Factors of Supply and Demand
Factors of Supply and Demand
The fast food chain that I chose to examine is White Castle. They are relatively new to the St. Cloud area and I think that some of the supply and demand factors that I am going to discuss may have already affected their sales. Two supply factors that would make an impact on White Castle would be the price of bread or the grain that it is made of and secondly oil, or more specifically, the price of the vegetables that the oil is made of. If there were a shortage of the wheat that makes the flour, which in turn makes the bread at the bakery that they use to serve their hamburgers, they may need to look for another supplier. This could possibly incur additional costs in both the purchasing of the supply from another vendor and to pay someone to look for a reasonable substitute for their current vendor’s shortage. If a shortage of grain is not a factor, any number of natural disasters or acts of God could damage and shut down the supplier’s facility that they purchase their bread products from.
This again would cost the company more money as they would have to find substitutes for their supplier’s shortage. If the price of vegetables goes on the rise due to a drought, the cost of vegetable oil production may also rise; this would cost the company part of its profits and therefore negatively impact them. If the machinery that refines the oil at the manufacturer breaks down or becomes unusable for any length of time, production for that type of oil could be affected, which could drive prices up therefore causing profit shortages. Two factors that I believe would affect the business on the demand side would be the cost and quality of the food they sell. If the food that they sell is priced too high or too low, they could experience overages or shortages in the supply they have to serve their customers each day.
Adequate pricing on their menu items is a huge contributor of the volume of any given food item they sell to their customers. In the same aspect, if the quality of their food is sub-par, they will lose the volume of new customers and those that are loyal to their brand. Regardless of the cost, people will migrate away from a restaurant, whether fast food or not, if the food that they serve is cold, unappetizing, or unappealing to their eye or pallet. I know firsthand that when the restaurant opened up in St. Cloud, they took at least six months to start making the food to the standard that I have come to expect from them. Menu items were overcooked and unappetizing the first couple of times that I ate there.
After some time though, they began to make the food more like the other restaurants in their chain that I have visited. The items that I have mentioned are only a few contributing factors to the wide variety of factors that have to be considered when planning a successful business. Many businesses have failed simply because the business plan they had, or did not have for that matter, did not take into account the many facets that a successful business must have.
Subject: Supply and demand,
University/College: University of Chicago
Type of paper: Thesis/Dissertation Chapter
Date: 14 October 2016
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