Sample report · Full case · profitability
Nonna's Pizza: sales are up 20%, profit is down a third. What happened, and what should we do?
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66 / 100
Fair
The rubric
Summary
You correctly identified delivery app fees as the main driver and accurately calculated both channel economics and the full profit bridge. Your recommendation was directionally sound: encourage pickup, negotiate fees, and retain profitable new app customers. However, the case became largely interviewer-led after your initial framework, and your proposed actions were not quantified into a credible path back to the previous profit level. To improve, turn exhibit observations into business implications, proactively investigate customer switching, and finish with a prioritized, quantified plan including risks and next steps.
Content & Knowledge · 35/50
You accurately calculated $14 contribution per pickup order versus $8 per app order and reconciled the profit decline through $600,000 of switching losses, $400,000 of new-order contribution, and $50,000 of extra labor. Your solutions addressed the right levers and preserved new customers, but you did not quantify their impact, calculate the blanket discount's cost, or establish how the plan would restore profit; the suggestion to cut labor hours also lacked operational support.
Structure & Organization · 17/30
You began with a sensible revenue-and-cost framework and independently requested costs and app order volumes. However, the framework did not initially distinguish channels or customer migration, and the interviewer supplied the customer split and directed the unit-economics analysis, profit bridge, and recommendation stages; your final plan remained an unprioritized set of levers rather than a structured recovery program.
Communication & Clarity · 14/20
Your explanations were concise and understandable, particularly the step-by-step contribution calculations and profit bridge. The exhibit readout initially described changes rather than explaining their implications, and the final recommendation's 'That should help get profit back up' lacked a numerical outcome, implementation steps, and risks; the downside response similarly identified another lever without sizing the shortfall.
What worked
“So half the orders are on the app now, and pickup went down from 250 to 150. Um, food is 30%, so $6. Pickup is $20 minus $6, so $14. App is $20 minus $6, minus 30%, which is another $6, so $8.”
You correctly calculated the contribution per order in each channel: $14 for pickup versus $8 for the app, after food and app fees. You also recognized that half of orders now use the app. This established the key economic distinction behind the profitability problem: equal sales revenue does not mean equal contribution when the ordering channel changes.
“So the regulars who switched, 100,000, they're each losing $6, so that's 600K. And the new ones bring 50,000 times $8, 400K. So minus 600 plus 400 is minus 200, and then the labor 50, so minus 250. Yeah, 750 down to 500.”
Using the customer split provided, you accurately reconciled the full $250,000 profit decline. You distinguished the $600,000 contribution lost when existing customers switched channels from the $400,000 contribution generated by genuinely new orders, then included the $50,000 increase in labor. This was your strongest analytical moment: it explained both the downside of channel migration and the benefit of incremental customers, while tying exactly to the reported profit figures.
What to fix
“Revenue is price times quantity, and costs are fixed and variable. And then also external factors, like competitors and the overall market.”
Your opening provides a basic profit tree, but it would be more useful if it identified a prioritized investigation rather than adding broad external factors. Since the prompt already established unchanged prices and rising sales, start with the hypothesis that costs per order or order mix have deteriorated, then compare cost lines year over year and investigate ordering channels. Asking again whether prices changed used time on an established fact. You did subsequently request costs and app volumes yourself; extending that self-direction to customer switching and contribution economics would reduce the need for the interviewer to supply the next analytical step.
“So food went up 300K, labor went up 50K, rent stayed the same, and there's a new delivery app fees line of 900K. So costs went up 1.25 million in total.”
The figures are correct, but the exhibit interpretation initially stops at describing changes. Explain that food remained 30% of sales, so its increase reflects volume rather than worsening food economics, and compare the $1.25 million cost increase with the $1 million sales increase to explain the $250,000 profit decline. You later calculated the customer-level bridge correctly; bringing that same interpretive clarity to the P&L would make the diagnosis more decisive without requiring the interviewer to ask what the figures mean.
Your next steps
- 1. Drive the analysis with a hypothesis and next test. Build on your revenue-and-cost structure by tailoring it to the pizza business: orders by channel, contribution per order, and fixed costs. Since the prompt already established unchanged prices, move directly to testing why costs grew faster than sales. After each exhibit, state the implication and your next question without waiting for a prompt: 'Food remains 30% of sales, while app fees are new. I’d compare channel economics, then ask how many app orders are new versus former pickup orders.' This makes your analysis more self-directed and moves from identifying a large expense to explaining its cause.
- 2. Design incentives around incremental profit. You correctly calculated the $14 pickup contribution, $8 app contribution, and profit bridge. Use those results to choose targeted actions: a $2 pickup reward for a switched regular leaves $12 rather than $8, recovering $4 per converted order. Contrast that with giving $2 off the existing 150,000 pickup orders, which would cost $300,000 without necessarily changing behavior. Explicitly recommend retaining the app's profitable new customers while testing targeted pickup rewards, rather than broad discounts or labor cuts unsupported by the analysis.
