,934d 7 .0 0
Û.S. Department of Commerce, 1972 Census of Business.

Retail Trade-Montana, comp. Bureau of the Census, Vol. 2,
Trade Area Statistics, (Washington D.C.: Government Printing
Office. 1973). P- 27-8.
1967 Census of Business. Retail Trade-Montana, p. 28-13.
^^1963 Census of Business. Retail Trade-Montana, p. 28-14.
^Bill Communications, Inc., Sales Management-1974 Survey
of Buying Power. (New York: Bill Publishing Agency,1974),
p. D-84.
^^Bill Communications, Inc., Sales Management-1971 Survev
of Buying Power, p. D-66.
*^See Table 2-2.
Âssuming a straight line trend i9 6 0 - 1970, i9 6 0 =
73.^18, 8 3 6 .6 per year*.
® 1973 figure of. $ 1 0 . 1 3 adjusted for 12.1^ growth in consumer
price index— food component, 1973 - 1975*
CD
■D
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■D GREAT FALLS RETAIL GROCERY SALES

CD
C/)
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3 ‘Annroximate SQuare Footaee Estimated Sales .. Annual Sales/Sauare Foot
O Weekly
Store Name Sales Area Annual
(1.000) Sales Area
Total Area (1.000) Total Area
8
Albertson's 23,000 37,500 $103 $5,356 $233. $143.
(O '
Buttrey's 17.100 27,000 65 3,380 147. 125.
Buttrey's #2 25,000 36,000 82 4,264 170. 118.
Buttrey's #3 6,500 9,750 19 988 152. 101.
3.
3
CD
"
Buttrey's #4 20,000 33,000 64 3,328 166. 101.
CD
■D ♦Rosauer's 15,400 20,700 39 2,059 134. 100,
O
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C Safeway #1 ■ 12,500 15,500 56 2,943 235. 190.
a
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3 Safeway #2 12,750 15,600 78 4,056 318. 260. •nJ
■D
O Super Save #1 10,000 16,650 45 2,382 238. 143.
CD
Q. Super Save #2 9,600 15,000 41 2,174 226. 145.
Super Save #3 16,000 22,600 47 2,444 153. 108.
■D Western Whsle 18,600 20,000 29 1,508 81. 75.
CD
C/)
Noble *s 8,000 10,200 28 1,456 182. 143.
C/)
Thriftwav i.800 7.100 12 624 108. 88.

NOTEI Square footage figures are approximations which were obtained while talking with
store managers and by measuring the individual store areas.
Sales estimates were made from 1973 Sales Management figures (Table 3-2) and the figures
shown in Appendix 6,
Individual store addresses are given in Table 3~5*
^During the assemblance of this paper, Rosauer's sold out and store became Shop n' Jot.
All figures are assumed the same.
28
of the city's grocery sales. Individual stores range in size
from small convenience types to large diversified complexes.
Being headquartered in Great Falls, Buttrey's Incorporated
is the leading competitor, Buttrey's operates four stores
which have a combined annual sales in excess of $11 million
(Table 3-4).
The next largest category includes voluntary and coopera
tive groups. This group of stores does 20^ of the city's sales.
Super Save IGA Stores are the main component of this category.
They own and operate three stores which do $7 million in sales
annually. These stores would be classified as medium-sized
supe rmarkets,
The remaining two categories include independents and all
others. These groups do the remainder of the Great Falls sales
volume.
Allôf these grocery stores are located inside the city
limits. The largest concentration is along 10th Avenue South
where there are two Buttrey's, one Albertson's, one Rosauer's,
and one Super Save IGA (Map 1 ). Also, there are numerous
independents and convenience stores along this road. Other
fairly concentrated areas would include the downtown area with
one Safeway and one Buttrey's store. The west side of town has
one Safeway, one Buttrey's, one Super Save IGA and Noble's
Foodland.
Many other factors which are generally considered when
looking at existing competition include the number of check
stands, parking spaces, and the number of employees (Table 3-5)•
29
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TABLE 3-5
GREAT FALLS GROCERY STORES
Map Store Name Check Parking Number of

Index Address Stands Spaces Employees
A Albertson's 286^ 60
Holiday Vllg 9
B Buttrey's #1
Holiday Vllg 7 150^ 63
C Buttrey's #2 82
2 6 1 5 10 Av S. 9 165
D Buttrey's #3 4 18
1st Av N. 30
E Buttrey's #4 8 400^ 63
Westgate Ctr
F ♦♦Rosauer*s 11
4800 1 0 Av S. 5 75*
G Safeway #1 68
1st Av N. 5 19
H Safeway #2 6 40 26
6 th St. NW
I Super Save # 1 6 28
2 5 th St. N. 35*
J Super Save #2 4 130

10th Av S. 25
K Super Save # 3 6 120

Smelter & Div. 29
L Western Whsle 4 60
83 3 Smelter 5
M Noble '8
6 1 7 1st Av NW 3 35 25
N Thriftway 2 10 8
8 2 5 5th Av S.
NOTE: This table's figures were obtained by talking with

each store manager and by counting personally.
♦Denotes current parking directly adjacent to other shopping
area parking.
♦♦See Table 3-4.
CHAPTER IV
POSSIBLE LOCATIONS FOR A NEW SITE
At the onset, three different locations were chosen as

possible sites (Map 2), All of these areas were looked at on
a general basis. Among the considered criteria were existing
competition, traffic volume, number of households, existing
schools, personal incomes and housing valuations surrounding the
site areas. Other items considered were the recent trends of
building permits, zoning restrictions, existing rental proper
ties and the potential for new private and rental properties.
After generally considering all three locations, site
number 3 was eliminated. The primary reason for this was existing
competition. Five medium-to-large sized supermarkets serve
this area. They offer a complete assortment of grocery
coverage. Buttrey's Westgate and Safeway are the main components
with Super Save IGA, Noble's Foodland, and Western Wholesale
being the remainder. Numerous Circle K and other convenience
stores fill any open gaps to provide a most comprehensive
service to the area.
In evaluating site number 1, several interesting character
istics are worth considering (Map 3)« First, the average number
of persons per household is slightly higher than the overall mean
for Great Falls (Table 4-1). This most likely results from a
multitude of factors. Even though no study of ages was made,
the presence of more children probably makes the difference,
31
32
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8 TABLE 4-1
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STATISTICS FOR IMMEDIATE TRADE AREA OF SITE NUMBER 1
AND GREAT FALLS METROPOLITAN AREA
3.
3 "
CD
CD
■D Family Characteristics Household Characteristics
O
Q. Housing
C
a Persons Per Persons Per Units
o
3 Ponulation Number Family Number Household (Total)
■D
O Site #1 1,472 3.38
4,979 1,313 3.79 1,573
CD
Q.
City 72,916 17.859 4.08 22,589 3.23 23,885
■D
CD SOURCE I 1970 Census, Research & Information Systems Division, Montana Department of
C/)
Intergovernmental Relations, State of Montana, Helena, Montana.
C/)
NOTE I See Map 3 for approximate size of area around Site Number 1,
35
This type of data is useful when budgeting for a new store.
Second, the value of owner-occupied housing units around
site number 1 is h i ^ compared to city-wide, statistics (Table
4-2). A l t h o u ^ this site has less housing than site number 2,
it definitely has more houses valued over $25,000 (Table 4-6
for comparison). In addition, the annual incomes of home owners
around site number 1 is concentrated in the $15*000 plus category
(Table 4-3).
Site number 1 also has shown significant growth over the
past four years. By comparing the number of residential
building permits issued during these years, growth was noted
for both sites 1 and 2 (Table 4-4). This recent growth
coupled with current building indicates a majority of Great
Falls housing growth is taking place around site number 1.
Much of the land is still undeveloped and could easily provide
growth through 1980.
The City of Great Falls has no zoning restrictions for
unplatted area. This leaves much of the land near site number
1 open for almost anything. Both the Montana and Country Club
Additions have provisions for one block of multi-unit rental
zoning.^ Grand Vista and Bel-View Palisades have no provisions
for these but Bel-View has a one block provision for commercial
use (ie. a small shopping center).
There is one elementary school (Meadow Lark) located within
the area of site number 1. This school has an enrollment of 535
Ôffice of the Building Inspector, Record of Building

