banner ad broker Movie Ad
Create a free acount with PRWeb!
Deposition Designation Station
Share |


Next time you walk into a grocery store, take a moment to appreciate all the equipment on the sales floor -- from the cantilevered gondola shelves to the automated checkout stands, the food bar, water dispensing machine, and of course, all the refrigerated display cases: enclosed freezers, reach-in refrigerated cases, the open topped freezer boxes that hold fish sticks and frozen chickens, the deli cases ... and the equipment you don't see: the walk-in coolers and freezers and the refrigeration compression system that most grocery store visitors never see.

The refrigeration compression system working 24/7 in the background to support coolers and freezer walk-ins and refrigerated display cases that hold perishable goods in a sellable state is perhaps the most important piece of equipment and machinery in a grocery store. Certainly, in any kind of grocery equipment appraisal, this equipment generally holds a high percentage of the entire operation's value.

Grocery store refrigeration systems are specially designed for each store's location and specific needs. Without these systems the space could easily be used for a number of other retail general merchandise purposes, such as sporting goods, clothing, etc. It is the presence of the refrigeration compression equipment that makes a grocery significantly different from any other retail space and that creates exceptional desirability for a potential buyer in the grocery industry. This is especially important to consider in an equipment valuation using an "in place" appraisal definition of value, such as Fair Market Value Installed or Liquidation Value in Place. And it's not just all the compressors, back-up systems and cold cases -- it's how they are all linked together in one large system connected with large amounts of copper pipe and control modules that monitor system wide operations and automatically notify staff if there is a problem. This is truly a case of the whole being greater than the parts.

We recently appraised equipment in nearly a dozen grocery stores for a collateral lending situation: one local grocery store chain planned to buy up stores from another grocery store chain. Because it was a collateral lending situation, we used a Liquidation Value. Because the stores being purchased would continue as grocery stores, the appropriate value was Liquidation in Place, which meant that all of the grocery store equipment, including the refrigeration compression system, retained some installation value.

In a different equipment appraisal scenario -- imagine that the stores would be closed and the equipment sold off piece meal to be taken away and used elsewhere -- we would have used a different liquidation value. That definition would not have included installation values and so the equipment appraisal report would have reported a completely different opinion of value. In that alternative scenario, of course, the value of the refrigeration compression systems would be remarkably different; because of the custom configuration of these units, moving them to a different location renders them much less valuable than they would be in their original location, even without considering the impact of installation value.

Share |

Jack Young, ASA, CPA is an Accredited Senior Appraiser (ASA) of the American Society of Appraisers specializing in Machinery and Equipment Appraisals and a Certified Public Accountant (CPA). Mr. Young has also been awarded a Master Personal Property Appraiser (MPPA) designation from the National Auctioneers Association. He has thousands of hours experience as an Equipment Appraiser and is an active member of the Northern California Chapter of the ASA, where he serves as Chapter President.

©Copyright - All Rights Reserved