I think this is a failing of a lot of businesses when they look at the 'undercut' pricing model. What most businesses don't realise is that if you discount som

I think this is a failing of a lot of businesses when they look at the 'undercut' pricing model. What most businesses don't realise is that if you discount something by just 20%, you will actually have to effectively DOUBLE your sales in order to make the same Net Profit at the end of the day. If you are looking to undercut the past place by 50%, then you will need to effectively sell 4x the volume that they are doing just to make the same sort of profit. That then brings further problems - in order to server 4x the customers during a lunch rush, you probably need to lease bigger premises with more staff on hand, thus increasing your Expenses - meaning a reduction in your Net Profit. More customers also means more customer problems (missed deliveries, reduced quality of service etc.) You would eventually end up with a scenario where you have a bustling pasta dive with double the customers, but making LESS money than the original one next door - or worse still, making a loss. Even though you are charging half the price...