An Economic Investigation into:

Coloz restaurant

Done by: Jeremy

Ammon
Form 5
Economics
(Mr.Reece)

TABLE OF CONTENTS
Title:
Page no:
Business Background
Aims/Objectives of the Business
Factors Of Production
Demand & Supply
Price Elasticity of Demand
Methodology
Appendix

Business Background:
Coloz was established in February 2003 and is
located on the corner of Gatacre and Baden-Powell
street (#22).
It is owned and run by Colin Burkett along with his
wife Andrea Burkett.
Coloz started out as mostly a bar and was popular
for its karaoke nights, latin dancing and after-work
limes.
Over the years, Coloz started to develop as a
restaurant rather than a bar and is now proudly
known for its delicious local or creole foods.

Aims/Objectives of the Business:

The owners would like to see Coloz become more
popular and develop as a restaurant where you can
get local foods. They aim to be the best restaurant
to go to for creole foods where locals would really
appreciate their culture.
Within the next couple of years, Coloz would like to
sell packaged frozen soups and callaloo to
supermarkets, so that people wouldnt have to buy
all the ingredients to make it themselves when
they could just buy a ready made soup or callaloo.
The serving size would be on average for two
people so that its not too much or too little and
hope to use the names, soup fpr two and callaloo
for two.

Factors of Production:
Capital:
Coloz started off with an opening capital of
$30,000. And the owners continued to invest into
the business and now maintain a current capital of
$160,000.
Land:
Coloz rents their premises at a rate of $10,000. Per
month.
Labour:
A total of five (5) employees are needed to run the
business
(chef, cleaner, preparer, cashier and
bar staff)
The amount spent on wages/salaries per month
vary between $28,000 - $30,000.
Entrepreneur:

The two entrepreneurs who took the risk to start

this business are Colin Burkett and Andrea Burkett.
The average profit made in one year is $200,000.

Demand and Supply:

The following tables represent the demand and
supply for Fish and Callaloo:
FISH
Price ($)
35
40
45
50
55

Quantity
Demanded
1010
1005
1000
990
985

Quantity
Supplied
985
990
1000
1005
1010

Quantity
Demanded
1010
1005
1000
998

Quantity
Supplied
1190
1195
1200
1205

CALLALOO
Price ($)
16
17
18
19

20

995

1210

*Quantity demanded and supplied are references for

orders catered for and orders that are wanted.

Reference to Fig.1 :
Fish is currently sold at $45 which is also the
equilibrium point where the supply and demand for
orders of fish both meet at 1000.
S: represents quantity supplied
D: represents quantity demanded
Reference to Fig.2 :
Callaloo is currently sold at $18 and as we can see
no equilibrium point has yet arrived for the supply
and demand for callaloo.
S: represents quantity supplied
D: represents quantity demanded

Both the supply and demand for fish and callaloo

are figures gathered from over a months time.

Inelastic demand can be referred to as when a

large change in price results in a small change in
quantity demanded.

The formula for the price elasticity of demand is:

%change in Q.D/% change in Price
In Fig.3 when price increases from $45 to $55 ,
demand decreases from 1000 to 985
The elasticity of demand for fish represented by
Fig.3 is therefore:
(15/100) / (10/45)
= 0.15/ 0.22
=0.0675
When the coefficient is less than 1 then demand is
inelastic. Therefore the demand for fish is Inelastic.

In Fig.4 when the price decreases from $18 to $16 ,

the quantity demanded increases from 1000 to
1010.

The elasticity of demand for callaloo represented

by Fig.4 is as follows:
(10/1000) / (2/18)
= 0.01/ 0.111
=0.09

Since the coefficient is less than 1 , the demand for

callaloo is therefore Inelastic.

Methodology:
Primary research only was used to obtain
information of Coloz restaurant.
A Direct interview was done with Mr. Colin Burkett

Appendix:
Direct questions used in interview:
How much money was invested into the
business
How many workers are employed?
What is the job of each employee?
How much money is spent on wages/
salaries in a month?
What is the cost of the land (building)?
What is the average profit/loss made in
one year?
What are the two most popular meals/side
dishes?
What would you say is the aim(s) of your
restaurant?
All other information was obtained from the
restaurants records.