Operate a chain of bagel restaurants

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Reference no: EM131725465

You own and operate a chain of bagel restaurants throughout the mid–Atlantic states, and you have been in this business for over 30 years. From your experience, you believe your current store size provides the lowest average total cost for businesses in your industry, and you also believe that any other firms in the business should have a very similar cost structure. In the past two years, a new entrant into your market has built very large restaurants that are roughly three–times the size of your stores. They charge prices that are comparable to your prices, but they are getting a lot of attention and taking some of your market share. If you are correct about the industry cost structure and the new entrant has built stores that are far too large, what do you think will happen in this market? Should you respond by increasing the size of your restaurants? Are there other things you should do?

Reference no: EM131725465

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