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A multiconcept restaurant incorporates two or more restaurants, typically6 chains, under one roof. Sharing facilities reduces costs of both real estate and labor. The multiconept restaurants typically offer a limit menu, compared with full-sized, stand-alone restaurants. For ex, KMAC operates a combination Kentucky Fried Chicken (KFC)/Taco Bell restaurant. The food preparation areas are separate, but orders are taken at shared point-of-sale (POS) stations. If Taco Bell and KFC share facilities, they reduce fixed costs by 30%; however, sales in joint facilities are 20% lower than sales in two separate facilities. What do these numbers imply for the decision of when to open a shared facility versus two separate facilities?

Microeconomics, Economics

  • Category:- Microeconomics
  • Reference No.:- M946715

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