P
ProHub
English 简体中文 繁體中文
Medium Profitability Structured Math

Sports Bar

#Food Services
ProHub Comment

This is a math-intensive case requiring structured calculation of weekly and annual profitability. The case tests the candidate's ability to organize complex data, perform accurate calculations, and contextualize financial results within an investment decision framework. The critical insight is recognizing that while the business shows positive profit ($104,050 annually), the 4.1% ROI over 5 years with a 4.8-year break-even is unattractive compared to alternative investments.

Estimated Time 15 minutes
Difficulty Medium
Source NYU
50 / 100

Your client is an entrepreneur looking to invest in a new bar. He needs to determine how profitable the company will be and convince his primary investor, his father, that it will be a viable business.

What factors would you consider and investigate?

Clarifying Information

Revenues:

  1. The average customer spends $15 on food per visit
  2. The average customer spends $20 on drinks per visit
  3. Capacity constraints and benchmarking should also be discussed here

Costs:

  1. Lease cost is $10,000 per month
  2. Labor costs can be seen below
  3. COGS: Food has a 20% gross margin
  4. COGS: Drinks have a 50% gross margin
  5. There is no specific data on utilities, legal, insurance, licenses, training, remodeling, equipment, and other startup costs

Labor Needs:

  1. Kitchen (when open): 4 people @ $10/hr
  2. Bar: 1 person @ $5/hr
  3. Wait Staff: 3 people @ $5/hr