Calculate Profit and Analyze Vegan Burger Market Trends
Overview
This question evaluates unit-economics analysis, break-even and cannibalization effects, pricing elasticity reasoning, and the ability to synthesize quantitative results with business strategy, falling under Analytics & Experimentation and business analytics for a Data Scientist role.
Capital One
Aug 4, 2025, 10:55 AM
Data Scientist
Technical Screen
Analytics & Experimentation
72
0
Case Study: Should We Launch a Vegan Burger?
Context (assumed for calculation)
To make the task self‑contained, assume the current and proposed unit economics below. You may state different reasonable assumptions and adjust the math accordingly.
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Current beef burger
- Price: $8.00
- Variable cost: $4.00
- Monthly volume: 10,000 units
- Fixed costs allocated to burger line: $30,000 per month
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Proposed vegan burger
- Price: $9.00
- Variable cost: $6.50
Assume any initial vegan sales primarily cannibalize beef burger sales 1:1 unless otherwise noted. Break-even uplift refers to the additional vegan units required (as a percentage of cannibalized units) to keep monthly profit dollars unchanged.
Tasks
- Calculate current monthly profit and profit margin.
- If a beef burger sale is replaced by a vegan burger sale, compute the additional vegan units required (as a percent of the replaced units) to break even on profit dollars.
- Based on an estimated 60–70% required sales increase to match current margins, recommend whether to launch the vegan burger and explain why.
- What future trends could make entering the vegan-burger market more attractive? Discuss both cost-reduction and revenue-growth levers.
Hints
- Show clear calculations and formulas; articulate assumptions.
- Consider market size (incremental demand vs. cannibalization), cost curves (learning/scale), and pricing (elasticity, willingness to pay).
Solution
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