- 3. Close with a quantified plan and downside case. Turn your directional recommendation into an owner-ready decision: explain that regulars switching channels lost $600,000, partly offset by $350,000 from new orders after extra labor. Then state assumptions and size your proposed recovery. For example, bringing back 50,000 switched orders with a $2 reward adds $200,000; negotiating the fee from 30% to 25% on the remaining 100,000 app orders adds $100,000, taking profit to $800,000. If only 25,000 return, those levers add $100,000 and $125,000 respectively, reaching $725,000. Explain how you would test an app-price increase to close the remaining gap, remembering that the app retains 30% of that increase. Finish with a pilot and the measures you would track, such as conversion, contribution, and retained new-customer orders.
The interview, out loud (27 turns)
Interviewer: Hi, thanks for joining. We have about 30 minutes. Our client is the owner of Nonna's Pizza, a family-run chain of five pizza shops in a mid-sized US city, with a loyal base of regulars. This was the busiest year in the chain's history. Sales grew from $5.0 million to $6.0 million, and prices did not change. But when the accounts came in, profit had fallen from $750,000 to $500,000. The owner asks us: sales are up 20%, but profit fell by a third. What happened, and what should we do? Over to you.
Candidate: Okay, so profit is down even though sales are up. I'd look at it as revenue and costs. Revenue is price times quantity, and costs are fixed and variable. And then also external factors, like competitors and the overall market.
Interviewer: Where would you like to start?
Candidate: Well, I'd first want to know if prices changed.
Interviewer: Same menu and same prices. The average order is still $20, however it is placed. The shops handled about 250,000 orders last year and 300,000 this year.
Candidate: Okay, so revenue is fine then, it's probably costs. Can I see the costs?
Interviewer: I'm sharing an exhibit now: the five shops' sales and costs, last year and this year, in thousands of dollars. Sales went from 5,000 to 6,000. Food went from 1,500 to 1,800. Labor went from 1,500 to 1,550. Rent and other stayed at 1,250. Delivery app fees went from zero to 900. Total costs went from 4,250 to 5,500, and profit from 750 to 500. What do you take from it?
Candidate: So food went up 300K, labor went up 50K, rent stayed the same, and there's a new delivery app fees line of 900K. So costs went up 1.25 million in total.
Interviewer: What do you take from that?
Candidate: The app fees are the biggest increase, so the delivery app is probably the problem.
Interviewer: What would you need to know to go further?
Candidate: Maybe how many orders come through the app?
Interviewer: I'm sharing another exhibit: orders by channel. Pickup and eat-in went from 250,000 orders last year to 150,000 this year. The delivery app went from zero to 150,000 orders. Total orders went from 250,000 to 300,000. The average order is $20 in both channels, and the app keeps 30% of each app order. What does a pickup order and an app order each leave after food and the app's share?
Candidate: So half the orders are on the app now, and pickup went down from 250 to 150. Um, food is 30%, so $6. Pickup is $20 minus $6, so $14. App is $20 minus $6, minus 30%, which is another $6, so $8.
Interviewer: Of the 150,000 app orders this year, about 100,000 come from regulars who used to pick up. The other 50,000 are new customers. Labor rose $50,000 to handle the extra orders, and rent and other costs did not change. Most app orders are delivered to homes within a ten-minute walk of a shop. How do you get from $750,000 of profit to $500,000?
Candidate: So the regulars who switched, 100,000, they're each losing $6, so that's 600K. And the new ones bring 50,000 times $8, 400K. So minus 600 plus 400 is minus 200, and then the labor 50, so minus 250. Yeah, 750 down to 500.
Interviewer: The app brought 50,000 new orders. Should the owner just drop it?
Candidate: Maybe not, since the new customers bring in money. But it is expensive.
Interviewer: What could the owner do to get profit back without losing the new customers?
Candidate: They could do more marketing for pickup, maybe offer discounts, negotiate with the app, or cut some costs like labor hours. Maybe raise prices on the app.
Interviewer: Why not just offer everyone $2 off pickup orders?
Candidate: That might be expensive, I guess it would cost $2 on all the pickup orders.
Interviewer: The owner is here. What happened, and what should we do?
Candidate: So profit went down mainly because of the delivery app fees. I'd recommend they try to get customers to pick up more and negotiate with the app, and maybe keep the app for the new customers. That should help get profit back up.
Interviewer: Your plan assumes half the switched regulars come back. What if only a quarter do?
Candidate: Then it would be less, so they might need to do other things too, like the price increase on the app.
Interviewer: Thank you, that's the end of the case.
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