Case Interview Question #00487: Taco Bell is an American chain of fast-food restaurants based in Irvine, California. As a wholly owned subsidiary of Fortune 500 restaurant company Yum! Brands, Inc. (NYSE: YUM), Taco Bell mainly serves American-adapted Mexican food, such as tacos, burritos, quesadillas, nachos, other specialty items, and a variety of “Value Menu” items. The Taco Bell chain serves more than 2 billion consumers each year in more than 5,500 restaurants in the U.S., more than 80% of which are owned and operated by independent franchisees.
Recently, Taco Bell is thinking of offering French fries in their restaurants. They have done several market studies, conducted focus groups, and surveyed customers about the idea. So far they have concluded that 20% of their customers would purchase French fries. As part of a Cognizant Business Consulting team hired by Taco Bell, you have been asked to determine whether they should go ahead with the French fries idea. How would you go about the case?
This is a “new product launch” case. It requires that the candidate first use the information provided to estimate the size of the market and then do a cost-benefit analysis to see what the actual profit potential might be. Finally, the candidate must evaluate other factors, which might weigh into the decision.
Candidate: OK, to evaluate this problem, I would like to look at the revenue that might be generated by selling French fries first and then look at the cost of producing French fries.