66 
in the stores with smaller volume of sales. However, in those systems 
whose stores are mostly small the average gross margin for the 
entire chain is usually large. (See Table 29.) In this respect the 
chain systems, as systems, are in accord with individual stores in 
being able to make a wide margin when bringing their trade close 
to the family consumer and in being compelled to sell on a narrow 
margin when competing with larger concerns in dealings on a larger 
scale. In general the higher cost of operation in a system whose 
stores are mostly small necessitates a rather wide margin between 
cost of merchandise at wholesale and selling prices at retail, just as 
in individual stores. (See Tables 29 and 30.) 
Operating expenses.— The average total operating expenses in the 
15 chain systems were 15.05 per cent of sales, considerably less than 
the weighted average for the individual meat markets. This differ- 
ence, as that in gross margin, is primarily due to the larger average 
volume of sales in the chain stores and the lower expenses of opera- 
tion when volume is greater. When comparison is made with indi- 
vidual markets of the same average size and giving the same class oi 
service, operating expenses are usually found to be higher in th< 
chain stores. (See Tables 26, 28, 29, and 30.) 
In the discussion of the various items of expense reference has 
already been made to differences between chain and individual stores 
in certain items that serve to make the total difference that appears 
between the two types of stores. The item of salaries and wages 
is substantially the same in chain stores as in individual markets 
of equal volume of sales. However, advertising is distinctly highei 
in chain-store systems, and similar differences appear in the minoi 
items of repairs and insurance and in the miscellaneous group 
making up other expense. As has already been explained, there ar< 
reasons why these items should bear the relation shown, and accord- 
ingly it is probable that the data presented are fairly representative 
of the two types of stores in the trade. 
Net profd. — The average percentage of net profits of the reporting 
chain systems selling meats only was approximately the same as oi 
individual meat markets, being somewhat higher than the weightec 
average of all individual meat markets and only slightly larger than 
the average of individual markets of larger size. (See Table 28.) 
The differences are not greater than could easily result from indi 
vidual variations and do not clearly indicate any greater profitable- 
ness in the trade carried on in chain systems than in individual 
markets. In chain systems conducting combination stores selling 
both meats and groceries, however, there is clear indication of 
higher percentage of profit on meats sold than in systems selling 
meats only and of a higher percentage of profit on meats than oi 
groceries sold in the same concerns. This matter will be briefly dis- 
cussed in connection with the grocery trade. 
Between stores of different sizes in the same chain there are usually 
very marked differences in net profit, which are of extreme interest. 
Within the same chain there is usually a considerable degree o1 
uniformity in percentage of gross margin between stores of different 
size, and operating expenses are usually considerably higher in tht 
smaller than in the larger stores. The obvious consequence is that 
the net profit is much higher in the larger than in the smaller stores 
