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Medium Profitability Operations

Tactole

#Agriculture & Food #Food Service
ProHub Comment

This case tests candidate ability to work through a profitability framework by systematically analyzing revenue and cost drivers. The key insight requires recognizing that despite revenue growth, unit sales actually declined significantly due to a menu change that increased prices but decreased customer satisfaction through slower service and complexity, ultimately eroding profitability.

Estimated Time 15 minutes
Difficulty Medium
Source Kellogg
50 / 100
Your client is Tacotle, a leading national fast casual restaurant with $420m in revenue in 2019. Over the five years proceeding 2019, Tacotle has experienced steady revenue growth and industry leading profitability. But for the first time in its 15 year history, Tacotle has experienced three straight quarters of EBITDA erosion. Tacotle’s CEO has hired you to explore what is causing profits to drop and what can be done to reverse the tide.

Clarifying Information

  1. Goal: Profitability (no specific milestones, looking for positive annual profit growth in the short term)
  2. Market: Defer until after the framework presentation
  3. EBITDA: Ensure interviewee understands that EBITDA is Earnings before interest, tax, depreciation and amortization (profit)