Mkt sizing - revenues of a bar in the center of London

market estimation Market sizing Revenue analysis
New answer on Jan 21, 2020
3 Answers
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Anonymous A asked on Jan 18, 2020

Hello everyone,

how would you estimate the revenues of a bar in the center of the city?

How would you do this case?

Thanks a lot!

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Luca
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replied on Jan 18, 2020
BCG |NASA |20+ interviews with 100% success rate| 120+ students coached |GMAT expert 780/800 score

Hello,

I would first of all asking if the bar has both tables (how many?) and counter service. I wouldn't worry too much about competition, since in the center of Lond it's fair to assume that you have enough demand. I would then proceed as following:

  • Estimate the number of seats of the restaurant and the average time/customer
  • Estimate how many customers per hour we can serve with the actual number of cash registers

You do this because the assumption is that the bottleneck of the process is the line that there will be to pay during the peak hours. You have to consider table service on top of that, since you bring the bill at the table.

Once that you have the capacity of the bar, you can divide the daily working day into time bands and make some assumptions on the "occupancy" of the bar in the different moments of the day. After this, you have just to multiply the number of bills by the average expenditure per client.


Please notice that:​

  1. Even when your bar will be "full", you don't have to consider all the seats of the bar, because you can have for example 2 people sitting at a table for 4.
  2. You could consider apart weekends and seasonality within a year. Don't forget to ask if you will be open 365 days/year.

Hope it helps,
Luca

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Clara
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replied on Jan 21, 2020
McKinsey | Awarded professor at Master in Management @ IE | MBA at MIT |+180 students coached | Integrated FIT Guide aut

Hello!

I would 1st clarify the type of bar and city, since this completly changes the story.

Once this is known, I would calculate the maximum revenue, aka, with bar at full capacity (total people you can host * opening hours * average comsumption per hour).

After that, I would calculate, per week day, how much % of the max revenue -at max capacity- can be made (e.g., Monday only 50%, Saturday 95%).

Hope it helps!

Cheers,

Clara

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Markus
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replied on Jan 18, 2020

Hi,

do you have information on the timeframe and the location of the bar in London?

Best regards

Markus

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Luca gave the best answer

Luca

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