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

Sports Bar

#Food #Food Services
ProHub Comment

This is a quantitative profitability case requiring strong structured math skills. The candidate must organize extensive customer volume data by time period and day-of-week, calculate revenues and costs systematically, and ultimately assess return on investment (4.1% over 5 years with 4.8-year break-even). The key is recognizing that while profitable, the returns are marginal relative to the $500K investment, requiring a nuanced recommendation that weighs the investment against alternatives.

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 12% 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