Big Wheel
Practice this intermediate profitability case interview question from Roland Berger in the Transportation sector. Includes detailed problem prompt, clarifying questions, structured framework, and expert recommendation. Part of ProHub's 835+ consulting case library.
This case tests revenue modeling, cost structure analysis, and profitability drivers. The interviewee must move beyond surface-level revenue comparisons to identify that despite Chicago generating higher total revenue ($52M vs $24M), DC is more profitable ($4M vs $2M) due to operational efficiencies in inventory rebalancing. The case then prompts strategic recommendations to improve overall profitability across both markets.
Your client is Big Wheel Bike Share and they operate bike sharing services in two major cities, Washington DC and Chicago. Their bike sharing business is self-service, where they have stations across each city with a number of bikes docked and customers simply pay at the station kiosk to rent bikes. They operate as a monopoly in both Washington DC and Chicago. The management believes that their operation in Washington DC is more profitable. Our objective is to determine:
- Is the management right that Washington DC is more profitable than Chicago?
- If so, why?
- How can Big Wheel improve their overall profitability?
Clarifying Information
- Annual subscription - $70 / year
- Daily rate - $10 / day (unlimited for 24 hours, 1 day pass = 1 ride)
- Washington DC: 200K annual subscribers and each person rents 10 rides a year; 1M rides a year from daily rentals
- Chicago: 600K annual subscribers and each person rents 5 rides a year; 1M rides a year from daily rentals
- Bike Depreciation - Chicago: $13M (26%); Washington DC: $5M (25%)
- Rebalancing Inventory - Chicago: $16M (32%); Washington DC: $5M (25%)
- Bike Maintenance - Chicago: $8M (16%); Washington DC: $3M (15%)
- Station Cost - Chicago: $8M (16%); Washington DC: $4M (20%)
- SG&A - Chicago: $10M (10%); Washington DC: $3M (15%)