Customer Discrimination of Restaurants

Source: Entrepreneur 

The economic principle I’m exploring is because of scarcity, people choose. All choices have an opportunity cost. My research question to help me study the economic principle is Restaurants have budgets as well as multiple areas of the business that needs money. If money is scarce how can restaurants decide on where to put the most money. According to the article, How to Start a Restaurant, by entrepreneur magazine, a restaurant can maximize profit by setting a target market, selecting the level of service, and that customers are satisfied with the purchase. 

 First, An extremely important element of beginning a restaurant in setting a target market. Often times restaurants who have trouble or go out of business attempt to please everyone when pleasing no one. When starting a business like this, a target market must be established or else customers will not be easy to come by. Should aim for about “5-10% of population”.

Second, Anyone wishing to be successful when selling food to the public must understand which level of operation will be sought. There are “quick service, mid-scale, and upscale”. So, we have fast food, mid-scale, which sets the middle ground between upscale and quick service, and upscale, which covers luxurious, expensive restaurants. If an entrepreneur has trouble establishing themselves into a certain group, he/she may be left having trouble getting customers due to lack of target market.

 Third, those selling food must be engaged in what is being sold. An entrepreneur must know what type of food shop they are opening so the customers may get what they are looking for. If a customer walks into a sandwich shop, they expect to walk out with a sandwich. If something else ends up happening, the customer may not return. It is extremely important for a new service to contain the food they advertise, so this being said, the budget must be managed to find the best ratio of pleasure for consumers.

In my next blog post I will research a different economic principle in which my analysis of each area contains much valuable info about the business that is restaurants.