Cost-benefit Analysis Rules for the Foodservice System

Authors

Amit Sharma, Pennsylvania State University

Type of Submission

Invited Article

Abstract

Cost-benefit analysis (CBA) is an established approach to help make informed decisions. The practical technique has been used extensively in several areas of study, and there is a robust literature on numerous aspects of CBA. While the functional characteristics have been well expounded, the incorporation of CBA into varied disciplinary contexts remains scanty. Foodservice systems can be viewed as an extension of the broader food system. Within food system economics literature, a critical gap remains in the study of behavioral decision-making through the lens of microeconomic approaches. CBA provides a theoretical approach to conduct such inquiries. Two rules in the CBA, opportunity cost and sunk cost, relevant to behavioral decisions, remain understudied, not just in context of the food system (and therefore the extended foodservice system) but also in the general literature in CBA. In this paper, we provide an overview of those two CBA rules. We do so in context of the key concepts and ideas that define the economics of the foodservice system. Opportunity cost and sunk cost research presented here offers perspectives from business focus, supply chain, and consumer aspects. In articulating an agenda for future research, we highlight the value of employing interdisciplinary and multidisciplinary approaches for such inquiries. Novel methodologies can also ensure we capture the true nature of decision behavior within these CBA rules. The most apparent of these is the measurability of costs and benefits. In this paper, we describe going beyond measurable costs and benefits, and tapping into the opportunities to broaden the framework of systematically understanding decision-processes. While we focus the discussion on the foodservice and food system, the discussion is as relevant to the broader hospitality research endeavor.

DOI

https://doi.org/10.7275/s78n-vv08

Recommended Citation

Sharma, Amit (2021) "Cost-benefit Analysis Rules for the Foodservice System," Journal of Hospitality Financial Management: Vol. 29: Iss. 1, Article 3.
DOI: https://doi.org/10.7275/s78n-vv08
Available at: https://scholarworks.umass.edu/jhfm/vol29/iss1/3