Permits, City of Great Falls, Montana.
CD
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TABLË 4-2
W
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3
0
3 COUNT & PERCENT OF SELECTED OWNER-OCCUPIED UNITS BY $ VALUE FOR SITE NO. 1
CD
AND CITY OF GREAT FALLS
8
c3
i"
' Site No. 1
1
3 Under $5i000- $10,000- $15,000- $20,000- $ 25,000- $35,000- $50,000
CD
$5,000 $9.999 $14,999 $19,999 $24,999 $34,999 $49,999
3.
3 "
CD
37 138 175 126 92 214 156 52
■CDD
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C
a I4j5 m 13?^ 9^ 22^ 16^ 5^
O
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■D
O Great Falls
w
CD
Q. o\
281 1452 2429 3445 1485 1027 398 109
■CDD 2 . 6^ 13. 6?S 23J{ 32.4^ 14^ 9 .7 ^ 3 . 7JS l.OJl

3
C/)
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SOURCE 1 1970 Census, Research & Information Systems Division, Montana Department
of Intergovernmental Relations, State of Montana, Helena, Montana.
NOTE I See Map 3 for approximate size of area around site number I.
■CDD
O
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■CDD COUNT & PERCENT OF SELECTED OWNER-OCCUPIED UNITS BY VALUE OF UNIT

& INCOME OP OWNER FOR SITE NO. 1
C/)
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3
0
3 Value less than $9,999 Value $10,000— $19,999
CD
8
Under $ 5,000- $10,000- $15.000 Under $5,000- $10,000- $15.000
c3
i"
' $5,000 $9.999' $14,999 + $5,000 $9,999 $14,999 +
1
3
CD 56.5 61 27 1 43 87 60 26
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39% kz%> 18ÿg 1% 20^ ko% 28^ 12^
"CDO
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■D Value $20,000— $34,999 Value $35,000 + + +
O
CD
Q.
Under $5,000- $10,000- $15.000 Under $5,000- $10,000- $15,000
$5,000 $9,999 $14,999 + $5,000 $9,999 $14,999 +
■CDD
27 21 67 180 13 30 26 132
C/)
C/)
-9 % 7% 23^ 61^ 6% 15^ 13^ 66%
SOURCE I 1970 Census, Research & Information Systems Division, Montana Department
of Intergovernmental Relations.
NOTE I See Map 3 for approximate size of area around site number 1,
38
TABLE 4-4
RESIDENTIAL BUILDING PERMITS

January 1971--January 1975
Location . No. of.Permits Issued
Site No. 1 ....
Site No. 2 ....
SOURCEI Office of the Building Inspector, Record

of Building Permits, City of Great Falls, Montana.
39
and ranks fourth out of twenty-one Great Falls elementary
schools (Appendix ?)• The current capacity of the school is
6 0 0 .^ Great Falls overall school enrollments are down and
school officials do not anticipate any need to enlarge Meadow
Lark in the short run. If this need arises, they will bus
excess children to the nearest under-capacity school. For
the long-run, building another school is entirely possible.
Existing competition around site number 1 consists of
one small convenience store. The majority of persons from this
area must travel across the Missouri River to Holiday Village
or across the Sun River to Central Avenue West when doing their
weekly grocery shopping. This reason helps to make site
number 1 a very good possible location either now or in the
future.
Site number 2 differs in many ways from site number 1
(Map 4). The population is much larger than site number 1 and
likewise there is much more existing housing. The average
number of persons per household is also larger (Table 4-5)»
However, housing values are not as h i ^ and the incomes
of these people are more heavily skewed towards the middle-
class ranges (Tables 4-6, 7). Due to Malmstrom AFB being
directly adjacent to this area, many of these people could be
military and consequently do their grocery shopping at the
commissary. This could either help or hinder this area in
the near future. The President has legislation before Congress
Înterview with Dr. H. Wenaas, Superintendent of Public

Schools, Great Falls, Montana, November 6, 1974.
40
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TABLE 4-^
8
ci'
STATISTICS FOR IMMEDIATE TRADE AREA OF SITE NUMBER 2
AND GREAT FALLS METROPOLITAN AREA
3
3"
CD
Family Characteristics Household Characteristics
CD
■o Housing
O
Q. Persons Per Persons Per Units
C
a Ponulation Number Familv Number Household (Total)
o
3
■o Site #2 10,414 2,563 4.06 2,796 3.72 2,879
o
f
City 72,916 4.08 H
CD
Q.
17.859 22,589 3.23 23.885
SOURCE I 1970 Census, Research & Information Systems Division, Montana Department of
■CDo Intergovernmental Relations, State of Montana, Helena, Montana.
C/)
C/) NOTE I See Map 4 for approximate size of area around Site Number 2.
■CDD
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Q.
■CDD
C/)
W TABLE 4-6
o"
3
0
3
CD COUNT & PERCENT OF SELECTED OWNER-OCCUPIED UNITS BY $ VALUE FOR SITE NO. 2
8 AND CITY OF GREAT FALLS
c3
i"
' Site No. 2
1
3
CD Under $5.000- $10,000- $15.000- $20,000- $25.000- $35.000- $50,000
$5#000 $9.999 $14,999 $19.999 $24,999 $34.999 $49,999 +
3.
3 "
CD
■CDD 7 107 252 826 391 192 4l 4

O
Q.
C
a 6)6 14^ 45)6 21)6 11)6 2)6 . .2)6
3
O
■D
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Great Falls
CD
Q. ■p-
N
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■CDD
3
2.6)6 13.6)6 23)6 32.4)6 14)6 9.7Jf 3.7^ 1.0^
C/)
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of Intergovernmental Relations, State of Montana, Helena, Montana.
NOTE I See Map 4 for approximate size of area around site number 2.
■CDO
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TABLE 4-7
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COUNT & PERCENT OF SELECTED OWNER-OCCUPIED UNITS BY VALUE OF UNIT
■CDO & INCOME OF OWNER FOR SITE NO. 2
C/)
W Value less than $9,999 Value $10,000— $19,999
o"
3
0
3 Under $5,000- $10,000- $15,000 Under $5,000- $10,000- $15,000
CD
$5.000 $9,999 $14,999 + $5,000 $9,999 $14,999 +
8
c3
i"
' 79 60 24 4 614
195 573 303
3
1
CD
36% 14?5 1$ 12f. 3¥ 36^ 18^

3.
3 "
CD
■CDO
O
Q.
C
a
O
Value $20,000— $34,999 Value $351000 + + +
a;
1 Under $5,000- $10,000- $15.000 Under $ 5,000- $ 10,000- $15,000

