Meat Department Dilemma

Prepared For
Drew Morrison

Prepared By
Megan Taylor

July 13, 2021

 Table of Contents
Executive Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Background . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Current Issues. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Reasons to Address the Issues . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Potential Solutions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Conclusion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Recommendations . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Possible Outcomes . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
 Executive Summary

In the past two quarters, the Green Grocery location 205 has seen a loss in revenue. The major
area where the loss occurred was in the meat department. When looking at the cause of the lost
revenue, there was correlation between consumers meat preferences, specifically the desire to eat
less red meat. When examining research and client surveys, it concluded that replacing red meat
with plant based alternative meat sources would reclaim profitability. Hence, it is recommended
changing the meat depart to align with current trends and customer’s desires, less red meat and
more plant based meat.

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 Introduction
At the 205 Green Grocery location, the meat department is losing a substantial amount of money.
In the last two quarters, the meat department lost about U.S. Dollar (USD) 100,000. The owner
of the location, Drew Morrison is worried about this trend. He is wondering how he can fix this
financial problem. He is asking the general manager, Megan Taylor to create a solution in order
to stop the financial loss. The reason for the loss is due to red meat sales. In the last two quarters,
the red meat sales have decreased profit margins by USD 450,000. The three major areas that
made a profit were chicken, seafood, and plant based alternative meats. The company needs to
figure out why this is happening, and which of these three areas the company needs to invest
additional resources.

Background
This location 205 was opened in January of 2019. Green grocery markets itself to health
conscious customers in Tucson, Arizona. By providing food for health-minded people, it is
important to stay with dietary trends. At this time, the store caters to the paleo, keto, vegetarian,
pescatarian, and vegan diets. It is important to the Green Grocery organization to choose to stay
on top of current trends in the health and wellness community. Most of Green Groceries
clienteles are Millennials and Gen Xers, so it is important to keep in mind their concerns and
desires in order to ensure that we maintain this established customer relationship.

Current Issues
At this current time, Green Grocery is still making a net profit. The company could start making
a deficit if it does not change their meat department profit margins. Previous quarters are
showing that the meat department is losing a projected USD 450,000 in red meat sales. This is
causing the store to have an overall profit of USD 10,000. This profit margin is very
unpredictable and very concerning to Drew Morrison. If Green Grocery continues at this trend
for another year, then the store, unfortunately, will have to file for bankruptcy or be forced to
close this location.

Reasons to Address the Issues

If Green Grocery does not fix this issue, they might even be forced to close their 205 location.
The company, as a whole, needs to figure out why this is happening at their location. The general
manager at location 205 did an exit survey in order to try to figure out the cause of this loss of
profit. About 25 percent of the clientele that were surveyed mentioned they do not desire to
consume as much red meat. The reason for this change in purchasing is due to recent articles,
like Peng Song (2014), that noted an “increase in red meat intake of 100 g/day was associated
with a statistically significant 17 % increased risk of gastric cancer”. Green Grocery has to
decrease the amount of red meat that is sold on the shelf by 15%. This is to ensure that the
company is still making a significant profit. The store needs to figure out how to replace this area
with either more chicken, seafood, or alternative meat. By finding a solid replacement, the
company should be able to turn their profits around and boost profits back to being around USD
450,000.

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 Potential Solutions
Green Grocery has three unique solutions to solve the declining sales in the meat department.
The area that contains the red meat is too vast for consumer consumption. By analyzing
consumers consumption in the meat department, the red meat area needs to be reduced by 15%
of its current surface area on the shelf. The new available space has three main options that the
meat department can substitute in the vacant space, and these options are chicken, seafood, and
plant-based alternative meat.
 The first option is to expand the chicken in the new vacant area. This is a viable option
and will increase the amount of organic chicken. While last year was turbulent for the
grocery industry due to Covid-19, one area of the meat market that had considerable
growth came from chicken sales. Elizabeth Furthman (2021) acknowledged that “Nearly
half (48 percent) of survey respondents also say they increased the amount of chicken
they prepared at home during the pandemic”. The manager of location 205 has stated that
she has seen similar growth in the market. In the last two quarters, that location has seen
an increase of sales averaging about USD 100,000 in chicken sales. The location of 205,
at this current time, has 35% of the meat department dedicated to chicken. This location
is adequately keeping up with customers’ chicken demand.
 The second option that is in high demand is seafood. In the last year, Green Grocery had
a net profit of USD 150,000 in seafood. Unlike many meat products, seafood has a
threshold. The store can increase the pricing; however, there is a limited amount of
seafood that the store can purchase. The store cannot go beyond that limit. By
communicating with our distributors, it has come to the attention of the general manger at
location 205 that it is unlikely for the Green Grocery location 205 to expand its seafood
market. While Lawton (2021) noted that “more than half of the world's oceans by surface
area are now fished”, it is also important to act ethically. Green Grocery has made a
pledge to help create a better biomass for commercial fishing. The company decided to
only use seafood products that were certified by the Marine Stewardship Council (MCS).
Lawton (2021) also acknowledge that “16 per cent of the world's wild-caught fish is
landed by MSC-certified fleets”. This means that it is impossible for the seafood products
to move into that 15% space that is left vacant from the red meat.
 The third option is plant based alternative meet. At the current time, the meat department
only has 5% dedicated for plant based alternative meat. The store also runs into the
problem that they cannot keep the product on the shelf because it is being sold more
frequently than it is being supplied. The reason that the meat department has this issue is
because they do not have enough space to store the plant based alternative meat. By
adding the new, vacant space to the plant based alternative meat section, this would allow
the meat department to contact more companies that sell these types of items. While
McTaggart (2021) pointed out that, “Ohio-based food retailer saw a 43% year-on-year
increase in dollar sales of plant-based meat in the year ending March 25, 2020, and a
106% increase versus the prior two years”. This article shows how this market is very

