Assignment Topics

Restaurant A offers a limited number of food categories (such as, wraps, burgers) which are similarly priced.

Restaurant B, on the other hand, offers a broad menu consisting of different starters, mains, side dishes, and dessert options which are priced differently.

• You are advised to consider how these foods are prepared in restaurants A & B.
• Explain why these two restaurants price their product differently.
• Describe how their cost structure is influenced by the diversity of food offerings.
• Briefly explain a process each might use to estimate their product costs.

Suggested Structure

Introduction: (about 1 – 1.5 pages, 350 – 450 words)

In the introduction, it is good to set out the framework of what you intend to write in your assignment. Firstly, in the introduction, you need to provide an explanation of your understanding of the assignment topic. Secondly, you explain how you want your assignment to be understood by the readers, i.e. just like constructing a building; before a building is built, you want to present a picture to show what the building will look like when completed.

Your understanding of the assignment topic could be like this:

This assignment is about cost and cost management of the products and business activities of two restaurants, A and B. Restaurant A is offering a limited range of food items as opposed to Restaurant B which is offering a broader range of food items. Inevitably, both restaurant A and B will price their products differently because of several factors such as economy of scale, nature of business activities, market forces of supply and demand, and others. Another important point that we must not forget is the ‘’assignment of overheads’’.

For example, a company produces a limited range of products as opposed to a company that produces a wide variety of different products, the manner in which the different products consume the overheads can differ widely and a single predetermined overheads rate used to assign the overhead costs may not be equitable to the costing of the products. We will discuss this further in the assignment.

Here, you can also discuss briefly the competitive strategies that could be undertaken by A and B. In strategic management, business strategies can take any one or more of the following forms:

• Low-cost leadership
• Market niche strategy based on lower cost
• Broad differentiation strategy
• Market niche strategy based on differentiation
• Best-cost provider

(You may want to research one or two references to support your discussion. Make sure the reference is relevant)

You discuss the above because business strategies affect the following three (3) key areas that the assignment topic is asking you:

• Why restaurant A and B price their products differently
• How their cost structures are influenced by their food offerings
• The process that restaurant A and B may use to estimate their product costs

Before you proceed to the ‘body’ of the assignment, in the introduction, you can continue to provide a few examples of how business strategies can impact the cost of the products. For example:

• If restaurant A targets a niche market by offering a limited range of food products, A can go for either one of the two options depending on the size of A:
  • Niche market based on differentiation
  • Niche market based on lower cost
• If niche market based on differentiation strategy is adopted (I’m talking about restaurant A), perhaps the finest and specialized food ingredients are used (e.g. wagyu beef, Hokkaido milk, etc. You can give more examples where necessary).
• Hence, it affects the cost of food products. However, if A operates with a certain level of economy of scale (e.g. restaurant A has a number of outlets throughout Singapore say, in upscale shopping malls. Here, you can provide a researched reference but make sure it is relevant), bulk purchases could be possible and then the cost of the food products can be more reasonable and less premium.
• If a niche market based on a lower-cost strategy is adopted, then restaurant A needs not to use high premium ingredients to prepare its food products. However, the ingredients and/or the restaurant ambiance can still be differentiated enough to cater to a niche segment of the market such as for consumers in the above-average income bracket.

Now you can write about restaurant B. B offers a broad menu and so could be going for a

• Low-cost leadership strategy or
• Best-cost strategy

Bear in mind that a ‘low-cost’ leadership strategy does not refer to a firm selling its products at as low a price as possible. It is not a price war. So you need to get a correct understanding of a low-cost leadership strategy.

You continue to write (Just like restaurant A above) about how a particular strategy can impact the food ingredients of restaurant B and So on.