Administrator
CONSULTING PROJECT Estimation and Analysis of Demand for Fast Food Meals
You work for PriceWatermanCoopers as a market analyst. PWC has been hired by the owner of two Burger King restaurants located in a suburban Atlanta market area to study the demand for its basic hamburger meal package–referred to as “Combination 1" on its menus. The two restaurants face competition in the Atlanta suburb from five other hamburger restaurants (three MacDonald’s and two Wendy’s restaurants) and three other restaurants serving “drive-through” fast food (a Taco Bell, a Kentucky Fried Chicken, and a small family-owned Chinese restaurant). The owner of the two Burger King restaurants provides PWC with the data shown in Table 1. Q is the total number of Combination 1 meals sold at both locations during each week in 1998. P is the average price charged for a Combination 1 meal at the two locations. [Prices are identical at the two Burger King locations.] Every week the Burger King owner advertises special price offers at its two restaurants exclusively in daily newspaper advertisements. A is the dollar amount spent on newspaper ads for each week in 1998. The owner could not provide PWC with data on prices charged by other competing restaurants during 1998. For the one-year time period of the study, household income and population in the suburb did not change enough to warrant inclusion in the demand analysis.
TABLE 1: Weekly Sales Data for Combination 1 Meals (1998) week 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 Q 51,345 50,337 86,732 118,117 48,024 97,375 75,751 78,797 59,856 23,696 61,385 63,750 60,996 84,276 54,222 58,131 55,398 69,943 79,785 38,892 43,240 52,078 11,321 73,113 79,988 98,311 P 2.78 2.35 3.22 1.85 2.65 2.95 2.86 3.35 3.45 3.25 3.21 3.02 3.16 2.95 2.65 3.24 3.55 3.75 3.85 3.76 3.65 3.58 3.78 3.75 3.22 3.42 A 4,280 3,875 12,360 19,250 6,450 8,750 9,600 9,600 9,600 6,250 4,780 6,770 6,325 9,655 10,450 9,750 11,500 8,975 8,975 6,755 5,500
You work for PriceWatermanCoopers as a market analyst. PWC has been hired by the owner of two Burger King restaurants located in a suburban Atlanta market area to study the demand for its basic hamburger meal package–referred to as “Combination 1" on its menus. The two restaurants face competition in the Atlanta suburb from five other hamburger restaurants (three MacDonald’s and two Wendy’s restaurants) and three other restaurants serving “drive-through” fast food (a Taco Bell, a Kentucky Fried Chicken, and a small family-owned Chinese restaurant). The owner of the two Burger King restaurants provides PWC with the data shown in Table 1. Q is the total number of Combination 1 meals sold at both locations during each week in 1998. P is the average price charged for a Combination 1 meal at the two locations. [Prices are identical at the two Burger King locations.] Every week the Burger King owner advertises special price offers at its two restaurants exclusively in daily newspaper advertisements. A is the dollar amount spent on newspaper ads for each week in 1998. The owner could not provide PWC with data on prices charged by other competing restaurants during 1998. For the one-year time period of the study, household income and population in the suburb did not change enough to warrant inclusion in the demand analysis.
TABLE 1: Weekly Sales Data for Combination 1 Meals (1998) week 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 Q 51,345 50,337 86,732 118,117 48,024 97,375 75,751 78,797 59,856 23,696 61,385 63,750 60,996 84,276 54,222 58,131 55,398 69,943 79,785 38,892 43,240 52,078 11,321 73,113 79,988 98,311 P 2.78 2.35 3.22 1.85 2.65 2.95 2.86 3.35 3.45 3.25 3.21 3.02 3.16 2.95 2.65 3.24 3.55 3.75 3.85 3.76 3.65 3.58 3.78 3.75 3.22 3.42 A 4,280 3,875 12,360 19,250 6,450 8,750 9,600 9,600 9,600 6,250 4,780 6,770 6,325 9,655 10,450 9,750 11,500 8,975 8,975 6,755 5,500