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

Market sizing
New answer on Dec 30, 2020
4 Answers
6.4 k Views
Anonymous A asked on Nov 22, 2020

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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Anonymous replied on Nov 22, 2020

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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Vlad
Expert
replied on Nov 22, 2020
McKinsey / Accenture Alum / Got all BIG3 offers / Harvard Business School

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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Ian
Expert
Content Creator
replied on Nov 23, 2020
#1 BCG coach | MBB | Tier 2 | Digital, Tech, Platinion | 100% personal success rate (8/8) | 95% candidate success rate

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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Antonello
Expert
Content Creator
replied on Dec 30, 2020
McKinsey | NASA | top 10 FT MBA professor for consulting interviews | 6+ years of coaching

Hi, in addition to the solutions proposed by the other coaches in the discussion, I would like to suggest similar cases in the platform to practice with:

  • https://www.preplounge.com/en/consulting-forum/how-much-would-you-charge-to-clean-all-the-windows-in-seattle-4965
  • https://www.preplounge.com/en/consulting-forum/market-sizing-milk-consumption-5087
  • https://www.preplounge.com/en/consulting-forum/how-would-you-calculate-the-value-of-a-cow-4982
  • https://www.preplounge.com/en/consulting-forum/estimate-number-of-traffic-lights-in-a-london-5692

Hope it helps,
Antonello

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