Two variables decide whether a cold store is profitable: how full it stays through the year and what it costs to keep one pallet cold for one day. Revenue rises and falls with occupancy, while financing, depreciation, insurance, staff and the electricity for heat coming through the walls run on when the store is empty. So the decision rests on the monthly course of the two numbers rather than an annual average.
Calculating the two numbers
- Occupancy: the month's billed pallet-days divided by pallet capacity multiplied by the days in the month. Each of the twelve months is written down separately, using the last 12 to 24 months of stock records.
- Cost per pallet-day: the month's total cost divided by the pallet-days stored that month. The cost includes refrigeration electricity read from a separate meter, labour, maintenance, insurance and the monthly financing or depreciation share of the investment; no item is counted twice.
- Break-even: monthly fixed cost divided by the difference between the price per pallet-day and the variable cost per pallet-day. The result is the number of pallet-days needed that month to avoid a loss.
Even an empty store gains heat through its walls, ceiling and floor, and the refrigeration plant runs to remove it; the article on cold store electricity use shows step by step how that load is calculated. This is why cost per pallet-day climbs in the low season, and empty months can eat the profit of full ones.
The yardstick is the price of buying the same service outside: a cold storage operator's pallet-day quote goes next to your own store's cost for each month. Sizing the store to peak demand multiplies the empty months; building for base volume and buying in service at peaks is calculated as a separate scenario in the same table.
Another way to raise occupancy is to offer the volume above your own needs as a storage service to other businesses; considered before the investment decision, that option also shapes the store's location and dock layout.
