Should a Restaurant Partner with Groupon?
Quick Overview
This question evaluates a candidate's competence in unit economics, break-even and profitability modeling, and the ability to distinguish incremental versus cannibalized customers when assessing voucher-based promotional partnerships, reflecting skills in revenue modeling, cost accounting, and business analytics.
Capital One
Jan 21, 2026, 12:00 AM
Data Analyst
Technical Screen
Analytics & Experimentation
4
0
A restaurant is deciding whether to partner with a daily-deals platform such as Groupon.
Assume the restaurant's current business is:
- 20 tables served per day
- Average spend: $30 per table
- Variable cost: 1.00 of customer spend
- Fixed cost: $100 per day
A Groupon-style offer is proposed:
- A customer pays 30 of menu value.
- Groupon keeps 40% of the $15 payment and remits the remaining 60% to the restaurant.
- If the customer spends more than $30, the excess is paid directly to the restaurant at face value.
- Assume every Groupon customer spends at least $30 .
Answer the following:
- What factors should the restaurant consider before partnering with Groupon?
- What is the restaurant's current daily profit without Groupon?
- For a Groupon customer, what average spend per table is required for the restaurant to break even on a purely incremental basis?
- Based on that result, would you recommend partnering with Groupon? Explain the difference between evaluating an incremental customer versus a cannibalized existing full-price customer .
- Now suppose the restaurant serves 25 tables per day , the average spend is 100 per day , variable cost remains 40% of spend , and 10 of the 25 tables use Groupon . What is the new daily profit?
- Why might profit be lower than in the original scenario even though both table count and average spend increased?
- Under what business conditions would you still consider Groupon despite lower short-term profit?
- If the restaurant does partner with Groupon, how could it improve profitability?
Solution
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