Chartwells Case Study

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Compass Group Hong Kong Limited is a food and support services company in the Healthcare, Education and Business and Industry segments. Under the brand name Chartwells, it has catered food to schools in Hong Kong since 1995 in on-site kitchens. Chartwells caters to 17 schools in Hong Kong such as Hong Kong Academy and the Australian International School.
Australian International School Hong Kong is a school in Kowloon Tong, Hong Kong with approximately 1100 students from the ages of 4 to 18. In AISHK, Chartwells caters for morning tea and lunch, primarily to AISHK students and staff. It serves a range of western and Chinese food such as pizza slices and noodles. Students who buy from Chartwells for lunch have the option of buying various products
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Therefore, if a restaurant is considered undesirable (e.g. high price, low quality of food), there is likely a low demand for its products due to the large number of substitutes (high PED). However, it has been noticed that despite many students complaining about the quality and price of Chartwells lunches, the lack of options, and long waiting lines, the majority continue to buy lunch from Chartwells daily. Hence it is hypothesised that this is due to Chartwells’ ability to gain monopoly power and operate as a monopoly within the sector of catering lunch to AISHK students. Since this monopoly power is not gained by most other firms in the food industry, Chartwells’ sources of monopoly power are unique, and likely come from the agreements between AISHK and Chartwells. In this essay, the extent Chartwells is able to operate as a monopoly will be investigated.

Method of Research
Twenty AISHK students were surveyed to find out how often they buy lunch from Chartwells, their main reason for doing so, and their main concerns regarding Chartwells lunches. An interview was conducted with David Christmas, business manager of AISHK to find out more about the process of hiring catering services, and rules they operate under. Secondary research was conducted to find information regarding the food industry in Hong Kong, the change in prices of Chartwells products, and the price elasticity of demand of various food products.

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