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Economies of scale

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  • Economies of scale

    There was a show on the other night on CNBC called "Big Mac: Inside the McDonald's Empire."

    It was really a great show. One of the things they were talking about in the show was how McDonalds is expanding in China. One of the things they learned in their expansion was to not open one store at a time. They found opening 5 or 6 stores in an area all at once made it more profitable for them. That way their supply trucks were able to travel to the locations with a full load.

    Isn't that fascinating? If you were to create your own burger restaurant, you would be really in for a rough ride trying to compete with McDonalds who can take advantage of such economies of scale.

    What's your thought on this?
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