“Analyze a fast food restaurant menu”
Your task is to analyze the menu at a local fast food establishment. The restaurant could be on- or off-campus, and either fast food (ex. Burger King) or quasi-fast food (ex. Chipolte’s). A sample report follows on the next page.
The goal of your report is to answer two main questions: How does the company use optimal pricing to increase profit? How does the company use price discrimination to increase its profit?
The report should be roughly 2 – 3 pages. OVER Use section headers in the report. No one wants to read a run-on report.
Suggested section headers: Introduction & Menu Description Optimal Pricing Price Discrimination Conclusion Appendix (if needed)
For the Introduction section, pick 5 items from the menu (choose a variety – some food, some drink, etc.). List the items and their prices in a small table. Discuss other general elements of the menu – if combo meals are available, etc.
For the Optimal Pricing section, analyze each of the 5 items and state whether the demand for that item is relatively elastic or relatively inelastic.
Next, estimate what the markup (margin) is on each item. [Don’t spend a lot of timing trying to dig up costs, just estimate the costs.] Now you can answer the question – are they setting prices optimally (which would be higher margins on inelastic goods and lower margins on elastic goods)? For the Price Discrimination section, discuss how the firm uses price discrimination to increase profit. Are they bundling high margin items with low margin items? Are they setting some prices artificially low to encourage more total buying? How are they using pricing to “guide” consumer decisions?
Introduction Our group has decided to analyze the Taco Bell restaurant on xxx WT Harris Blvd. Taco Bell is a fast food restaurant with a seating capacity of xxx. Etc. We have chosen 5 items to analyze and have presented them below. Etc. OVER 2. Optimal Pricing Below is the estimated cost and margin for each item: For the first item, chicken quesadilla, our group believes the demand is relatively xxx (elastic or inelastic). Etc. 3. Price Discrimination Taco Bell employs a number of strategies to sell the same good at different prices. For example, you can buy a 4-pack of tacos for $xxx, which lowers the price per taco from the normal price of $0.89 to $0.72. Etc. Taco Bell also offers combo meals to increase profit. For example, the combo of xxx… Etc. 4. Conclusion One paragraph conclusion.