Official Solution:
A negative review of a popular restaurant claimed that the wait staff was rude and the food was overpriced. This review caused sales to drop precipitously which, in turn, forced the original owners to sell the business. The new owners revised the menu and dismissed most of the wait staff. By the end of six months, however, monthly sales had improved by less than 1%.
All of the following, if true, forms a basis for at least a partial explanation of why sales at the restaurant have not improved except which one?
A. The new owners could not determine who were the rudest members of the wait staff.
B. New menu items offered by the new owners are now more affordable.
C. The new owners neglected to advertise the fact that the restaurant is now under new management.
D. The new owners began managing the restaurant during the summer, when sales were generally at peak.
E. Another restaurant with similarly-priced menu items opened across the street.
A. This option may explain why the sales did not improve. It is possible that the members of the staff who were the rudest were not dismissed and thus the rude behavior from the wait staff continued even after the change in management, thereby deterring the growth in sales.
B. CORRECT. An affordable menu should normally lead to increase in sales. Therefore this option does not explain why the sales did not significantly improve.
C. If negative publicity caused sales to fall, positive publicity – including information about a change in management – would help explain why the sales could improve. However since this information was missed out from the advertisement, sales did not improve.
D. If the new management took over in summer when the sales were at peak, after six months, in winter, the sales would normally drop - this option states that there is a seasonal trend in the sales and hence explains that even though the steps taken by the management might have increased the sales, the increase was offset by the seasonal variation. Thus the increase in monthly sales was less than 1%.
E. It is well known that competition reduces market share. Thus this option explains that even though the steps taken by the management might have increased the sales, the increase was offset by the competition. Thus the increase in monthly sales was less than 1%.
Answer: B
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