FastFood Chain Turnaround

With Exhibit 1, a good candidate should be able to identify a few key insights:

• Sales was relatively stable until a significant drop in 2024

• Gross margin % remains stable, which implies COGS (as % of sales) has not changed much and is not a big issue\

• Net profit is a lot worse. This is driven by the combination of (1) significant sales drop, and (2) not enough reduction on costs below COGS to cope with sales drop

The candidate should then further break down sales to its components. Given that the average price or translation size (in $) has remained the same, the candidate should realize that the main issue lies with transaction volume drop and should ask further on breakdown of the transaction volume, ideally proposing a few potential ways to slice the data (e.g., by channel, by store etc.).

With Exhibit 2, the candidate should be able to observe that compared to competition, FastFood Co is lagging behind in delivery sales (in volume) and as such they need to catch up on increasing their delivery sales. 

The brainstorming exercise is qualitative with the aim to test whether the candidate can think openly. There is no definite answer, but potential ideas could include:

• Review the performance on deliver platforms and improve marketing efficiency (visibility, awareness, conversion, retention etc.)

• Leverage CRM if they already have some customer data, e.g., loyalty program

• Leverage digital channels e.g. WhatsApp, Instagram to reach out and engage with customers and provide additional order channels

• Consider changing delivery platform if the current one(s) are not effective

With Exhibit 3, the candidate should spot that FastFood Co has higher costs, compared to benchmark, particularity on rent and depreciation. Depreciation is hard to change, but there should be levers to improve on rent. Potential ways to reduce rent include re-negotiating with the landlord for a special discount, exploring closure/consolidation of uneconomical stores, consider cloud kitchen that caters only for delivery etc.

The conclusion from the candidate should cover both sales improvement and cost improvement. 

On sales, FastFood Co needs to increase the # of transactions by increasing their delivery sales. They could review their performance on delivery platform, leverage CRM and other digital media tools, and potentially consider alternative platforms etc. 

On costs, rationalizing rent cost would be the main lever. FastFood needs to explore options e.g. renegotiation, rationalizing stores, adjusting store format etc. 

The next step for FastFood would be to quantify these potential levers, assess which ones are more material and start taking action accordingly.