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How can I market size the number of hot dog eaters in NY city from the demand side?
Overview of answers
Hi Firas,
An interesting question. If I were to receive such a question in an interview, I would start by clarifying a few things:
- Should I estimate the number of hot dogs sold, or the number of hot dog eaters?
- How is "hot dog eater in NYC" defined?
Once I have those two questions answer, I would start with the NYC population, and apply (some if not all of) the following filters:
- Remove people who cannot eat hot dogs (e.g. new-born babies, terminally-ill elderlies, people under specific health conditions, religious reasons, etc.)
- Filter by age: assumption here is that certain generations are more likely to consume hot dogs.
- Filter by weight: assumption here is that heavier people are more likely to consume hot dogs.
- Filter by district/location: assumption here is that people from certain parts of NYC are more likely to consume hot dogs.
- Filter by nationality: assumption here is that people from certain countries are more likely to consume hot dogs.
Each of these filters apply a certain percentage number to the NYC population, and the result would be my answer to the question. In a real interview, I would probably use only 2-3 of the filters mentioned above, instead of all of them.
(edited)
Estimate the population in NY city at a given time - let's say 25M (including tourists etc)
Then think of who typically has hot dogs and where. Some examples are
1. Sports games
2. Tourist venues - Brookln Bridge, Time Sq, Central Park etc.
3. Impulse buys
Estimate attendance at sports games (safe to say 20k at any point - going up to 150k for special events).
Estimate number of tourists - either based on facts (50M a year = 1M a week or day (assuming everyone stays for a week) or estimates - x% of population is tourists (2-5% seems reasonable)
Impulse buys are harder but you can use assumptions such as No. of non tourists visiting tourist areas and what % of those may buy (I would say <1% but work with a number that is easy)
Add all 3 numbers up to get an estimate
(edited)
A few considerations upfront:
- demand side = hot dog for lunch for office workers and tourists. People who have day off would prefer to eat at home or live outside of NYC. Assumption: people would have a dog for dinner/breakfast.
- Average dog price in NYC = $2
Consider office workers:
As an office worker (located predominantly in Lower Manhattan), I would have the following food options for lunch:
- Dog $2 + Drink $1.7
- Leon/Pret etc as take away ($5+)
- Food delivery ($6-7)
- ...
Hypothesis: Hot dogs compete against another food options offering a cheaper meal for price sensitive office workers.
Number of office workers:
- NYC has around 8m population,
- Thereof 6m are working age,
- Thereof 2m are employed and work in an office,
- Thereof 1m have offices in NYC
- + 0.5m is communiting from outside (Jersey)
- Leads to 1.5m office workers in NYC.
Assumption: 10% have a dog for lunch --> 150k workers
Market size (demand side) on a week day: 150k x $2 = $300k
Market size p.a. $300k x 180 working days = $54m p.a.
Consider tourists:
50m tourists p.a. --> 1m a week, 150k a day.
20% try a dog: 30k * $2 = $60k a day
Market size p.a. = $60k * 365 = $21.9m
TOTAL MARKET SIZE = 21.9 + 54 = approx. $76m p.a.