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Medium Market Entry Go/No-Go Decision

East Asia Cuisine

#Restaurant #Food Service
ProHub Comment

This case guides candidates through a systematic profitability analysis of a niche restaurant concept, requiring market sizing, cost estimation, and financial modeling. The key learning is recognizing when revenue projections fall short of target goals and developing mitigation strategies or recommending against the venture despite its apparent appeal.

Estimated Time 15 minutes
Difficulty Medium
Source Cornell
50 / 100
Our client, Randy, is a second-year MBA student at Cornell Johnson Graduate School of Management. Having missed the wonderful food in her hometown, Hong Kong, and in light of the lack of Guangdong style food in Ithaca, she is considering starting a takeaway only restaurant that sells Hong Kong style dim sum and beverages. Randy would like to know what factors she should consider when deciding whether to start this business.

Clarifying Information

  1. Randy wants to have a stabilized annual profit of $80,000 per year
  2. Randy plans to order frozen food either from Hong Kong or locally. Think Siu Mai, Beef Balls, Curry Fish Ball, and Milk Tea. She simply needs to re-heat them and steam them, so it is pretty straight forward. That’s why Randy thinks that she can manage it, although she does not have prior experience in the restaurant industry. Randy is thinking about leasing a retail spot in Collegetown, opposite to Breazzano Centre, a new complex in which Johnson business school students go to classes. The spot is also a 10-minute walk away from the main Cornell campus.
  3. Budget is not a huge concern. Randy is confident to cover the associated upfront cost for a small takeaway restaurant.
  4. Given the niche restaurant idea, there are no direct competitors at the moment. Potential substitutions are other Chinese restaurants or takeaway options.