At the end of 2016, as the company suffered losses, Red Robin CEO Denny Marie Post announced that the company was increasing the number of lower-priced items on its menus. In particular, the restaurant would increase the number of meals priced at $6.99 from one to four. An article on marketwatch.com quoted the CEO as saying, “We see our recent upturn in traffic … as validation of our decision to refocus on everyday value … and improved speed-to-table.”

a. In increasing the number of lower-priced menu items, is Red Robin more likely to be reacting to competition from McDonald’s or from Panera Bread? In emphasizing improved service time (“speed-to-table”), is Red Robin more likely to be reacting to competition from McDonald’s or Panera Bread? Briefly explain.

b. Would these two strategies be an example of a firm in a monopolistically competitive industry attempting to differentiate its product? If not, briefly explain why the CEO may have decided to pursue these strategies.