IGCSE, A Level Business Student Forum

Izaak owns a small fish restaurant. He employs two chefs (cooks) and three workers who serve in the restaurant. He has been trying to increase added value to improve profits. Izaak has been looking at the business accounts as shown in the Table below. He thinks fixed costs are too high. Izaak has received a number of complaints about food and service. He knows he must improve quality but cannot decide the best way to do this. 10 Identify and explain two problems that low quality might cause for Izaak’s business. [6]

Possible KN Points:
• Loss of existing customers /loyalty
• Loss of new customers
• Cost of replacement
• Cost of fines
• Damage to reputation /image
• Cannot supply on time
• Increase waste
• Cannot charge higher prices