Diagnose coffee-shop profit decline
Problem: Diagnose Coffee Shop Profit Decline
You operate a single-location coffee shop. In August 2025, your profit experienced an 18% decline compared to July 2025. During the same period, transaction volume decreased by 4%, while the average check size increased by 2%.
You have access to the following datasets:
- POS_transactions:
order_id,order_ts(timestamp),item_name,category,qty(quantity),unit_price_cents,discount_cents,tender_type - Inventory:
date,item_name,purchase_qty,purchase_cost_cents,waste_qty - Labor_shifts:
date,employee_id,role,hours,wage_per_hour_cents - Foot_traffic:
date,in_count(number of people entering)
Part A: Profit Driver Analysis
Build a driver-tree and perform a variance decomposition to attribute the 18% profit delta to the following factors: unit volume, price/discounting, product mix, Cost of Goods Sold (COGS) changes, waste, and labor productivity. You must:
- Specify the exact formulas used for each component.
- State the effect-ordering method employed (e.g., Shapley value decomposition or waterfall analysis).
- Clearly show how each identified lever contributed to the overall 18% profit drop.
Part B: Competitor Impact Estimation
A competitor opened a new coffee shop two blocks away on July 15, 2025. Without the ability to run an A/B test, design a study to estimate the incremental impact of this competitor on your coffee shop's revenue. For your proposed study, you must:
- State the identification strategy (e.g., Difference-in-Differences with synthetic controls, or controlling for weather/event effects).
- Detail the data requirements necessary to execute this study.
- List all critical assumptions underlying your chosen strategy.
- Propose at least two robustness checks (e.g., placebo pre-trends analysis, an event-study plot).
Part C: Experiment Design
Propose two fast experiments that can be designed and executed within a two-week timeframe to validate hypotheses related to the profit decline (e.g., menu engineering, promotional timing). For each experiment, you must:
- Define clear margin guardrails to prevent unintended negative financial impact.
- Specify a stopping rule for the experiment.
AI interview prep
Core dilemma
Accurately attributing a complex business outcome (profit decline) to multiple interacting internal and external factors, and designing robust causal inference studies without direct experimentation, all while proposing actionable, statistically sound interventions under tight time constraints.
3 tradeoffs and 2 stress tests locked
Interview prep
Unlock the interviewer X-Ray rubric, tradeoff matrix, stress tests, clarifying questions, and key concepts.
Diagnose coffee-shop profit decline
Problem: Diagnose Coffee Shop Profit Decline
You operate a single-location coffee shop. In August 2025, your profit experienced an 18% decline compared to July 2025. During the same period, transaction volume decreased by 4%, while the average check size increased by 2%.
You have access to the following datasets:
- POS_transactions:
order_id,order_ts(timestamp),item_name,category,qty(quantity),unit_price_cents,discount_cents,tender_type - Inventory:
date,item_name,purchase_qty,purchase_cost_cents,waste_qty - Labor_shifts:
date,employee_id,role,hours,wage_per_hour_cents - Foot_traffic:
date,in_count(number of people entering)
Part A: Profit Driver Analysis
Build a driver-tree and perform a variance decomposition to attribute the 18% profit delta to the following factors: unit volume, price/discounting, product mix, Cost of Goods Sold (COGS) changes, waste, and labor productivity. You must:
- Specify the exact formulas used for each component.
- State the effect-ordering method employed (e.g., Shapley value decomposition or waterfall analysis).
- Clearly show how each identified lever contributed to the overall 18% profit drop.
Part B: Competitor Impact Estimation
A competitor opened a new coffee shop two blocks away on July 15, 2025. Without the ability to run an A/B test, design a study to estimate the incremental impact of this competitor on your coffee shop's revenue. For your proposed study, you must:
- State the identification strategy (e.g., Difference-in-Differences with synthetic controls, or controlling for weather/event effects).
- Detail the data requirements necessary to execute this study.
- List all critical assumptions underlying your chosen strategy.
- Propose at least two robustness checks (e.g., placebo pre-trends analysis, an event-study plot).
Part C: Experiment Design
Propose two fast experiments that can be designed and executed within a two-week timeframe to validate hypotheses related to the profit decline (e.g., menu engineering, promotional timing). For each experiment, you must:
- Define clear margin guardrails to prevent unintended negative financial impact.
- Specify a stopping rule for the experiment.