Should Company Launch Vegan Burger Based on Profit Analysis?

Q: Should Company Launch Vegan Burger Based on Profit Analysis?

This question evaluates unit-economics and quantitative product-launch decision-making skills, focusing on contribution margin metrics, break-even analysis, profit and profit-margin calculations in the Analytics & Experimentation domain for Data Scientist roles, and is primarily a practical application of symbolic and numeric financial modeling with conceptual economic reasoning. It is commonly asked to assess how candidates translate per-unit prices, variable and fixed costs, and observed volumes into go/no-go judgments by reasoning about profitability, required volume targets, and sensitivity to cost or demand trends.

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Question

Case: Launching a Vegan Burger — Unit Economics and Go/No-Go

Context

You are evaluating whether to launch a vegan burger alongside an existing standard burger. You have been provided (or can denote) per-unit price, per-unit variable cost, and product-line fixed costs for each product.

If exact figures are not provided, use variables and compute symbolically; you may also illustrate with a small numeric example.

Given/Notation

Standard burger: price p_s, variable cost c_s, fixed costs F_s, observed volume Q_s.
Vegan burger: price p_v, variable cost c_v, fixed costs F_v.

Tasks

Compute for each product:
- Contribution margin per unit: cm = p − c
- Contribution margin ratio: cmr = cm / p
- Break-even sales volume (units): Q_be = F / cm
- Profit at volume Q: π(Q) = Q·cm − F
- Profit margin at volume Q: m(Q) = π(Q) / (Q·p)
Using the statement “achieving the same profit margin as the standard burger requires selling 60–70% more units” for the vegan burger:
- Express the required vegan volume Q_v to match the standard burger’s profit margin m_s = m_s(Q_s).
- Assess feasibility.
Recommend: Should the company introduce the vegan burger? Justify quantitatively (using the formulas and any provided or assumed numbers) and qualitatively.
Name future industry or cost trends that could make entering the vegan-burger market attractive.

Hints

Set up contribution-margin and break-even formulas.
Discuss economies of scale, raw-material costs, and consumer-demand growth.