the number of devices are sold to the restaurants?

marketdevelopment marketentry profitability;
New answer on Sep 03, 2020
1 Answer
mehrasa asked on Aug 27, 2020
I am a business consultant. I am preparing for BCG/ Bain. Would like to work with advanced/pro members

Dear Community,

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

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

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Anonymous replied on Sep 03, 2020

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!

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mehrasa on Sep 03, 2020

@joe thank you for the reply. in fact, my Q is still there... why the interviewee didnot calculate the new customers and just considered the growth rate (the restaurant who want to change their device)?!!

mehrasa on Sep 03, 2020

If we want to arque this is the first year they launch the product, still the interviewee need to calculate new customers who switch from current menu to e-menu not the growth rate... for me it is still absurd