COST ESTIMATION USING ECONOMETRIC MODEL FOR RESTAURANT BUSINESS
COST ESTIMATION USING ECONOMETRIC MODEL FOR RESTAURANT BUSINESS

Summary/Abstract: Study is aimed to develop an econometric model to estimate the cost of the restaurant business in Erbil city of Kurdistan. Restaurant food is costly in Erbil city as a common opinion of consumers. Restaurants are also struggling to make the business sustainable. A basic assumption considered to evaluate all cost factors and to establish an equation to get the clarity of cost estimation and check it with sales of the business. So the research questions formulated as what are different cost factors involve with the restaurant business, which cost is the most important to consider having the significant impact on the business, and what can be the standard econometric model to incorporate cost factors? A sample of 215 restaurants has been taken as the representative of industry. Variables and data get feed in the SPSS software for the analysis. Five dimensions of cost structure from cost namely Prime Cost, Works Cost, Cost of Production, Cost of Sales and Sales has been taken in study. Conclusion of the research based on the data analysis shoes that Prime Cost is the least important, Works Cost has the negative trend shows that there is increase in Sales will have the huge fall in Works Cost, increasing Sales has the small increase in Cost of Production, Cost of Sales is under question. Finally an econometric equation model is presented assuming the standardized equation for this specific case.

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