Cost of production

• In the case study of Secret Recipe Sunway Pyramid, the fixed cost such as shop rental, salary and interest for capital is a cost component that will not change irrespective of the amount of output.  Through my observation, the outlet is reduce its variable cost by employing part time labor for peak hours.  It has little customers during the non-peak hour.  I suggest the outlet to step up their promotional effort to increase customers patronizing during non-peak hours.  This will help to increase the output, hence, reduce the average cost of production and increase profit margin.

 

Factors that influence demand

• Secret Recipe operated since 1997 and known for lifestyle café chain, famous with its cakes.  However, the booming of theme cafes and the social advertisement, Secret Recipe has been losing out its business to the theme cafes and turned itself to just another eatery outlet.  Observing that more of young people that are hanging out in Sunway Pyramid, I would suggest Secret Recipe to increase its competitiveness by having seasonal theme deco, active in social advertisement and maybe coffee art, in order to attract young customers to patronize.  This will also help to increase the demand of other food items, therefore, increase revenue and profits.

 

Law of demand

• Secret Recipe located in a shopping mall has a large number of competition. The ones which are cheaper and those that are more expensive and luxurious. In order to compete in this competitive environment, I suggest that Secret Recipe to have a promotion day each month to boost up their sales. During promotional day, Secret Recipe naïve customers can take the opportunity to try and the regular customers can have the chance to order more items.  This will help them to increase demand. Hence, maximizing revenue and profit.