Sunday, October 24, 2004

Tomato Shortage

Due to the recent hurricanes in Florida and the recent floods in California, the nation is experiencing a shortage of tomatoes which results in an increase in the price of tomatoes. Many restaurants are trying to find alternative means of preparing their dishes with less or no tomatoes. Wendy's has cancelled it's planned promotion of a new sandwich due to this shortage and is expecting to end this quarter in a loss because of it. In contrast, smaller restaurants who are also feeling the effect of the higher prices and lower quantity have decided to keep their prices the same within their menus because they fear they will lose their customers.

If you were a restaurant owner, which approach would you use in order to gain profit - increase your prices, cancel or modify certain menu options, or keep your prices the same in hopes of a higher quantity being purchased from you due to customer loyalty? Is there another option which would work best?

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