2. You are running a small independent breakfast restaurant near campus. The largest competitors within the neighborhood against your restaurant are large chain restaurants like My Warm Day breakfast restaurant. The price of meals sold in your restaurants are exactly the same as at My Warm Day breakfast restaurant. Recently, the wholesale price of food materials including hams, eggs and breads has increased around 25%. My Warm Day breakfast restaurant tends to absorb the price increase from the suppliers, but you realize there is no other way for your restaurant to absorb this increase but pass it on to the customers. At the same time, you are worried about losing customers because of the future price increase.
Please discuss the possible reasons why My Warm Day breakfast restaurant is able to absorb the increase in costs. (10%)