Schedule mock interviews on the Meeting Board, join the latest community discussions in our Consulting Q&A and find like-minded Interview Partners to connect and practice with!
Back to overview
Anonymous A
on Feb 20, 2021
Global
Question about

Doesn't total profitability increase after removing the 3 items?

I'm confused regarding the new profitability after removing the 3 prep items, even though the new profit margin is 1323 USD, if you go back and calculate the new total revenue and new total profit, it actually increases for the restaurant. 

Example: old revenue total: 4940 and old profit total: 3540 (profitability: 71%)

New revenue total (removing 3 prep items): 4130 and new profit total: 3378 (profitability is 81%)

The case concludes that removing these items will not help profitability... which is not the case

2
2.3k
22
Be the first to answer!
Nobody has responded to this question yet.
Top answer
Ian
Coach
on Feb 20, 2021
Top US BCG / MBB Coach - 5,000 sessions |Tech, Platinion, Big 4 | 9/9 personal interviews passed | 95% candidate success

Hi there,

3378 is less than 3540. Therefore, this does not improve profitability.

It does improve profit margin, but not overall profitability (profitability = profits).

You're just getting mixed up with terminology here :)

https://www.google.com/search?q=profitability&rlz=1C1CHBF_en-GBAU880AU880&oq=profitability&aqs=chrome..69i57j0i433l2j0i131i433j0i433j69i60l3.1471j0j7&sourceid=chrome&ie=UTF-8

Clara
Coach
on Feb 22, 2021
McKinsey | Awarded professor at Master in Management @ IE | MBA at MIT |+180 students coached | Integrated FIT Guide aut

Hello!

Daniel, the author is in PrepL, hit him up and consider also doing a coaching session for in-depth analysis of the case.

Cheers,

Clara

Similar Questions
Consulting
Question about
Should Products and Dividend be taken into consideration?
on May 30, 2023
Global
3
800+
Top answer by
Ian
Coach
Top US BCG / MBB Coach - 5,000 sessions |Tech, Platinion, Big 4 | 9/9 personal interviews passed | 95% candidate success
14
3 Answers
800+ Views
Consulting
Question about
Summary
on Jul 19, 2023
Global
3
700+
Top answer by
#1 rated McKinsey Coach | top MBB coach
12
3 Answers
700+ Views