In \"Kitchen Nightmares,\" Chef Gordon Ramsay visits struggling restaurants and

Question

In "Kitchen Nightmares," Chef Gordon Ramsay visits struggling restaurants and gives the owners of the restaurant a number of recommendations intended to reverse the restaurant's prospects. One suggestion Chef Ramsay commonly makes is to reduce the size of the restaurant's menu and concentrate on a smaller number of offerings. Our textbook has several theories that can be used to explain how that recommendation can reduce costs.

Explain how the recommendation is an application of Economies and Diseconomies of Scope.

Explain how the Learning Curve concept also would suggest a smaller menu would lead to a cost reduction.

Explanation / Answer

Ans

It is application of economies of scope in the sense that when restaurants produce too many varieties at same time, the yield falls.

The learning curve suggests that focusing on smaller number of varieties which involve repetitive behavior will increase marginal and average product overtime

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