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In the News

Marginal Cost - Pret Ditches the Smoothie!

Geoff Riley

22nd February 2023

Can you hear Pret customers tearing up their monthly subscriptions? Pret-a-Manger is to stop selling shakes and smoothies because they can't afford it and instead will offer iced-drinks.

It is a classic case of marginal cost. This is the change in total cost from making one extra unit. For Pret it is more expensive to provide smoothies with ingredient prices on the rise and it takes time to make them which increases the unit labour cost. Hence long queues of increasingly dissatisfied subscription customers. Pret will replace them with iced drinks using newly-installed machinery which take less time to make and are cheaper.

Geoff Riley

Geoff Riley FRSA has been teaching Economics for over thirty years. He has over twenty years experience as Head of Economics at leading schools. He writes extensively and is a contributor and presenter on CPD conferences in the UK and overseas.

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