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 lucrative. By adding more plant based alternative meats to Green Grocery, this could be
exactly what is needed to be the top competitor in the Tucson market. In a recent article
Dudlicek (2020) explained that “millennials... are the top consumers of plant based
alternative meats” and “Gen Xers... are also a core consumer group for plant based
alternative meat”. This additional information provides ample evidence that the
consumers at Green Grocery are in need for additional plant based alternative meats. The
only concern is that Green Grocery has is the fact that it would take additional time to
find distributors that sell high quality products that our consumers are desiring. This
would mean that the company would probably lose another USD 100,000 next quarter
until they find the right products. This might require the company to advertise more in the
community so that they know where the best place is to find plant based alternative food
sources in Tucson. The estimated costs for this additional advertisement are about USD
25,000.

Conclusion
The company needs to go over this information so they can understand the best strategy in order
for the meat department to be financially viable for the company. By analyzing the chicken
market, Green Grocery now understands that they are at the peak position in order to maximize
their profits. It would not be wise for their chicken products to be moved into the vacant space.
The other idea is seafood, but this is not a good suggestion because their current, trusted seafood
distributors are unable to increase their supply to the company. Green Grocery is unable to
provide more seafood than what is currently available. A final thought is adding plant based
alternative meats. This option is viable because they have room to grow in the market. Our
consumers in the community are desiring for more of these products. Research supports this
claim that consumers are wanting more of these products.
Recommendations
To understand the recommendation, the company needs to look thoroughly at its clientele. The
clienteles that spend more money at the store are the millennials and Gen Xers. They have a clear
want and desire for more plant based alternative meat. The following information shows that
Green Groceries should invest in more plant based alternative products. The company might lose
another USD 125,000 as they are transitioning to replace the area that once held 15% of the red
meat. By the end of the year, the store should be able to regain their lost assets and additional
USD 250,000. In the meantime, they can mark up their seafood by 15% which will offset the
original loss of USD 125,000 to approximately USD 75,000.
Potential Outcomes
By following these recommendations, Green Grocery should see a positive trend that can double
the number of sales in comparison to last year. By the end of 2022, the store should gross in the
approximation of USD 500,000. This should make up for the lost revenue that occurred during
this transitional period of time when changing out the red meat on the shelf. This also will bring
more clientele that are health conscious to this grocery store and diversify the clients that they
currently have at location 205. If the plant based alternative meat trend continues, this should

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allow the company to continue to profit more and more every year. The company should be
aware that trends are constantly changing. A key component would be to document this change
during the exit survey in order to understand their clients’ preferences in products. By looking at
relevant research and supporting proposals, the company should make back their losses before
the beginning of next year.

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 References
Dudlicek, J. (2020). Raising the Stakes: RETAILERS REPORT ROBUST MEAT SALES, BUT
PLANT-BASED PRODUCTS ARE NIPPING AT THEIR HEELS. Progressive Grocer,
99(2), 48–57.
Fuhrman, E. (2021). Poultry Prospers during the Pandemic: Ground Turkey and Chicken Dark
Meat Do Particularly Well as Consumers Turn to Dining at Home. National Provisioner,
235(1), 10–21.
Lawton, G. (2021). Plenty more fish in the sea? New Scientist, 249(3321), 36–40.
https://doi.org/10.1016/s0262-4079(21)00241-4
McTaggart, J. (2021). Flex Spending: RETAILERS SHOULD INVEST MORE IN PLANT-
BASED FOODS TO CAPTURE A PIECE OF THIS BOOMING MARKET. Progressive
Grocer, 100(1), 32–35.
Song, P., Lu, M., Yin, Q., Wu, L., Zhang, D., Fu, B., . . . Zhao, Q. (2014). Red meat
consumption and stomach cancer risk: A meta-analysis. Journal of Cancer Research &
Clinical Oncology, 140(6), 979-92. doi:http://dx.doi.org/10.1007/s00432-014-1637-z