1 $ 5.000 $9.999 $14.999 + $5,000 $9.999 $14,999 +
0
c
%
1 59 128 284 288 3 14 9 89
W
3
8!? 17^ 37^ 38^ 3$ 12^ 8^ 11$
SOURCE I 1970 Census, Research & Information Systems Division, Montana Department
of Intergovernmental Relations,
NOTEi See Map 4 for approximate size of area around site number 2,
kk
which will force the closure of most U.S. commissaries.^
The results of this act will greatly enhance the food market
in this area and in Great Falls.
Building trends in this area have been very slow (Table
4-4). Practically all platted tracts have been developed.
Unplatted areas to the northeast side of site number 2
could be developed in the future but are not too feasible
for the next few years. There are many multi-unit dwellings
in this area and a good potential for many more. As mentioned
earlier, unplatted land in Great Falls has no zoning restric
tions concerning type of dwellings. The blocks are arranged
so that site number 2 could be patroned more easily by
walkers.
The area surrounding site number 2 contains three ele
mentary schools, one junior h i ^ , and a deaf-blind school.
All three elementary schools are quite large with Lewis and
Clark being second largest in the city (Appendix 7). Projec
tions do not include any new schools needed in this area in
2
the near future.
Existing competition is non-existent right at the site
area, but two convenience stores are located within the site's
outlined territory. Other competition would come from a
Super Save IGA on 2 5 th Street North and both a Super Save IGA
1
Stores * Go It Alonet Ford Orders Operations Be Self-
Supporting. Air Force Times, Vol. 35, No. 22, January 1, 1975«
Front Page.
2
Interview with Dr. H. Wenaas, Superintendent of Public
Schools, Great Falls, Montana, November 6, 1974
45
and Shop n* Jot on 10th Avenue South. Some people may even
venture down as far as Buttrey's Super Store or Holiday Village
or downtown to shop at Safeway,
CHAPTER V
FINANCIAL ANALYSES AND CONCLUSIONS
The feasihility of a new business rests on an analysis

of sales, operating costs, investment requirements, financing
arrangements, and finally, profitability. When considering
a new medium-to-large sized supermarket, sales potential is
very likely the most important determinant of economic
feasibility. Economies of size are well recognized in the
full service retail food business. The food potential and
size of store must closely correlate or else the low profit
margins will be erased by expenses.
The data in previous chapters points to a medium-to-
large sized supermarket as one with approximately 20,000 square
feet of space generating approximately $ 5 0 , 0 0 0 in sales weekly.
These parameters have been selected for use in developing a
pro-forma income statement and in determining investment and
financing requirements for a new store. A conservative
approach has been taken with respect to initial investment,
limiting it primarily to fixtures and inventory. Land and
building are assumed leased.
The pro-forma income statement on the following page
indicates a gross profit margin of 19.42 percent. This
figure was obtained in an interview with Mr. Chuck Mereness,
a Super Save IGA store manager. This is the current figure
46
47
NEW MEDIUM TO LARGE SIZED SUPERMARKET
PROJECTED INCOME STATEMENT
FIRST 12 MONTHS
WEEKLY YEARLY
AMOUNT PER CENT AMOUNT
INCOME
Sales (all departments) $5 0 ,0 0 0 1 0 0.0 0 $ 2 ,6 0 0 , 0 0 0
Cost of Sales 40,290 8 0 .58 2 .095.080
Gross Margin $ 9,710 19.42 $ 50 4,9 20
CONTROLLABLE EXPENSES:
Wages & Fringes $ 4,080 8 .1 6 * $ 21 2,1 60
- Operating Supplies 345 .69 17 ,94 0
Outside Labor & Repairs 150 .30 7.800
Advertising 435 .87 22,620
Wholesale Buying Service 750 1 .5 0 39,000
Administrative & Legal 250 .50 13 ,00 0
Bad Debts 50 .10 3 .6 00
Total Controllable Expenses $ 6,060 12.12 $ 315,120
FIXED EXPENSES:
Rent $ 1,000 2.00* $ 52 ,00 0
Utilities 400 .80 20,800
Insurance 175 .3 5 9,100
Taxes & Licenses 380 .76 1 9 ,76 0
Interest 51 6 1 .0 3 * 26,822
Depreciation ___ 550 1.10* 2 8 .60 0
Total Fixed Expenses V> 1.021 é .04 {Î 157.082
Total F & C Expenses S 9.081 18.16 Î 472.202
Income Before Taxes $ 629 1.26 $ 3 2 ,718
Federal Tax Î5 154 .31* 8,035
!! 475 .95 $ 24,683
State Tax 10 .02* . . 532
NET PROFITS $ 465 .93 $ 24,144
SOURCES: Interview with Mr. F. J. Raucci, Buttrey Foods
Inc., Great Falls, Montana, January 22, 1975-
Interview with Mr, C. Mereness, Super Save IGA
Store Manager, 10th Avenue South, Great Falls, Montana, March
5, 1975-
National Association of Retail Grocers of the
United States, Inc., Financial Planning Report— Issue #12,
February 1975-
Small Business Administration, 1973 Food
Yearbook.
NOTE: Âsterisk figures are calculated individually in
Appendix 8 or later in this chapter. All wage and fringe
figures are current rates obtained in an interview with Mr.
F. J. Raucci of Buttrey Foods Inc., Great Falls, Montana.
48
his company would use for a store of this size and sales in
Great Falls. After all operating expenses, profit before tax
equals 1 . 2 6 percent of sales or $ 6 3 0 weekly on $ 5 0 ,0 0 0 .
Federal and state corporate income taxes are calculated in
Appendix 8 and are approximately equal to .33 percent of sales.
This leaves an after-tax net profit margin of .93 percent or
approximately $465 per week.
Most of the expense percentages were obtained in a
similar manner to the profit margins. Interviews with
representatives of both Buttrey's and Super Save IGA stores
revealed the actual figures used in Great Falls. National
and regional statistics were obtained from the National
Association of Retail Grocers and the local Small Business
Administration. Taken collectively, final expense percentages
were arrived at with the exception of the asterisk items on
the pro-forma income statement. These figures are derived
individually in Appendix 8.
The sales forecast for each department was arrived at
in a similar manner. Firms in Great Falls use the same
department percentages as indicated by national statistics.
The following calculations show the projected amount of sales
for each department.
Department Amount. of Total
Grocery $3^,500 73^
Meat 10,000 20
Produce 3 ,500 7
Projected Weekly Sales $50,000 100^
SOURCE* Interview with Mr. C. Mereness, Manager,Super
Save IGA, 10th Avenue South, Great Palls,Montana, March 1 9 7 5 .
49
Wage and fringe pay scales used represent exact amounts
for the Great Falls area as outlined in Appendix 8. These
items are regulated through unions for each position in the
store. Although different pay grades exist for each position,
the most likely combinations for a new store were used. Payroll
and Social Security taxes were calculated for each individual
department. Sales per man hour figures were used in the
calculation of the new store's employment needs (Appendix 8).
Total wages and fringes as a percent of department sales are
summarized below:
Total Wages & Fringes as a Percent of Sales
Department Wage & Fringe Ratios Yield
Grocery 7.86^ 73 5* 7378?^
Meat Q.OZfo 20 1.604C^
Produce 11. ?2 ^ 7 »8 2 0 ^
TOTAL : 8.1622JI5
Since leasing of the store is an assumption, rent was

obtained from a standard industry formula (the greater of
$2.00 per square feet or 2 percent of sales).^ With a
20,000 square foot store and $ 5 0 , 0 0 0 weekly sales, rent was
determined to be $1,000 per week.
Depreciation of fixtures was figured using the straight
line method. Chosen for simplicity, this method assumes a
fixture life of ten years. Fixture costs were figured on a
square footage basis using $14-30 per square foot. This
figure is also based on the opinions of local retailers and
national statistics.
^National Association of Retail Grocers of the U.S. Inc.,

