CoffeeCo practice case | Case Studies - Interview Preparation PDF Download

Client Background

You’re having lunch with an old friend from university, and she’s looking for some business advice. She is thinking of opening a coffee shop in Cambridge, England, a large university city an hour and a half away from London.

She sees potential in this business but wants your help in determining whether opening a coffee shop is a good idea. 

Case Setup

Start any case by understanding the question you’re asked to solve. Ask your interviewer questions if you feel confused or need more information. We want you to succeed in your interviews!

Take the time (1-2 minutes) to think about how you would approach the problem. Always structure your thinking, and communicate your ideas with your interviewer.

Here are some sample questions to ask yourself:

• How big is the opportunity?
• How much does it cost to open a coffee shop?
• What is the shop’s go-to-market strategy?

Analysis

Your friend is impressed with the framework you presented and is eager to know the potential market size to estimate the volume of coffee she can sell. While acknowledging that the market could consist of commuters, visitors, and others, she wants you to limit your focus to Cambridge residents for now.

How do you estimate the size of the market?

To calculate the amount of coffee that needs to be sold to break even in the first year, your friend wants to use the estimated market size, which you determined using your framework and assumptions. Additionally, she wants to take into account the cost of opening and running the coffee shop, as well as the price and cost per cup of coffee. This calculation will help her understand the minimum amount of coffee she needs to sell in order to break even in the first year.

How much coffee does she need to sell to break even in the first year?

Here is some additional information:

Price per coffee = £3
Cost to open shop = £245,610
Cost to run shop each year = £163,740
Cost per cup of coffee = £1