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.

• 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
• 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

1. Calculate current monthly profit and profit margin.
2. 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.
3. Based on an estimated 60–70% required sales increase to match current margins, recommend whether to launch the vegan burger and explain why.
4. 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).