The company has lots of alternatives. They just choose not to.
You are correct. Though I wouldn't say the company has lots of alternatives it does have a few.
Any company that faces an increase in the price it pays for any of the goods it uses has 3 choices.
1. It can pass the increased costs onto consumers by raising the price of its products.
2. It can absorb the increase in costs by reducing its profit margin.
3. It can reduce its consumption of the good that is costing it more.
A company budget is no different in many ways to a personal budget. They both utilise private money in an attempt to enhance wealth. If an individual had a particular liking for a certain brand of beer and that beer went up in price, he would be faced with similar choices to any company experiencing a rise in the cost of goods it consumes. If he wants to continue to consume that brand of beer he would have to reduce his consumption of some other good, maybe lamingtons, or his increased costs would risk his ability to enhance his wealth. If he wasn't willing to do that then he would have to suck up the extra cost, this of course would harm his financial position and would be considered profligate by the majority of rational people. The third choice he has would be to stop buying that brand of beer and consume a cheaper one instead.
A company can only push up the price of its goods so far before it damages its trading position. Likewise it can only absorb price increases so far until its trading position is also damaged. In the case of
Red Robin, it cannot find an alternative like our beer drinking buddy, so it is left with only one option. Reduce its consumption of the good that is rising in price.
It would be profligate to argue that a company should continue to consume a good that rises in cost without taking some course of action to reduce the harm it does to its financial position.