Financial Planning Report--Proiection for a New Supermarket,
Issue #12, (February 1974), p. 7-
50
Investment Requirements
Investment requirements include inventory projected at
$ 5 ,6 0 per square foot plus cost of fixtures and working capital
requirements. These amount to $420,400 as indicated below.
Fixture Cost $286,000
Inventory (2 0 , 0 0 0 x $ 5 *6 0 ) 1 1 2 ,0 0 0
Working Capital (20^ of Inventory) 22.400
TOTAL INVESTMENT $420,400
Less* Investment by Retailer $(100,000)
TOTAL LOAN $ 320.400
Working capital needs and debt financing assumptions

were obtained in a telephone interview with a commercial
loan officer in the Great Falls First National Bank. The
balance sheet on the following page shows a beginning assets,
liabilities, and owner's equity projection for the new store.
This statement assumes that inventories are purchased without
the use of trade credit. Any purchase so arranged can be
reflected in an adjustment to "Accounts Payable" (increase)
and to "Contracts Payable" (reduction of long term financing
requirements) •
Debt Service Capability and Return on Investment
If approximately $2,600,000 of sales are achieved in
the first year, expected after-tax profits should equal
$24,144. Total funds available for debt service are found by
adding first year depreciation to net profit. The loan
principal payments are listed in the following first year loan
amortization schedule. When subtracting principal payments
from available funds, net funds generated for the first twelve
months of business equal $ 3 0 ,9 0 0 .
51
NEW MEDIUM-TO-LARGE SIZED SUPERMARKET

BEGINNING BALANCE SHEET
ASSETS
Current Assetst
Cash on Hand & In Bank $ 22,400
Notes & Accounts Receivable 0
Inventories*
Grocery Department $ 81,760
Meat Department 22,400
Produce Department ^ 7,840
Total Merchandise Inventories È112.000
Total Current Assets $212,000
Fixed Assets*
Fixtures & Equipment $286,000
Reserve for Depreciation 0
Total Fixed Assets $286.000
Total Assets $420.400
LIABILITIES
Current & Accrued Liabilities :
Accounts Payable 0
Notes Payable 0
Accrued Taxes 0
Total Current & Accured Liabilities 0
Fixed Liabilities:
Contracts Payable $320.400
Total Liabilities $320,400
Capital $100,000
Total Capital $100.000
Total Capital & Liabilities $420.400
52
LOAN AMORTIZATION SCHEDULE
Loan of $320,^00— 10 Year Payoff— 9% Simple Interest
PAYMENT INTEREST PRINCIPAL LOAN BALANCE
$ 3 2 0 ,4 0 0
1 $ 2,403 $ 1 ,6 5 6 3 1 8 ,7 4 4
2 2,372 1 ,6 8 7 3 1 7 ,0 5 7
3 2,342 1 ,7 1 7 3 1 5 ,3 4 0
4 2,311 1,748 3 1 3 ,5 9 2
5 2,281 1,778 311,814
6 2 ,2 5 0 1,809 3 1 0 ,0 0 5
7 2 ,2 2 0 1,839 3 0 8 ,1 6 6
8 2,189 1 ,8 7 0 3 0 6 ,2 9 6
9 2.159 1 ,9 0 0 3 0 4 ,3 9 6
10 2,129 1 .9 3 0 3 0 2 ,4 6 6
11 2,098 1,961 3 0 0 ,5 0 5
12 2 ,0 6 8 1 ,9 9 1 2 9 8 ,5 1 4
$26,822 $21,886
Interest of $26,822 divided by 52 weeks = $5l6/wk.
Principal of $21,886 divided by 52 weeks = $421/wk.
PROJECTED CASH FLOW

New Income Projection $24,144
Add Back: Depreciation 28.600
Total Funds Available $52,744
Less: Principal Payments $21.886
NET FUNDS GENERATED $30,858
The profitability of the new store must be analyzed
partially in relation to the level of investment. Two common
profitability ratios are Return on Total Assets and the Return
on Capital. The first ratio gives a yearly return on the total
investment while the second yields a return on the retailer's
investment.
Return = Net Profit after Taxes ulus Interest _ $50.966 __ ^
on Assets Total Assets $420,400 * ^
Return on = Net Profit after Tax _ $24.144 _
Capital Capital “ $100,000 “
53
Since first year financing charges are significant, a Net
Operating Profit Rate of Return is also calculated.
Net Operating Profit _ Profits before Interest & Taxes _
Rate of Return ” Total Investment “
04201% 0 " 14.16^

It should be noted that total investment requirements of
$420,400 assumed inventories purchased without the use of
trade credit. To the extent that some trade credit can be
arranged, less initial investment and long term financing will
be required. This will result in a higher return on invest
ment than that calculated above.
Break-Even Analvsis
A beginning break-even point can be found in relation
to the income statement. If business dropped off severely,
it is assumed that forced cuts in part time and bag boy help
would save approximately $1,333 in wages and fringes. This
amount equals 22 percent of controllable expenses, which can
be classified as variable cost. A breakdown of all fixed
and variable costs is outlined below*
Fixed Costs:
Fixed Expenses (Per Income Statement) $ 3,021
Controllable Expenses (78^) 4.727
Total Fixed Costs $ 7.748
Variable Costs*
Controllable Expenses {2.2%) $ 1,333
Cost of Sales 40.290
The break-even point is calculated from these figures as $46,240.

