Medium
Profitability
Dine-in Restaurant Chain
Practice this intermediate profitability case interview question in the Consumer Goods 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 break-even analysis case requiring candidates to work backwards from fixed costs to determine required unit sales per location. The case tests basic financial modeling skills and the ability to structure a top-down approach across multiple business units. Strong candidates should also contextualize the answer by discussing whether 20 donuts is achievable given current 15-donut sales and consider strategic implications like loss-leader pricing or partnership opportunities.
Estimated Time
25 minutes
Difficulty
Medium
Source
PeterK
10
/ 100
Saturdays, a casual dine-in restaurant chain in North America, has gained fame for its delicious chicken thighs. They introduced donuts last year to increase revenue, but this new menu item has yet to turn a profit. What’s the daily break-even number of donuts sold per restaurant?
Clarifying Information
- Each restaurant sells an average of 15 donuts per day
- Donuts are priced at $2.5 each across the chain
- There are 40 restaurants in the chain
- The gross margin for donuts is 75%
- The fixed costs for this product line is $540k annually covering expenses such as donut production facility costs and marketing
- Please consider 360 days in a year