Evaluate Coupon Impact on Restaurant Profitability
Overview
This question evaluates profitability analysis, unit economics, cost-volume-profit reasoning, and experimental impact assessment skills through both qualitative factor identification and quantitative financial modeling.
Capital One
Jul 12, 2025, 6:59 PM
Data Scientist
Onsite
Analytics & Experimentation
52
0
Profitability Assessment for a Restaurant-Coupon Partnership
Context
You own a restaurant and are evaluating whether to partner with a coupon marketplace that charges a commission on checks redeemed with a coupon. Assume:
- One coupon max per table; commission applies only when a coupon is used.
- Variable cost equals 40% of the gross check (food, disposables, etc.).
- Fixed cost is $100/day (rent, salaried labor, utilities).
- Unless stated otherwise, use the same average spend for coupon and non-coupon tables.
Questions
- What qualitative and quantitative factors would you evaluate before deciding to partner with the coupon website?
- Given current operations (20 tables/day, 100/day), calculate the daily profit.
- If joining requires paying a 40% commission on every check that uses one coupon (max one per table), what average spend per table would make the partnership at least break-even relative to the current profit? State any assumptions and show the formula.
- Based on your calculation, would you join the site? Justify your decision.
- After joining, new data show 25 tables/day, 10 tables using coupons, $36 average spend, variable and fixed costs unchanged. Calculate the new daily profit and decide whether to continue the partnership. Explain why the profit changed.
Solution
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