PURE FRESH SAND WI CHES

Growth strategy Low difficulty

Retail Interviewer-led case

This case involves a discussion on potential growth opportunities for Pure Fresh Sandwiches, a client in
the restaurant industry.

The case covers all dimensions of the case interview scorecard, with an emphasis on numeracy. The
case doesn’t ‘unlock’ with a single answer to solve the client’s problem. Rather, the candidate is
expected to gather a set of opportunities for the client to grow, and to synthesize them in the conclusion.

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A video of this case is available in the Interview Prep Course.

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Problem definition
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Our client is Pure Fresh Sandwiches, a large sandwich company that competes with the likes of Subway
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and other major chains. The client owns and operates the third-largest chain of sandwich stores in the
world, and, like its competitors, sells a range of premium sandwiches, coffees and teas, as well as soft
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drinks and snacks. Last year the client had sales of $5bn.
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The client has found its growth rate slowing in recent years, and a new CEO has been hired to help
increase profits. The client already has a team focusing on cost reduction, but needs support to identify
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revenue improvement opportunities. You have been hired to help the client identify new growth
opportunities, to be implemented over the next five years.

How can Pure Fresh accelerate revenue growth over the next five years?

Additional information
If the candidate asks for more specific objectives or context, you can clarify on the following points the
following:
• The client is looking for opportunities that take revenue growth from 1% per annum to 3%+ over
this period. Market growth has also been at 1% in recent years
• The client is looking for opportunities that can be implemented and begin yielding benefits within
the next five years; they are not looking at growing outside of their core-business or launching
new brands
 Question 1 (Structuring)

How would you structure your approach to the problem?

Additional information

If asked or if the candidate goes off-track, clarify that this is specifically a revenue improvement case,
without a focus on cost reduction

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Possible answer

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1. Increase the number of stores:

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a. Expand within existing geographies
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b. Expand to entirely new geographies

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2. Increase customer visits per store:

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a. Increase customer numbers

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b. Increase frequency of visits for each customer

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3. Increase revenue per customer visit:

a. Increase average pricing on products
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b. Increase number of products bought per visit

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Question 2 (Numeracy)

Among the client’s product mix is coffee, and the client’s interested in finding ways to compete more
effectively on this product type against the likes of Starbucks and other major chains.

The client currently sells its ‘Pure Latte’ product for $3.00 in the US, and has trialled lower price points in
a number of its stores. We’ve compiled the results of these trials in this exhibit (Exhibit 1).

Based on this information, what do you think is the optimal price point for the ‘Pure Latte’
product?

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Possible answer

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Profit for each price point can be understood by calculating the contribution margin (price minus cost) for
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each of the options, and multiplying this by the volume sold.
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This leads to the following results:

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At $3, $300 profit per store per day ($1.50 * 200)

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• At $2.50, $325 profit per store per day ($1.30 * 250)

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• At $2, $315 profit per store per day ($0.90 * 350)

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Looking at direct profit alone, it looks as if the optimal price point is $2.50.
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However, considering the direct revenue, which is the client’s goal, as well as the additional sales that
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could be generated by additional footfall, the lowest-price option of $2 is the most favorable option.
 Exhibit 1

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$2
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Price per cup

$2.50
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per day

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350
250
200

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Cups sold per store

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$1.10
$1.20
$1.50
Cost per cup
Question 3 (Numeracy)

Another area the client team is considering is international expansion. In particular, the team is exploring
whether they should launch their premium sandwiches in the Indian market, and want to understand how
big an opportunity this represents.

Go ahead and estimate the market size for premium sandwiches in India

Additional information

If the candidate is unsure, share that we’re looking for an annual market size in dollars. Share also that

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‘premium sandwiches’ here refers only to those bought to eat from a chain of our client’s type; in other

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words, this estimation does not encompass sandwiches someone might make at home.

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If a candidate is going off track, steer them towards a focus on urban customers, in middle- / higher-
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income segments.
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If prompted, give the candidate any of the following information:

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• Population of India: 1.3 billion

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• Urban population percentage: 40%

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• Income needed to be ‘in the market’ for buying premium sandwiches: top quartile of income
distribution, within the urban population
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• Expected price point for our premium sandwiches in India: $1

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Possible answer

Given a population of 1.3 billion, the customers ‘in the market’ to buy sandwiches of this type can be
estimated at c.130m if:
• We assume 40% of the population is in urban areas, and only those in urban areas will have access
to premium sandwiches
• We assume only those in the top quartile of the income distribution within the urban population would
buy premium sandwiches

Of those ‘in the market’ to buy, we assume that only 20% would like and buy premium sandwiches, given
this will primarily target working adults who do not want a full meal for lunch.

This gives 26m customers for premium sandwiches. Of this group, we assume 2 purchase per week on
average, resulting in 52m weekly sales. This leads to a revenue of $52m per week at a $1 price point,
which reflects c.$2.7bn in sales annually.

Overall this looks like an interesting opportunity. For a company of $5bn in revenue, even a small
segment of this market could make a material difference to our sales.

Question 4 (Creativity)

In addition to what we’ve covered, the client is interested in generating entirely new ideas to boost
revenue.

Focusing now at the store level, how else could Pure Fresh grow revenue per customer visit,

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besides changing the price?

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Additional information
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If the candidate is unsure, clarify that we should be focusing here on opportunities to grow sales per
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customer visit, not at ways to boost customer visits overall. Ideas such as further geographic expansion
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are therefore not directly relevant.

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Possible answer
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1. Keep people in store longer

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a. Improve the layout and design of the stores

b. Offer improved wifi
c. Offer charging points and other facilities customers find useful

2. Run special offers and promotions

a. Use bundling offers on purchases
b. Instruct staff to up-sell
c. Promote higher-value products visually in-store

3. Expand the range of products sold

a. New products within existing categories (e.g. new types of coffee)
b. Entirely new product categories (such as mugs, sandwich equipment, or other hardware)

Overall there appear to be a lot of opportunities to increase sales per customer visit and to accelerate
sales growth as a result.
Question 5 (Synthesis)

Overall, what would you recommend to the client?

Possible answer

You have asked us how Pure Fresh should go about increasing revenues over the next five years.
Based on what we’ve covered, there are at least three major opportunities we should consider to grow
sales:
• Price point optimisation. In particular, we’ve seen how reducing price on coffee can draw more
customers into the store and increase sales and profits

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•

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Geographic expansion, and in particular considering an entry into the Indian market, which offers a
potential market of $2.7b

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• A targeted approach to increase sales per customer visit, including in-store promotions and
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improvements to our store environment
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Over the coming weeks, we’d like to explore these ideas in more detail and whether they will be sufficient
to reach the client’s annual growth target of 3%.
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Want to see successful candidates solve Pure

Fresh Sandwich?

Watch Andrew (now BCG) and Liam (now Bain) in

the Interview Prep Course

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