In 2011, Red Robin announced that it would open 12 fast-casual restaurants, and in 2016 the company decided to abandon the fast-casual restaurant business.Which of the following reasons relating to the characteristics of monopolistic competition did the company give for getting out of the fast-casual restaurant business?
A)Barriers to entry were too high.
B)The restaurants were not differentiated enough from their full-service restaurants.
C)There were very few buyers and sellers in the market.
D)Standardized pricing in the industry gave them no potential to earn a profit.

Question

Quizplus · Accepted Answer

Red Robin stated that the fast-casual restaurants were not differentiated enough from their full-service restaurants. This suggests that in the monopolistic competition market structure, Red Robin faced difficulty in creating unique restaurant offerings that were different enough to attract customers from other fast-casual restaurants. Therefore, option B is the correct answer. Options A and D relate more to the barrier and industry structures of a monopoly, while option C implies a lack of competition, which is not a characteristic of monopolistic competition.

In 2011, Red Robin Announced That It Would Open 12