Bain Case Interview Practice #1: Coffee Shop Startup

This Bain case interview practice case is a market entry case, one of the most common types of cases for Bain first-round interviews. To pass your consulting interviews and land a consulting job offer, it is critical that you practice and master case interviews.

To solve or pass this case, you will need to create a consulting framework to assess the market attractiveness, strength of competitors, the client's capabilities, and the expected profitability. Afterwards, you will deliver a case recommendation that summarizes your analysis and key takeaways from the case interview.

[rishimetawala]

I would also do a sense check in the end to make sure the number makes sense and if we can even have capacity to serve 205k cups which translates to 560 cups a day which seems inflated. So it would make sense to add in some complementary products like cakes and pies or whatever to break even or reduce the costs and increase the price etc.

[achmadabdul]

At 07:16, how can 9 million cups for 2 pounds per cup be equal to 18 billions (BILLIONS). Might need fore coffee or three zeros just got added at the end?

[shubhendukulshreshtha]

I like the extra tip about estimating the market share required and sense checking if that's achievable in a year or not - good business sense. However I think it comes to a required approx 35% and not 3% probably begging the question if the up front capital can be spread out over 5 or 10 years to make break even annually more possible..

[pandabear]

But the case tells us that they drink an average of 1 cup per day why would we need to calculate that?

[jamielee]

Really feel like the sample answers on the Bain website are way too simple...

[RaulFournier]

Hi. Just one quick clarification, your calculation for the coffee market size is 18B but it should be 18M, correct?

[riorin]

Why estimate the percentage that drinks coffee when the assumption is already " assume that each person drinks 1 cup per day" ?

[xCopaCOD]

It is explicitly stated that the population of 100k people drinks 1 cup of coffee on average, meaning this average includes both coffee drinkers and non-coffee drinkers. So the claculation you proceed with assuming that only 50% of the 100k drink 1 cup per day doesn't make much sense unfortunately, and neither does Bain's.

[alfonsomontt]

Shouldn't the Cost of Opening the Shop be amortized over a period of time? e.g. 250k over 10 yrs (+ some financial cost). Then, annual fixed costs would be 163k + 25k (+2.5k).
Sounds weird to amortize the entire investment in just 1 year for the break even calculation. Also, break even in Yr2 would be significantly different...

[BAndre]

About your coffee market sizing equation. Is it better if I breakdown the population by age demographic (let's say per 15 years) with each age group has their own % that drinks coffee (so it's not general 50%)?

[tanig]

this is a problem for a strategists who never be in a business. calculating business size as easy as doing assumtion here and assumption there. based on the based limited logic. businessman never do that. defining market size must be real and accurate