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The Cosmos restaurant

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The Cosmos restaurant

by akhpad » Fri Aug 20, 2010 8:45 am
Source: Veritas Prep

The Cosmos restaurant chain is planning to open a branch in an economically depressed region, a decision that will require substantial investment. However, the primary source of income for most of the region's inhabitants comes from factory jobs, and few factory workers earn sufficient income to regularly dine at the Cosmos restaurant. Nevertheless, Cosmos restaurant executives insist that this branch will not lose money.

Which of the following, if true, provides the strongest support for Cosmos's contention?

A: Cosmos markets itself as a restaurant for special occasions and does not expect many customers to visit regularly.
B: Cosmos will be the only restaurant of its kind in the region.
C: If the branch does lose money, Cosmos has enough highly successful branches elsewhere that the company will remain on comfortable financial footing.
D: Cosmos bases its prices at a certain location partly on the median annual income of residents in the region.
E: During the last nation-wide recession, Cosmos's stock price increased by more than 30 percent.

OA: A
Last edited by akhpad on Fri Aug 20, 2010 7:27 pm, edited 1 time in total.
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by beatthegmatinsept » Fri Aug 20, 2010 8:57 am
The Cosmos restaurant chain is planning to open a branch in an economically depressed region, a decision that will require substantial investment. However, the primary source of income for most of the region's inhabitants comes from factory jobs, and few factory workers earn sufficient income to regularly dine at the Cosmos restaurant. Nevertheless, Cosmos restaurant executives insist that this branch will not lose money.

Which of the following, if true, provides the strongest support for Cosmos's contention?

A: Cosmos markets itself as a restaurant for special occasions and does not expect many customers to visit regularly. Since only a few workers can dine regularly, we can assume that the remaining will at least dine on special occasions.
B: Cosmos will be the only restaurant of its kind in the region. Irrelevant. If people don't have money, they won't dine regardless.
C: If the branch does lose money, Cosmos has enough highly successful branches elsewhere that the company will remain on comfortable financial footing. Weakens. Takes the scenario where the branch does lose money.
D: Cosmos bases its prices at a certain location partly on the median annual income of residents in the region. Inspite of their pricing, only a few have money to dine regularly.E: During the last nation-wide recession, Cosmos's stock price increased by more than 30 percent. Irrelevant

My final two options are A and D. If I were to pick one, I'd go for A.
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by SeemaSkl » Fri Aug 20, 2010 9:37 am
IMO A. also.
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by ssp » Fri Aug 20, 2010 4:44 pm
IMO Answer Choice D

The question I would ask myself is "How will the Company make money if factory workers cannot afford to regularly dine at the Cosmos restaurant?"

Let's analyze A - If customers only come in for special occasions, how does this support the contention that the branch will not lose money? The restaurant probably will if customers only come in about once a month or every few months on "special occasions".

What about D - What if the prices of the restaurant are lowered so that they are affordable for the customers in the region? That is what D is saying. The prices of the restaurant will be adjusted so that it is affordable for the customers in the region. I think other people are ignoring the fact that the prices will be lowered...

What is the official answer?
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by vijaynaik » Fri Aug 20, 2010 5:27 pm
I will go with 'D' for the same reasoning given by 'ssp'
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by debmalya_dutta » Fri Aug 20, 2010 6:10 pm
My pick is A
only few in that city can afford to dine regularly outside and
the option A says that Cosmos expects very few customers and not on a regular basis ....

whereas option D says that Cosmos bases its prices on the median salary at the location
even if Cosmos bases it on median salary but that doesn't tell me whether the pricing will attract enough customers or not to rationalize the business decision . What if there are only few people above the median income range ?

@akhp,
please share the OA?
@Deb
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by akhpad » Fri Aug 20, 2010 8:03 pm
Thanks for explanation.


I was confused about A and D.
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by scorpionz » Fri Aug 20, 2010 10:41 pm
I am not convinced that 'A' is the best option. The reasoning that executives think that the brand is marketed as one for special occasions and hence they do not expect people to dine regularly seems to be a complete paradox to the conclusion that the branch will still do well and not lose money.

My option would still be 'D'.

But then that's just my two cents...
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by diebeatsthegmat » Sun Aug 22, 2010 6:12 am
scorpionz wrote:I am not convinced that 'A' is the best option. The reasoning that executives think that the brand is marketed as one for special occasions and hence they do not expect people to dine regularly seems to be a complete paradox to the conclusion that the branch will still do well and not lose money.

My option would still be 'D'.

But then that's just my two cents...
take you as an example for explaining why D is not the answer.
you are a worker and you make not much money to feed yourself everyday, for example, you make only 10$ a day thus do you dare to have meal at a restaurant which charges you 10$ a meal? this could happen but hardly
and suppose you are the boss of the restaurant, do you will to open a restaurant in a place where only few people have dinner or lunch?
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