Costs and Competition

I have always dreamt of joining the food industry especially the fast food industry. However, after observing the trends in the market and a growing segment of the health conscience segment of customer, I am more convinced that I should start a fast food outing. A major factor that influences entry into this industry is the progressive increment in the number of health and wellness consumers. This has facilitated the redefining of food culture. However, it is not so easy to penetrate into this market. Among the main barrier to entry in this industry is regulatory obstacles. General food service sector is governed by strict health requirements, and license requirement. Dealing in health sector requires to adherence to more requirements related to organic food. 

The fixed costs that are likely to be incurred in the establishing of health food restaurant include cost of premises, equipment, licenses, and insurance. The first element on fixed cost is on location where the occupancy costs through leasing restaurant space and is charged on monthly basis. Fixed costs such as insurance and licenses are billed on an annual basis. Among the equipment that will need to be acquired food prep stations, cookware, dishes, silverware, dishwashers, napkins, refrigerators, freezers, and cash registers (Walters, 2018). Another fixed cost is the managerial costs for running the business

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The major variable costs for the restaurant will be food and beverages and labor costs. Food and beverage cost are the major variable costs. The variable costs are recognized as the cost of goods sold and are part of the operating costs. Another major variable cost for the restaurant is the labor costs. Employees salaries are essential part of operations. The different employees required include chefs, line and prep cooks, servers, waiters. Labor costs need to adhere to standards on minimum wage. The opportunity costs that will be involved in this include the salary that will be foregone after my resignation from the current job post. 

ReferenceWalters, N. (2018). Restaurant Starup Costs: A Breakdown for New Resturateurs. Retrieved from https://www.shopkeep.com/blog/restaurant-startup-costs-breakdown

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