Facilities in a restroom

Case information

Difficulty: Intermediate

Candidate-led

< 100 Ratings

Times solved: 700+

Valuation

Case Prompt:

A restaurant owner is currently setting up a new restaurant and making some basic decisions on how to fit it out. Today he’s deciding on facilities in restrooms for customers to dry their hands. He has 3 options: Paper towels, Roller towels, and Hot Air dryers.

What should he consider in his decision-making process?

Practice makes the difference

Practicing alone helps – with a partner it’s even better. Solve this case in a realistic mock interview.

Considerations

Show solution Hide solution

Decision Making

Show additional information Hide additional information

Show solution Hide solution

At this point, it is obvious that from an economic standpoint, the option you select will vary with the number of customers. Therefore, it makes sense to look at a break-even calculation.

Dryers

$100/month + upfront charge of $1,000 depreciated over their lifetime
$1,000/(4 x 12) = $21 / month
Total cost = 100 + 21 = ~$120/month

~$120/month which does not vary with the number of customers coming into the restaurant.

Toweling Rolls

<2,000 customers / month → $10 every other day → 10 x 15 = $150 / month
>2,000 customers / month → $10 every day → 10 x 30 = $300 / month

Even with less than 2,000 customers per day, it will cost 150$ / day and this in itself is more costly than both the dryer and the towels option, and with more than 2,000 customers, it will only look more unfavorable.

Paper Towels

Vary directly with #of customers in the restaurant, at a cost of $0.05 per customer. Therefore, with a low number of customers per month, paper towels will be cheaper than dryers will. How many customers would have to come to the restaurant each month to make the dryers more cost-effective?

The cost of towels would have to exceed $120 per month, equating to $120/$0.05 = 2,400 customers per month.

The real economic decision is between towels and dryers. At less than 2,400 customers per month (or 2,400/30 = 80 customers per night) you would prefer the towels. Once the number of customers increases above this, you'd switch to the dryers' option.

Further Questions

Following the economic analysis, you might mention a few more noneconomic points that might sway the balance:

Are there additional staff costs for cleaning up paper towel waste?
How many suppliers of each option are there? If there is a single supplier, might he have the capacity to raise prices in the future?

Practice This Case With Peers Who Are Currently Looking for Interview Partners.

All Meeting Slots

Do you have questions on this case?

Ask our community and receive answers and tips directly from our experts.