the number of devices are sold to the restaurants?

Question

Dear Community,

Could you please guide me on this case offered on Bain website, here is the link

https://www.bain.com/careers/interview-prep/case-interview/associate-consultant-practice-case-interview/

from the minute 4-10 they talk about the statistics to calculate what would be the market size...

my Q is exactly here. we have 600k restaurant in the US, 5% of them are willing to buy the e-menu and they buy in average 30 devices + we need the # of resto that replace their devices which is 50% according to the interviewer

the math for me is 600k *2% = 30k restaurant - new customer

30k* 50% = 15k existing customer who replace --> the whole market = 45k restaurant then 45k*30 devices = 1mil350K devices

BUT the interviewee did not not consider 30k new restaurants and just calculated the 15k who replace the devices to calculate the market size in $

at the end, the interviewer evaluated that the candidate calculation is accurate..... How?! WHY?

thank you for your justification

Answer 1

The replacement rate suggested is meant to be applied against any menu-type used (whether digital or paper). Thus, the 50% rate should be applied day one to the 30k restuarants in-scope for the exercise.

In this instance, it would be fine for you to ask your interviewer a clarifying question around whether the product uptake would be at 50% day one, or every year going forward. Hope this helps!