P.7
Chartwells only have
a profit incentive
to sell more
goods up to
fit provides financial supthe point
o the school, e.g bursaries,
in which
eachers, facilities etc.
when they
reach their
Funding for
Trinity School,
profit target. From
Old Palace
Chartwells’ perspective
School etc.
the best outcome is when
service is good enough to
hit their profit target, but not
drops in demand, once again too good such that costs are
harming pupils. Chartwells
higher than
also benefit from economies necessary.
of scale in the catering
Another
sector in a way that Whitgift disadvantage
could not. They have huge
is that the
purchasing economies of
consumer
scale as they buy food in
has to trust
bulk for all of the many
Whitgift
schools they operate in.
(rather than
They also have managerial
the forces of
economies of scale as they
supply and
have vast experience in
demand) to
how to run school catering
give them a
efficiently.
competitive
price. If
However this business model Whitgift
does (in my opinion) have a
wanted to,
few weaknesses. Generally
they could raise the price
businesses operate more
above its equilibrium
efficiently if they have profit price on the high street to
incentives to do so (eg
increase profit. The final
Private vs. Public sector).
disadvantage relates to the
Pupil
PED of Chartwells’ food
being very inelastic. It would
make more economic sense
for Chartwells to decrease
the quality of service (to
cut costs) and raise the
price of food (to reach the
profit target and receive
the full management fee)
rather than the o ѡ