Break-Even- Fixed Costs = !>7.748 _
Point Variable Costs ^ !^41.623 “
Sales $50,000
5^
The break-even analysis is not complete, however, without
showing the cash flow break-even point. Fixed costs must be
adjusted to eliminate depreciation, a non-cash expense.
Cash Plow Fixed Costs $ 7 ,7 ^ 8 - $550 = $7 ,1 9 8
Variable Costs = $41,625
Cash Flow BEP = -— $7 p198 = $42,957
$5 0 ,0 0 0
Food Potential - Site Area Number 1
Food potential for site area number 1 is figured using
food sales per person in Great Falls times number of households
times number of persons per household. Year-end food sales
per person equal $14.27 for 1974 (Table 5-2). Average persons
per household in site area number 1 equal 5*38 (Table 4-1).
Assuming growth in housing units correlates directly to
households, the number of 1 9 7 5 households can be estimated
using building permit data. The 1970 figure of 1,573 housing
units grew to 1,828 or 15»9J^ by the beginning of 1975 (Tables
4-1, 4-4). The 1 9 7 0 figure of 1,472 households increased by
1 3 .9 ^ equals 1 , 6 7 6 households estimated for 1 9 7 5 in site area
number 1.
Food Potential for = $14.27 x 5 . 5 8 x I6 7 6 = $8 0 , 8 5 7
Site Area Number 1
If approximately 7 2 ^ of all households in site area
number 1 spend of their food budgets in the store, the
break-even point of $46,240 will be accomplished. It would
take approximately 77^ of all households spending 80^ of their
food budgets to equal $ 5 0 , 0 0 0 weekly sales.
55
Food Potential - Site Area Number 2
Food potential for site area number 2 is figured the
same way as that calculated for site area number 1. Housing
units grew only 1.5^ (Table 4-4). The number of households
beginning the 1 9 7 5 year is estimated to be 2 8 3 8 with 3 . 7 2
persons per household (Table 4-5)I the food potential for
site area number 2 is estimated at $ 1 5 0 , 6 5 3 as indicated
below.
Food Potential for = $14.27 x 3 «72 x 2 8 3 8 = $150,653
Site Area Number 2
If approximately 6l?5 of all households in site area
number 2 spend 5 0 ^ of their food budgets in the store, the
break-even point of $46,240 will be accomplished. It would
take approximately 66% of all households spending 5 0 ^ of their
food budgets to equal $ 5 0 , 0 0 0 weekly in sales.
Final Conclusions
The building of another medium-to-large sized super
market in Great Falls would be feasible if certain conditions
can be achieved. First, weekly sales must approximate $46,240
to break even and $50,000 to make a reasonable profit. Second,
a general industry consensus is that the gross profit margin
should equal 18 percent or more. Without this amount, expenses
will force the store owner to operate at or near a loss.
Expenses must also remain fairly constant. If rent or wages
were to suddenly double for some unknown reason, profits would
be seriously jeopardized.
56
In addition to these requirements, certain intangible
factors must be mentioned. Things like community feeling,
brand loyalty, and convenience are all very importemt. If
the surrounding homeowners were strongly against another
business in a site area, housewives wouldn't patronize the
store and it could fail as a result. Similarly, if local
consumers have a strong loyalty to a certain chain, the
independent store may suffer. A door-to-door survey could
answer many of these questions.
Although both site locations presently have the food
potential to generate needed sales, it is very unlikely site
number 1 would do so at this time. The percentage of shoppers
needed to consistently generate sales is most likely too high.
Military people living in this area who shop at the Base
Commissary can't be utilized. Site number 1 is a real
prospect for the near future, however, as the rate of housing
construction in Great Falls is highest in this area. There
is also the possibility of purchasing and expanding the
existing convenience store located in this area.
Site area number 2 is also a good prospect for now and
in the future. Its location makes it easily accessible and
the traffic flow on Second Avenue North is fairly constant.
The population in site area number 2 is greater than in site
area number 1 and there are more schools (relating to the fact
that there are more persons per family than average). Several
multiple unit dwellings can also be found in this area.
57
A large portion of this population, however, is
most likely military and therefore competition from the Base
Commissary would be stronger, A flexible operating schedule
could bring in many of these customers, though. As mentioned
in Chapter IV, congressional legislation may close many U. S.
commissaries in the near future. This would be a major factor
concerning the food potential of site area number 2. Other
competition consists mainly of two Circle Ks and Shop n* Jot
on 10th Avenue South. If similar hours to Circle K and the
reasonable prices of Shop n* Jot were employed, a full
service medium-to-large sized supermarket in this site area
is very feasible.
APPENDIX 1
CITY POPULATIONS BY AGE AND SEX
USING MIGRATION-SURVIVAL METHOD
• FOR GREAT FALLS
Age Census Census Net 1970 Projections
Sex Years I960 1970 Migration 1975 1980
Male 3919 2609 — — ^03 3026
5- 9 3096 3380 464 3619 3920
10- 14 2515 3461 -478 3147 2304
15- 19 1546 2543 -570 2756 2776
20- 24 1780 2232 -2 3 6 2604 3072
25- 29 2042 2088 591 2600 3435
30- 34 1906 1695 -6 0 1831 2126
1892 1677 -3 2 1 1665
P
40 -
- ??
44 1766 1650 -197 1568 1467
45 - 49 1558 1674 -110 1629 1484
50 - 54 1254 1556 -83 1556 1454
1034 1276 -95 1343 1371
P -
60 - 64
5? 844 1005 -5 2 1117 1247
65 - 69 802 759 -17 821
70 - 74 711 558 —12 580 III
7j_&_0yer_ 972_ ______ 1062. _ii2§.
Totals 27419 29135 -1588 30492 3.2136,
Female 0 - 4 3804 2540 -440 2533 2941

-.5 — 9 3061 3210 -941 3420 3717
10 - 14 2398 3355 -4 5 0 2240
15 - 1? 1993 2969 -117 3113
20 — 24 2213 2715 322 3185 3799
25 — 29 2000 2120 140 2525 3158
30 — 34 1847 1794 -427 1941 2200
35 -
39 1794 1694 -2 9 7 1722 1796
40 - 44 1771 1709 -114 1685 1660
45 -
49 1526 1679 -48 1663 1585
50 — 54 1181 1627 1662 1570
55 — 59 1009 1338 1431 1472
60 64 907 1095 -6 1275 1509
65 —
69 865 892 —8 1006 1183
70 - 74 742 780 25 846 942
Over
75 & < 827 1439 _l6jO
totals 27938 30956 ‘2325 32693 34535
CITY 60091 -3913 63185 66671
TOTALS 55357
SOURCE * Information Systems Bureau, Department of Inter

governmental Relations, State of Montana, Helena, Mont.
NOTE * - Assumes continued 1 9 6 O - 1970 migration trends-
It illustrates what the city population would be in 1975
and 1980 if I960 - 1970 birth, death and migration rates remain
constant t h r o u ^ 1980. ^0
APPENDIX 2
COUNTY POPUIATIONS BY AGE AND SEX
USING MIGRATION-SURVIVAL METHOD
FOR CASCADE COUNTY
Age Census Census Net 1 9 7 0 Projections
Sex Years I960 _ 1970 Migration 1975 1980
Male 0 - 4 5 1 46 3707 -3 2 0 3795 4410
5 - 9 4199 4719 993 5125 5626
10 - 14 3422 4788 -384 4457 3449
15 - 19 2459 3584 —6 3 8 3892 4027
2 0 - 24 2951 3968 610 4690 5553
2 5 - 29 3804 2954 572 3480 4305
30 - 34 2559 2532 -378 2857 3405
35 - 39 2531 2520 -224 2571 2655
40-44 2381 2207 -2 7 3 2177 2183
45 - 49 2071 2129 -2 5 8 2134 2119
50 - 5 4 1697 1996 -214 1983 1850
55 - 59 1319 1649 -173 1709 1696
60 - 64 1096 1334 -77 1462 1591
6 5 - 69 1007 974 —16 1063 1218
70 - 74 897 705 -35 740 858
75 - 79 551 577 45 5 7 4 558
80 & Over 377 622 ______ 5§___ 708 — Z§5—
Totals 37444 40965 -714 ^3417 46277
Female ;o - 4 5075 3588 -287 3680 4326
'5-9 4094 4530 -7 7 4 4935 5462
10 - 14 3323 4689 -387 4346 3315
%5 - 19 2521 3725 -402 4026 4122
20 - 24 2722 3470 154 4100 4897
Z5 - 29 2592 2968 464 3548 4386
30 - 34 2391 2570 -1 6 1 2859 3277
35 - 39 2372 2344 -2 3 7 2469 2684
40 - 44 2246 2216 -144 2275 2382
4 5 - 49 1969 2104 —1 8 0 2113 2079
50 - 5 4 1468 2010 -145 2069
1983
55 - 59 1264 1696 -142 1795 1812
60 - 64 1089 1334 -35 1551 1827
65 - 69 1044 1071 -57 1212 1437
70 - 74 868 916 9 1000 1122
75 - 79 5 62 759 52 7 9 2 778
80 & Over __ ]74__ __ 849 ____101___ ..98fL_ -1942—
Totals 35974 40839 -2171 OT54 46936
CITY
TOTALS 73418
-2885: 81804
37171 93213
SOURCE t Information Systems Bureau» Department of Inter

governmental Relations» State of Montana » Helena, Mont.
NOTE* Assumes continued 1 9 6 O - 1970 migration trends.
It illustrates what the county population would be in 1975
and 1980 if I960 - 1970 birth» death and migration rates remain
constant t hrou^ 1980.
CD
■D
O
Q.
C
g
Q.
■D
CD
C/)
C/)
APPENDIX 3
POPULATION PROJECTIONS
8
3 "
CASCADE COUNTY GREAT FALLS

i
CD
Most Likely High Low ‘Most Likely High Low

i Year Projection Projection Projection Projection Projection Projection
s 1970 82,100 60,351 •
~o
1 1972 84,200 61,900 •
1 1977 96,100 97,500 90,500 75,000 76,000 72,000

