Grocery App

ProHub Comment

This is a straightforward payback period calculation case requiring candidates to identify relevant revenue impacts (basket size increase and customer growth), apply the gross margin to convert to profit, subtract maintenance costs, and divide investment by annual profit increase. The case rewards candidates who ask clarifying questions, structure their approach clearly, and contextualize the answer with industry insights about app development timelines and margin pressures in grocery retail.

Estimated Time 15 minutes
Difficulty Medium
Source PeterK
50 / 100
Your client is a local grocery chain with two stores and $30M in annual revenue. They would like to launch a smartphone app for grocery pick-ups. What would be the payback period for building such an app?

Clarifying Information

  1. Expected investment to build a smartphone app is $1.1M
  2. Exhibit 1. Expected Financial Impact of a Smartphone App, 2024F
  3. The client’s gross margin is 30%
  4. Projected maintenance costs to support the smartphone app is $50k per year