Restaurant in Buenos Aires
Market Sizing
Business Operations
Strategy
?
Prompt
Whilst on holiday in the Argentinean capital, you meet through mutual friends, Mike, the proud new owner of
YuNoodle, a Korean noodle restaurant.
You ask about his restaurant and he tells you that business has been very successful since its launch one year ago.
He also mentions that he has recently been approached by a bank offering YuNoodle the option to accept credit
card payments. He says that he is unsure, and that although some rival restaurants do accept card payments, credit
card usage is fairly low in Argentina. Currently, YuNoodle only accepts cash payments from customers.
Guide - Provide only if requested
casebook | ESADE MBA Consulting Club
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Communication &
Presence
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5
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5
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Business Acumen
Cookies
Traps
¤ Identifying that
profitability is close to
peaking since capacity
utilization is very high
¤ Segmenting customers
into tourists (higher
usage of credit cards)
and locals
¤ Suggesting that any
fee can be passed to
consumer
Credit card payment details: Credit card providers charge a commission (2%) per transaction.
In return they offer business intelligence / consumer insight.
Credit card acceptance will immediately double takeaway sales.
Mike expects 75% of takeaway customers to pay by credit card.
Regarding the restaurant business, an estimated 25% of customers would pay by credit card.
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Analytical & Problem
Solving Skills
¤ Assuming that
everyone will pay by
credit card
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Common Sense &
Practicality
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x
Restaurant business can be broken down into two parts:
Restaurant (currently 90% of revenue)
Opening hours: 9 hours per day for lunch and dinner
Average client spend: 60 ARS (per head)
Capacity: 80 seats
Utilization: 90%
Profit margin: ~6%
Growth rate: 0%
Average meal duration: 1.5 hours
Take away (currently 10% of revenue)
Profit margin: 10%
Growth rate: ~20% per annum
qualitative
Notes
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Mike asks you whether or not he should accept the bank’s offer.
$1 Argentinian peso (ARS) = $0.02 USD
quantitative
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Creativity
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Energy & Fit
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Restaurant in Buenos Aires
Market Sizing
Business Operations
Strategy
quantitative
qualitative
Suggested Approach
1
Understand the business
3
Restaurant
Take away
Average daily revenue: $25,920 ARS
$60 ARS * (80 seats * 90%) * (9 hours /1.5 hour duration)
Average annual revenue: $1m ARS
$10m ARS * 10% of revenue
Average annual revenue: $9m ARS
$25,920 ARS * 350 days
Average annual profits: $100,000 ARS
$1m ARS * 10% profit margin
Average annual profit: $540,000 ARS
$9m ARS * 6% profit margin
Total annual profit: ~$640,000 ARS
2
Understand the card payment model and assess the impact
Restaurant
Loss in profit: $45,000 ARS
$9 million * 25% * (2%) = $45,000 ARS
Conclusion
Based on
information and
revenue benefit,
Mike should accept
the Bank’s offer
as the Take away
business is growing.
Access to business
intelligence will give
additional customer
insight which might
help future business
considerations.
Take away
Increase in profitability: $100,000 ARS
$1 million * 10% = $100,000 ARS
Loss in profits: $30,000 ARS
$2 million * 75% * 2% = $30,000 ARS
Total change in annual profit: +$25,000 ARS
$100,000 - $30,000 -$45,000 = $25,000 ARS
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