1 S 1980 99,000 103,000 85,500 78,700 82,000 70,500
1 1985 102,000 109,000 81,200 81,600 87.700 70,000
1 1990 106,000 116,400 81,700 87,000 96,000 70,000

1 2000 116,000 126,900 81,750 96,000 104,000 70,000
■D
C/)
C/)
SOURCE I U.S. Department of Commerce, Bureau of Economic Analysis, Regional Economics

Information System and THK Associates, Inc., Economic Base Study. 1974. Citv of Great Falls
and County of Cascade M o n t a n a . October 1974, Figure 14 .
APPENDIX 4
SUMMARY OF CASCADE COUNTY POPULATION

PROJECTIONS. 1975 - 1990
100,000
z 99.391
Z 95.000
e-
<;
J 90,000
a*
^ 85.000
Oi
80,000 1973» 83.700
1970 1975 1980 1985 1990

Y E A R
SOURCE: Research and Information Systems Division,

Department of Intergovernmental Relations, State of Mon
tana , HeIena, Montana•
61
CD
■D
O
Q.
C appendix 5
g
Q.
■D
CD
CASCADE COUNTY POPULATIONS BY AGE CATEGORY AND SEX
1970 PROJECTED TO I98O
C/)
C/)
Census Projections
CD
11 % 1980 %
8 ü - ly 16,798 40.0 17,269 39.8 17,521 37.9
20 - 44 14,181 3 4 .7 15.775 36.3 18,101 39.0
45 - 64 7,108 1 7 .4 7,288 16.8 7,256 15.7
65 2^nd over 2.878 7.0
-L-O65 3.399 7.3
3. Totals
3 " 40,965 100.0 43.417 100.0 100.0
CD
46,277
CD
■D ^ n ,
w Female 0-19 16,532 40.5
O
Q.
16,987 28.8 1 7 ,2 2 5 3 6 .7
C
a 20 - 44 13.568 3 3 .2 1 5 .2 5 1
O 3 4 .9 17,626 3 7 .5
3 45 • 64 7,144
"O 17.6 7,528 1 7 .1 7 ,7 0 1 16.4
O
CD
65 and over J.. m __8J ^.988 -i l l 4.384 __2i4
Q. Totals 40.819 100.0 i3t,7Sl 100.0 46.936 100.0
County Totals 81,804 87,171
■D
9 3 ,2 1 3
CD
C/)
C/)
of Relations. State
CD
■D
O
Q.
C
g
Q.
APPENDIX 6
■D
CD
GREAT FAXIiS GROCERY SALES
C/)
(A
O
3
O Wôî
Market *a
8 No. of Grocery
Stores Store Sales Principal Supplier
ci'
LEADING CHAINS 66.0^
Buttrey*s 4 29.0 Own) Great Palls, Mont.
2
3
3"
Safeway
Albertson's
Rosauer's, .
1
1
i5:§ Own) Butte, Mont.
[Own) Boise, Idaho
U.R.N., Spokane, Wash.
CD Circle K (c) 8 1:8 Assoc. Foods, Helena, Mont.
CD
■D VOLUNTARY &/ 0R COOPERATIVE GROUPS 20.0^
O
Q.
o\
C
a w Super Save IGA 3 17.0 Ryan Mercantile C o . , Great
O
3
Falls, Montana
■D Bob's Thriftway 1 1.5 Assoc. Foods, Helena, Mont.
O
The Market Place 1 1.5 Assoc. Foods, Helena, Mont.
CD
Q.
LEADING INDEPENDENTS
Noble's Foodland 1 Ryan Merc. Co.,Great Falls, Mt.
Northside Market 1 Ryan Merc. Co.,Great Falls, Mt.
■D
CD
Whitehouse Grocery 1 1.0 Ryan Merc. Co.,Great Falls, Mt.
C/)
C/)
OTHER GROCERY STORES 28 8.
TOTAL 52 100.
SOURCE1 Fairchild Publishers, Supermarket News Distribution Study of Grocery Store

Sales in 287 U. S. Cities. (New York#Fairchild Publishing Co., 19741 p. 132.
(c) Convenience Stores

APPENDIX 7
Great Falla Public Schools
Great Falla, Montana
ENROLLMENT - September 19. 1974
School Kdn 1st 2nd 3rd 4th 5th 6th 7th 8th
'Chief Jo8._5$ 66 63 65 70 69 86 477
Collins 0 17 20 20 15 19 26 117
Emerson 41 43 26 40 43 27 46 10 276
Franklin_
__62__59 52 48 64 68 80 11 444
&_&_Clark_ 77_ 99 77 75 106 104 120 658
Lincoln _ _ 55 50 51 52 64 67 66 10 415
Longfellow 92_ 81 94_ 81 85 87 76 14 610
Lowell 44 45 52 28 41 46 25 281
^ _
___
___
_ 102_ 101 97 89 98 116 102 705
McKinley 35 37 46 46 42 57 53 316
'Meadow Lk. 61 73 81 63 87 81 89 535
Momlngsde^ 49_ 48 71_ 75 73 97 109 522
Mt. View_
__32 66 64 65 74 82 82 8 473
Rlvervlew 49 47 50 41 43 59 49 13 351
Roosevelt 43_ 47 50 50 49 106 105 6 456
Russell 46 54 40 44 54 66 348
Sacalawea _ 41_ 47 49_ 47 71 64 95 14 428
S
k j
r l
l n
e_ 45_ 51 56_ 52 48 76 57 6 391
1
Sunngside_54 52 47 45 41 65 62 25 391
Valley Vw. 56_ 50 65_ 62 63 63 68 _ 427
Whittier 52 42 46 22 42 204
Rehab.Ctr. -
16 16
SpecEd Ctr 61 61
E._Jr,_Bttgh 439 465 541 _21 1466
R.Jr. High 457 423 428 21 1329

P. Gibson 311 322 344 _977
W.Jr.Mgh 315 314 291 _920
G.P.H
.S. 700 679 680 26 -208S
C.H.R.H.S
. 862 724 650 26 2262
Vo-Tech 354 354
Total 10921167 1211 1106 1263 1407 1462 1522 1524 160415621403 1330 64218295
Elementarv Junior Hieh Senior HIeh Spec.Ed. Post H .S.
Kindergarten 1 092 Grades 7 & 8 3 046 Grades 10-12 4295 Total 6 42 Vo--Tech 3 54
Grades 1-6 7616 Grade 9 1604
Total 6760 Total 4650
Third Week of School
SOURCEI Office of the Superintendent of Public Schools, Great Falls,

