My submission into @spectrumecons Economics Challenge 5

This was another interesting challenge set forth by @spectrumecons. In Challenge 5, we are tasked with choosing a location to build a new restaurant in Merry Town. We are to base this choice off of the given information of the four different sites, as well as, other pertinent data about the growing town. Alongside this, we also must decide what to serve and the quality of food to serve, while also giving our rationale as to why the other sites were rejected. So, let’s get to it.

First up is Site A. At first, this site seemed like an attractive option. Some of the pros are it has road frontage on two streets, large volume of vehicle traffic, moderate foot traffic, and being near the clinic. Some of the cons include being located across from Mike’s Kababs and high rent. While this location has a lot going for it, I feel that it would be too much of a liability to be near Mike’s Kababs and, because of his poor service and occasional arrests outside his store, it could tarnish the new restaurant’s brand.

Next up is Site B. This location has a lot of potential. Some of its pros include being near small car park that is rarely full and being within walking distance of the Mall. The cons include low volume of car traffic and most people do not go very far down the street. Even though this has some moderate foot traffic, I feel that if it is overflow from the Mall shoppers, then they will just eat at the food court in the Mall. So, I think this option would be hard to bring in the customers.

Thirdly is Site D. This site has a lot going for it and is one of my top two choices. The pros for this option are road frontage on 2 sides, it is across from the new sports arena, close to the Shopping Mall, close to a growing residential area, and high volumes of traffic. The cons for this option are high rent, high traffic occurs every other week, and no close free parking. I did really like this option because I feel that the proximity of the sports arena, police station, bus terminal, and Shopping Mall overflow could translate to a lot of revenue. Also, since there are not close parking lots it limits the number of people who would want to eat there and I feel that the increased competition of other local restaurants would make the business have to heavily compete for customers. So for these reasons, I would probably eliminate this option as well.

Finally Site C. This site has a lot of potential and is the other of my top two. The pros here are that the building is twice as big as other locations, medium vehicle traffic from the school and residential area, and near a growing residential area. The cons here are low foot traffic and medium rent. With all the given information, I feel that this is the best option to go with. It is located near the school and a growing residential area. Merry Town is growing at 4% per annum and since most of that growth will be Site C. Most people want convenience and one cannot get more convenient than having a restaurant right next door. Also with all the new families moving in, they will be bringing in a lot more money which could translate to increased profits. Other aspects include the bigger building, which could help the restaurant expand with the growing population, and they are not near any other food establishments (a restaurant desert), which translates to less completion.

Okay now that I have settled on Site C, it is time to get to the other details of the challenge. In the Site C restaurant, I would have a family restaurant with a medium priced, medium quality buffet style menu. This would allow me to offer many different alternative for all tastes of food to accommodate the diverse population and still be able to keep it affordable for families to eat. Some of the offerings would include Asian, Latin, and European dishes. Also as mentioned, it is a larger building and would allow for future growth. In the case of higher rent, if we are focused on growth then a bigger building is a necessity. Success for this restaurant is not necessarily to make a huge profit the first year or two, but to create a restaurant that is a staple in the community for decades to come. So this may mean that we only breakeven or make little profit for a couple of years, but we are in it for the long haul and not to make a quick buck.

Thanks for reading and looking!