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Easy Profitability

Choi Sun is Here

#Retail F&B #Financial Services

Practice this beginner-friendly profitability case interview question in the Retail F&B sector. Includes detailed problem prompt, clarifying questions, structured framework, and expert recommendation. Part of ProHub's 835+ consulting case library.

ProHub Comment

This is a straightforward profitability case that requires candidates to build a financial model comparing incremental revenue from faster transactions against Choi Sun's service costs. The key insight is recognizing that the value proposition differs significantly by customer segment—only the take-out segment benefits from faster transaction times, while eat-in customers are constrained by table turnover, not payment speed.

Estimated Time 16 minutes
Difficulty Easy
Source HKUST
10 / 100
Our client, Leung Kee, is a popular lunch-service-only cha chaan teng (Hong Kong-style café) in Quarry Bay, serving mostly office workers and locals in the area. As a recently-established venue, Leung Kee is currently accepting only cash transactions. Leung Kee has been approached by Choi Sun Financials, a fledgling fintech company focusing on providing streamlined financial transactions to small and medium enterprises, with an offer to use their services. Is Choi Sun’s offer a good idea?

Clarifying Information

Leung Kee:

  1. Opening hours 12 pm – 2 pm, Mondays to Fridays, 50 weeks a year.
  2. Despite its short opening hours, the café is very popular, with queues forming before the café is opened each day and many disappointed customers still in queue turned away at closing.

Choi Sun’s services:

  1. Integrated point-of-sale terminal accepting major credit cards, EPS (Electronic Payment Services), Octopus, Alipay, WeChat Pay, etc.
  2. Promises faster transaction speeds, convenience for customers.

Customers:

  1. Eat-in: Groups of 4–6 people seated at larger tables.
  2. Take-out: Typically office workers taking lunch back to eat in office.
  3. Given the choice, all customers will pay using non-cash methods (i.e. they will use the services provided by Choi Sun).

Current operations:

  1. Eat-in: Tables are seated for an average of 20 minutes.
  2. Eat-in: There are 10 tables available for eating in.
  3. Take-out: Average transaction time is 60 seconds.

Choi Sun’s service specifications:

  1. Trials at a similar cha chaan teng in Kwun Tong shows transaction times can be reduced by 15 seconds on average.
  2. Choi Sun will charge the greater of 2% or HK$5 per transaction.
  3. There is an annual fee of HK$50,000 that covers all necessary training, hardware, and maintenance.

Average customer spend:

  1. Eat-in: The average table bill is HK$500.
  2. Take-out: The average customer order is HK$100.
Mock Interview
Interviewer

Our client, Leung Kee, is a popular lunch-service-only cha chaan teng (Hong Kong-style café) in Quarry Bay, serving mostly office workers and locals in the area. As a recently-established venue, Leung Kee is currently accepting only cash transactions. Leung Kee has been approached by Choi Sun Financials, a fledgling fintech company focusing on providing streamlined financial transactions to small and medium enterprises, with an offer to use their services. Is Choi Sun's offer a good idea?

You

Thanks. Before analyzing, I'd like to clarify a few key questions...

Interviewer

Good question. Let me provide some background information...

You

Based on this, I suggest analyzing from these dimensions...

AI Score
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Practice this case with AI Mock Interview

Leung Kee, a Hong Kong cha chaan teng cafe, must decide whether to adopt Choi Sun Financials’ payment processing services. The analysis requires segmenting customers by type and calculating whether incremental revenue from capturing unmet demand exceeds the service fees and annual subscription cost.

Key Insights:

  1. Customer segmentation is critical—eat-in transactions are limited by table availability and dining duration, not payment speed, while take-out transactions can be accelerated by faster payment processing
  2. The fee structure impacts profitability differently by segment (2% = HK$10 for eat-in vs. HK$5 for take-out), requiring separate analysis
  3. The case intentionally provides incomplete information on overall operating costs; strong candidates recognize this limitation and discuss its implications for profitability assessment
  4. There is unmet customer demand due to capacity constraints and customers turned away at closing, which Choi Sun’s services can help capture in the take-out segment