Montana.
NOTSt * Indicates school within Site Area Number 1.
**Indicates school within Site Area Number 2.
64 -
APPENDIX 8
WAGES AND FRINGES i Grocery Department
WEEKLY RATE PER
POSITION WAGES HOUR
Head Grocery Clerk $197.60* $4.30
Grocery Clerks 152.00 3.80
Box Boys Average 2.20
Part-Time Average 3*40
*Based on 44 hours/week. Industry rewards extra hours @ time
+ one-half for being Department Head.
Store volume of approximately $50,000 per week, $50,000
X 73^ sales mix - $36,500 grocery sales. $36,500 divided by
$ 5 6 sales per man hour = 6 5 2 hours.
WEEKLY
POSITION HOURS SALARY
Store Manager 40 $ 3 0 7 .6 9
Head Grocery Clerk 44 197*80
7 Clerks 280 ,1,064.00
Box Boys 124 2 7 2 .8 0
Part-Time 164 557.60
TOTAL 652 $ 2 ,3 9 9 . 8 9
^6 5 2 ^ ^ 8 ^ ~ $3*6808 cost per hour
FRINGES t
Health, Welfare, Dental, Optical & Prescription Drugs
2 5 .7 0 /hour
Pension 12 •50/hour
Vacation Accrual----1/52nd of $3*6808 = $.0708/hour
State IndustrialAccident $.0034/hour
PAYROLL TAXES: TAX RATE OF TOTAL WAGES)
Social Security 5*?6^ *
State Unemployment 1.469$ **
TOTAL 7 .229s
* Social Security Tax rate is 5*85^ up to $14, lOO/Yr/Man.^

♦♦Unemployment Tax rate is 3 .IO9S up to $4,2OO/Yr/Man.^
^Department of Health, Education & Welfare, Social Security

Administration, Great Falls, Montana.
aion of Employment Security, Great Falls,
66
Average hourly rate of $3.6808 x 7.22^ = $.2657/hour in payroll
taxe 8.
TOTAL GROCERY WAGES & FRINGES PER HOUR:
Wages $3*6808
Health, Welfare, Etc .2570
Pension .1250
Vacation Accrual .0708
State Industrial .0034
Payroll Taxes .2657
TOTAL $4.4027
Grocery Wages & Fringes as a percent of Salest
$ 4 .4 0 22 _ «
$56 - 7*
WAGES AND FRINGESt Meat Department

WEEKLY RATE PER
POSITION WAGES HOUR
Head Meat Cutter $214.82* $4.67
Journeyman 186.80 4.67
Wrapper 151*20 3*78
Part-Time Average 3*78
♦Based on being paid for 44 hours. Industry rewards extra
hours @ time + one-half for being Department Head.
Store Volume of approximately $50,000 per week. $20,000 x 20^
sales mix = $10,000 meat sales. $10,000 divided by $ 6 7 sales
per man hour = 149 hours.
WEEKLY
1 Head Cutter 40 $214.82
1 Journeyman 40 186.80
1 Wrapper 40 1 5 1 *2 0
1 Part-Time 22 109.62
TOTAL 149 $662.44
$662.44
1 4 9 hrs $ 4 . 4 4 5 9 cost per hour
NOTE: Wage & Fringe Scales were obtained from Mr. F . J .

Raucci, Buttrey Foods Inc., Great Falls, Montana.
67
FRINGES t
— — 3 1 *70/hour
Pension 200/hour
Vacation Accrual 152nd of $4.4459 per hour = $. 0854
State Industrial Accident $.0034
PAYROLL TAXES» TAX RATE OF TOTAL WAGES)
Social Security 5*^5%
State Unemployment 1.51^
TOTAL 7 ,3695
Average hourly rate of $4.4459 x 7*36^ = $.3272/hr in payroll
taxes.
TOTAL MEAT WAGES & FRINGES PER HOUR
Wages $4 . 4 4 5 9
Health, Welfare, etc. .3170
Pension .2000
State Industrial Accident .0034
Payroll Taxes .1272
TOTAL $5 . 3 7 8 9
Meat. Wages & Fringes as a percent of Sales:
. 8.02J5
WAGES & FRINGES: Produce Department
WEEKLY RATE PER
POSITION WAGES HOUR
Produce Clerk $172.00 $4.30
Part-Time Average 3*4o
Store volume of approximately $50,000 per week. $50,000 x 7%

sales mix = $ 3 § 5 0 0 produce sales. $ 3 § 5 0 0 divided by $ 3 9 sales
per man hour = 8 9 hours.
WEEKLY
1 Produce Clerk 40 $172.00
Part-Time I 6 6 .OO
TOTAL 89 $ 338.60
= $3.80<f5
68
FRINGES I
— 7 0 /hour
Pension 12.50/hour
Vacation Accrual l/52nd of $3.8045 = $.0731/hour
State Industrial Accident $.0034/hour
PAYROLL TAXESt TAX RATE (fc OF TOTAL WAGES)
Social Security 5 «85^
State Unemployment 2,22^
TOTAL 8 .0 7 ^
Average hourly rate of $3»804-5 x 8.07^ - $.3070 per hour in

payroll taxes.
TOTAL PRODUCE WAGES & FRINGES PER HOUR*
Wages $3,804-5
Health, Welfare, Inc. .2570
Pension .I2 5 0
State Industrial Accident .0034-
Payroll Taxes .3070
TOTAL $4 .5 7 0 0
Produce Wages & Fringes as a percent of Saless
^^$ 3 9 "^ * 1 1 .7 2 9 5 of Produce Sales
TOTAL WAGES & FRINGES AS A PER CENT OF SALES t

WAGE Sc FRINGE
DEPARTMENT PER CENT RATIOS YIELD
Grocery 7.86 73 5-7378
Meat 8,02 20 1.6040
Produce 11.72 7 .8204
TOTAL 8 .162295
OTHER EXPENSES *
Rent t The greater of $2.00/square foot on 20,000
square feet or 295 of sales.
iNational Association of Retail Grocers of the U.S., Inc.,

Financial Planning Report— Issue #12, February 1974.
69
$ 5 0 , 0 0 0 sales/week x . 0 2 = $l, 0 0 0 /week or $ 5 2 ,0 0 0 /year.
Depreciationt
Fixture cost of $14.30 per square foot. $14.30 x 20,000
square feet $286,000.
$286,000 using 1 0 year life, straight line depreciation
equals first year depreciation of $ 2 8 ,6 0 0 .
Interest*
The interest cost is obtained from the "Amortization
Schedule" to show the repayment of the loan to purchase fixtures
and equipment. The interest was annualized at $26,822 for the
first year or $ 5 1 6 per week.
Federal Income Taxes
Corporate Federal Income Taxes are 25^ on the first
$ 2 5 ,0 0 0 and 2 3 ^ thereafter.
$2 5 ,0 0 0 X 25 ^ = $6 , 2 5 0
$ 7 .7 6 0 X 23^ = 1 .7 8 5
TOTAL FEDERAL TAXES* $8,035
State Income Taxes *^
Corporate State Income Taxes are figured at 2.18^ on
all profits after Federal Taxes.
$24,683 X 2.18J5 = $539
Înterview with Mr. Lyle Gorman, Buttrey Inc., Great

