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McKinsey Medium Profitability

Tres Burritos

#Retail

Practice this intermediate profitability case interview question from McKinsey in the Retail sector. Includes detailed problem prompt, clarifying questions, structured framework, and expert recommendation. Part of ProHub's 835+ consulting case library.

ProHub Comment

This case tests the candidate's ability to structure a response to an external crisis with multiple strategic options and trade-offs between financial and reputational considerations. The case progresses logically from option identification through financial analysis to cost optimization, requiring both quantitative modeling and qualitative judgment about brand impact.

Estimated Time 26 minutes
Difficulty Medium
Source NYU
49 / 100
Your client is a national burrito chain with 100 locations. There has been a widespread flu virus growing in the U.S. which has the potential to hurt their business. They need your help deciding how they should respond to the virus in NYC specifically, and what the implications will be for their brand.

Clarifying Information

  1. There are 10 locations in NYC
  2. The restaurants sell 3 types of burritos, along with guacamole, salsa, and other sides.
  3. All of their sales come from grab-and-go takeout orders. Tres Burritos does not currently offer delivery.
  4. Their main goal is maintaining a net positive profit. They’re also concerned about how their actions in NY will affect the national brand.
  5. The virus is projected to last for 3 months
  6. We do not know how Tres Burritos is responding in other cities.
Mock Interview
Interviewer

Your client is a national burrito chain with 100 locations. There has been a widespread flu virus growing in the U.S. which has the potential to hurt their business. They need your help deciding how they should respond to the virus in NYC specifically, and what the implications will be for their brand.

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
Structure Analysis Communication Business Sense Quantitative
Practicing...
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Practice this case with AI Mock Interview

A burrito chain must decide how to respond to a 3-month flu virus outbreak in their 10 NYC locations. The key insight is that offering delivery, despite incurring a $20K setup cost and 10% revenue decline with 10% COGS increase, still yields positive EBITDA over 3 months and preserves customer relationships better than closing or staying open without adaptations.

Key Insights:

  1. Recognize that crisis response requires evaluating multiple options beyond binary open/close decisions
  2. Understand that profitability impact is dynamic over time (Month 1 shows -$1K EBITDA due to setup costs, but Months 2-3 show $19K recovery)
  3. Balance short-term financial pain against long-term brand and customer retention considerations
  4. Consider both cost-side improvements (using third-party delivery platforms) and revenue-side opportunities (selling ingredients, partnering with competitors)

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