Case

Sandwich place

Solved 1.1k times
4.0 5 233
Difficulty: Beginner | Style: Candidate-led (usual style) | Topics: Market sizing

Problem Definition

A local sandwich place has a shop located in a busy business district. The business district is filled with large head-offices of major corporations, a train station & a university. The sandwich place only sells one type of sandwich priced at $5.00. This is a cold-cut salmon sandwich with bread, smoked salmon, salad, cheese & sauce. The sandwiches are freshly made and only prepared after the order is placed, so no pre-packaged sandwiches. The shop has 3 employees who all service customers and it is a take-away without any seating.

Try to estimate the total revenue this shop can generate in one month. Costs are no factor here. Try to base your estimation on logical & reasonable assumptions that would be common for a sandwich place as described here.


Comments

Since this is a candidate-led case, the candidate should drive the case from start to finish.

  • The candidate should make his/her own assumptions whereas interviewer should check for business sense, logical assumptions, details and structure.
  • Solution below is a possible solution based on our assumptions.

Short Solution (Expand)


Detailed Solution

Paragraphs highlighted in green indicate diagrams or tables that can be shared in the “Case exhibits” section.

Paragraphs highlighted in orange indicate hints for you how to guide the interviewee through the case.

Diagram 1 can be shared with candidate that provides a structure for the case.

I. Assumptions

We can make the following assumptions:

  • Sandwich is a cold-cut, so it shouldn't take more than 5 minutes to prepare each sandwich.
  • Shop follows office hours operating 9 hours from 10.00 AM to 07.00 PM.
  • Shop is closed during the weekend.
  • Between 10.00 AM & 12.00 PM the shop is preparing for the busy lunch-rush, so it doesn't sell anything in those 2 hours.
  • Assuming shop has three time-segments with a lunch-rush between 12.00-02.00 PM, light afternoon between 02.00-05.00 PM and evening rush between 05.00-07.00 PM.

II. Revenue

Revenues are generated within the three time-segments mentioned above only. You could argue that you need the time between 10AM and 12PM to prepare the sandwiches for the lunch-rush.

We can now calculate revenue:

  • 3 employees are able to prepare 36 sandwiches an hour.
  • During lunch hour, they sell 100% of production which is 36*2=72 sandwiches.
  • During the afternoon, they sell at 25% capacity which is (36*25%)*3=27 sandwiches.
  • During the evening, they sell at 50% capacity which is (36*50%)*2=36 sandwiches.
  • Total daily revenue is (72+27+36)*$5=$675.
  • Total monthly revenue is $675*20 days=$13,500.

Total estimated revenue is $13,500 per month.


Difficult Questions

  • How could this shop double his revenue in the same location?

Related consulting question(s)

The number of hairdressers depends on three main factors: # of haircuts done per year, time spent per haircut and capacity of each hairdresser. Number of haircuts: Number of haircuts depends on US... (more)

Hi there, I would start by asking some general questions to have a better feeling on the case: 1) Does our client provides this new service elsewhere? If not, does our client already has the cap... (more)

Best answer so far:
Currently non-active expert
Expert

Hey Philip, There are for sure several ways of estimating that number, but a quick top down approach can be resumed in 3 steps 1. Estimate the total population of the US: ~300M (I guess it's alrea... (more)

Best answer so far:
McKinsey Engagement Manager & BCG Consultant | Interviewer at McK & BCG for 7 years | Coached 50+ candidates secure MBB offers

Hallo Brinja, hier ein Bottom-Up Ansatz: Das jährliche Marktvolumen in Holland entspricht [ I. Menge verbrauchter Windeln pro Jahr] x [ II. durchschnittlicher Verkaufspreis pro Windel] I. Menge ve... (more)

Hi, I would try to make an estimation from demand side: We cant split market value into two components: $ spent by citizens of given country and $ spent by people from abroad. I think that we... (more)

Related BootCamp article(s)

Important Facts

It's essential to know some key figures regarding geographies, population, economies for your case interviews. We summarized them for you here.

9 Comment(s)

Market Sizing

Market Sizing Cases are used to test your quantitative and reasoning skills. The interviewer evaluates your structure, numbers-handling and business sense.

15 Comment(s)
4.0 (233 ratings)
4.0 5 233
Case exhibits