Falls, Montana (January 1975)»
Îbid.
SOURCES CONSULTED
BOOKS
Adams, Walter. The Structure of American Industry. 4th ed.
New York, N.Y.i The MacMillan Company, 1971*
Caves, Richard. American Industryt Structure, Conduct.
Performance. 3rd ed. Englewood Cliffs, N.J.: Prentice-
Hall, Inc., 1 9 7 2 .
Editor St Publisher Company. Editor & Publisher*s Market Guide.
New York, N.Y. * E & P Company Inc7, 1968, 6 9 » 70, Til
73. 7 4 .
Fairchild Publishers. Supermarket News Distribution Study of
Grocery Store Sales in 287 U.S. Cities. New York, N.Y.*
Fairchild Publishing Company, 197^.
Gustafson, Neil C. Recent Trends/Future Prospects: A Look At
Upper Midwest Population Changes. Minneapolis, Minnesota:
Upper Midwest Council, 1973*
Mountain Bell Telephone Co. Mountain Bell Telephone Directory
For Great Falls and North Central Montana. January 1974.
PERIODICALS
Bill Communications Inc. "1974 Survey of Buying Power." Sales
Management. (July 1974).
Degener, Jo. "A Food Co-Op Can Get It For You Wholesale."
Money. (June 1974) 3^-36.
"How Chain Management Performed in 1973* " Chain Store Age.
Headquarters Edition. (March 1974) E651
Mead, William B. "What's In A Name Brand," Money. (February
1974) 40-44.
Osborne, Phillip B. "A&P Counts The Cost of It's Pyrrhic
Victory." Business Week. (April 28, 1973) 117-119*
"Retail Food Industry." Standard & Poor's Industry Surveys.
(December 13, 1973).
"Stores I Go It Alone ; Ford Orders Operations Be Self-Supporting,
Air Force Times. Vol. 35. No. 22. (January 1, 1975) *
70
71
PUBLIC DOCUMENTS
U.S. Department of Commerce. 1972 Census of Business. Retail
Trade— Montana. Washington, D.C.t Government Printing
Office, 1973.
U.S. Department of Commerce. 1972 Census of Business. Wholsale
Trade — Montana. Washington, D.C.t Government Printing
Office, 1973.
U.S. Department of Commerce. Countv and Citv Data Book.
Washington, D.C.t Government Printing Office, 19^7»72.
U.S. Department of Commerce. Census of Population. Montana.
Washington, D.C.t Government Printing Office, 1940, 5o, 7 0 .
U.S. Department of Commerce. County Business Patterns 1972—
M o n tana . Washington, D.C.t Government Printing Office,
June 1973.
U.S. Federal Trade Commission. Economie Report on the Structure
and Competitive Behavior of Food Retailing. Washington,
D.C.t Government Printing Office, January 1966.
UNPUBLISHED SOURCES
Cascade County USDA Committee For Rural Development. Cascade

Countv Situation Statement— 1972 With Special Emphasis on
Agriculture. Cascade County Reproduction, 1972.
Commercial Loan Department. Telephone Interview, First National
Bank, Great Falls, Montana, March 1975*
Gorman, Lyle. Inteirview At Buttrey Foods Inc. , Great Falls,
Montana, January 1975.
Great Falls City/County Planning Board. Economic Base Studv.
1974. Citv of Great Falls and Countv of Cascade Montana.
THK Associates, Inc., October 1974.
The Great Atlantic & Pacific Tea Company Inc. 1973 Annual
Report.
Jewel Companies Inc. 1972 Annual R e p o r t .
Mereness, Chuck. Interview at Super Save IGA, Store 10th

Avenue South, Great Falls, Montana, March 1975-
Modil, Tony, Telephone Interview, Commission of Employment
Security, Great Falls, Montana, February 1975.
National Association of Retail Grocers in the U.S., Inc.
Financial Planning Report— Projection For a New Super
market. Issue #12, February 1974.
72
Office of The Building Inspector. Record of Building Permits.
Great Falls, Montana.
Raucci, F. J. Interview at Buttrey Foods Inc., Great Falls,
Montana, January 1975*
Research & Information Systems Division, Montana Department
of Intergovernmental Relations, State of Montana.
Social Security Administration. Telephone Interview, Department
of Health, Education, & Welfare, Great Falls, Montana,
March 1975-
Store Managers. Interviews with all Medium-to-Large Sized
Grocery Outlets in Great Falls, Montana, December, 1974.
Wenaas, H . , Dr. Interview at the Office of the Superintendent
of Public Schools, Great Falls, Montana, December 1974.

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University of Montana

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Graduate Student Theses, Dissertations, & Graduate School

Feasibility study for a new medium-to-large sized supermarket in

Follow this and additional works at: https://scholarworks.umt.edu/etd

B.A., University of Washington, 1972

Presented in partial fulfillment of the requirements

Master of Business Administration

Dean, Gradate Schodl

All rights reserved

INFORM ATION TO ALL USERS

I would like to express my sincere appreciation and

The retail food industry in Great Falls, Montana closely

The majority of today's retail food distribution in

^Adams Walter, The Structure of American Industry.

^Standard & Poor's Industry Surveys, "Retail Food Industry.

^Adams, Walter The Structure of American Industry.

^Adams, Walter, The Structure of American Industry.

PERCENT RETURN ON NET WORTH.

Food chains 12.5 1 2 .5 1 2 .3 1 1 .0 1 1 .5

Electric Power 11.0 11.4 1 1 .5 1 1 .5 1 1 .2

SOURCEI Adams Walter, The Structure of American

^"How Chain Management Performed in 1973"t Chain Store Age.

SOURCE I "How Chain Management Performed in 1973",

The population of Great Falls has grovm significantly

thousand persons (Table 2-1). More recently, growth has

Cascade County USDA Committee for Rural Development,

GREAT FALLS POPULATION ESTIMATES

®-U,S. Department of Commerce, Bureau of the Census,

Gll971 Editor & Publisher Market Guide, p. 2 7 7 .

CASCADE COUNTY POPULATION ESTIMATES

^U.S. Department of Commerce, Bureau of the Census,

^THK Associates, Inc., Economic Base Study. 1974 Citv of

The State of Montana and various independent agencies

GROCERY STORE SALES

Wholesale distribution of groceries in Great Falls

Total Number of Reporting Units by Employment-Size

SOURCEt U.S. Department of Commerce, Social And Economie

GREAT FALLS POPULATION & RETAIL FOOD SALES

Year Sales Sales Weekly

2-U.S. Department of Commerce, 1972 Census of Business.

CASCADE COUNTY POPULATION & RETAIL

Year Sales Sales Weekly

^U.S. Department of Commerce, 1972 Census of Business.

■D GREAT FALLS RETAIL GROCERY SALES

Thriftwav i.800 7.100 12 624 108. 88.

GREAT FALLS GROCERY STORES

Map Store Name Check Parking Number of

J Super Save #2 4 130

K Super Save # 3 6 120

NOTE: This table's figures were obtained by talking with

POSSIBLE LOCATIONS FOR A NEW SITE

At the onset, three different locations were chosen as

^Office of the Building Inspector, Record of Building

■CDD 2 . 6^ 13. 6?S 23J{ 32.4^ 14^ 9 .7 ^ 3 . 7JS l.OJl

■CDD COUNT & PERCENT OF SELECTED OWNER-OCCUPIED UNITS BY VALUE OF UNIT

-9 % 7% 23^ 61^ 6% 15^ 13^ 66%

RESIDENTIAL BUILDING PERMITS

Location . No. of.Permits Issued

SOURCE * Information Systems Bureau, Department of Inter

SOURCE t Information Systems Bureau» Department of Inter