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Henning

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4

Market Sizing Questions - No. of Restaurants in Paris, can someone check my approach?

1. % of people in Paris going out to eat for lunch/dinner, and % who go to restaurants as compared to takeaway/supermarkets/bakeries etc.

population paris -> 3 Mio (wild guess) % eat outside per day, 30% (900.000), percent of those who actually go to a restaurant 50% (450.000)

tourists -> 300.000 in the city on a given day (1/10 of population) % eat outside 70% (210.000), % eat in restaurants 80% (approx. 170.000)

2. Overall target market: 620.000 people per day - define peak hours

Peak hours: 11:00 - 14:00 for lunch and 17:00-20.00 for dinner

concentration: 50% / 50% so 310.000 each

3. Avg. Number per group

Important to calculate the occupancy rate per table. Say on average, 3 people go to a restaurant together, Would mean there is a need for approx. 100k tables in the peak hours.

4. Avg. Time spend in restaurants

Say 1 hour, so a restaurant can serve 3 groups during peak hours

5. Avg. Tables per restaurant

Say a restaurant has on average 10 tables. This would mean during the peak hours 30 groups can be served which would mean 90 persons per restaurant in peak hour and 180 persons per day.

6. No of Restaurants

Take the 600.000 people from the beginning and divide by approximately 200 which would equal 3000 people per day

Sanity check: 3 Mio people and 3000 restaurants would equal a 1000 people per restaurant which would be quite high. Thus I would double my estimate to at least 6000 - which would indicate 500 people on every restaurant. This would be in line with my experience of smaller towns and even villages with around 20 restaurants per 10.000 people.

1. % of people in Paris going out to eat for lunch/dinner, and % who go to restaurants as compared to takeaway/supermarkets/bakeries etc.

population paris -> 3 Mio (wild guess) % eat outside per day, 30% (900.000), percent of those who actually go to a restaurant 50% (450.000)

tourists -> 300.000 in the city on a given day (1/10 of population) % eat outside 70% (210.000), % eat in restaurants 80% (approx. 170.000)

2. Overall target market: 620.000 people per day - define peak hours

Peak hours: 11:00 - 14:00 for lunch and 17:00-20.00 for dinner

concentration: 50% / 50% so 310.000 each

3. Avg. Number per group

Important to calculate the occupancy rate per table. Say on average, 3 people go to a restaurant together, Would mean there is a need for approx. 100k tables in the peak hours.

4. Avg. Time spend in restaurants

Say 1 hour, so a restaurant can serve 3 groups during peak hours

5. Avg. Tables per restaurant

Say a restaurant has on average 10 tables. This would mean during the peak hours 30 groups can be served which would mean 90 persons per restaurant in peak hour and 180 persons per day.

6. No of Restaurants

Take the 600.000 people from the beginning and divide by approximately 200 which would equal 3000 people per day

Sanity check: 3 Mio people and 3000 restaurants would equal a 1000 people per restaurant which would be quite high. Thus I would double my estimate to at least 6000 - which would indicate 500 people on every restaurant. This would be in line with my experience of smaller towns and even villages with around 20 restaurants per 10.000 people.

(edited)

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Book a coaching with Henning

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I would add a few points to your calculation to make it more robust:

  • Distribution of people that go for lunch vs dinner might not be equally split which increases the number of restaurants, as most are empty for lunch
  • It seems you're implicitly assuming that occupancy is 100% at peak hours for all restaurants,so you're calculating the minimum number of restaurants you need to serve the demand.

Other than that, I think your approach is solid and makes sense to me.

I would add a few points to your calculation to make it more robust:

  • Distribution of people that go for lunch vs dinner might not be equally split which increases the number of restaurants, as most are empty for lunch
  • It seems you're implicitly assuming that occupancy is 100% at peak hours for all restaurants,so you're calculating the minimum number of restaurants you need to serve the demand.

Other than that, I think your approach is solid and makes sense to me.

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Hi,

You can also calculate from the supply side:

  • Calculate the ovarall area of the city
  • Split the city into tourist center, center,surbubs
  • Assume the number of blocks in each
  • Assume number of restaurats per block
  • Assume work hours, occupancy, av time

Best

Hi,

You can also calculate from the supply side:

  • Calculate the ovarall area of the city
  • Split the city into tourist center, center,surbubs
  • Assume the number of blocks in each
  • Assume number of restaurats per block
  • Assume work hours, occupancy, av time

Best

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Honestly, it's pretty good! nothing to add from the other coaches.

The most important thing here is you split up things logically (i.e. not unecessarily) and made fairly reasonable assumptions.

Honestly, it's pretty good! nothing to add from the other coaches.

The most important thing here is you split up things logically (i.e. not unecessarily) and made fairly reasonable assumptions.

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