Case 14: Euro Seafood

Profitability Bain Unknown Round

One of our private equity clients recently acquired a leading European seafood restaurant chain.
The chain owns and operations 700 restaurants across Europe. Same store sales (SSS) declined
Prompt last year. The private equity parent has aggressive expectations for improved business
performance. How can the client improve SSS?
When the candidate asks about SSS and the main driver of that, please hand them exhibit 1. The
main takeaway here should be that customer traffic is highly correlated with SSS growth.
When the candidate asks for competitor information, please hand them exhibit 2. The main
Guidance takeaway here should be that there is limited opportunity to increase price or bill size.
When the candidate asks about the current table configurations, please hand them exhibit 3. The
main takeaway here should be that there is opportunity to reconfigure the restaurants to
accommodate more parties of one or two.
The data shows that 4-seater tables are ~50% utilized during peak hours [Look at the chart. It is
hard to read on purpose. About ¼ of the 4-
4-seat tables are occupied by 3 people. Thus, ¼(75% occupancy)+ ¾ (50% occupancy) = ~50%
utilization]; there are on average 2 people sitting at a 4-seater (4-seat capacity*50% utilization).

Lets assume we reconfigure each restaurant so that one 4-seater is separated into two 2-seaters,
effectively adding 2 seats.
is the bottom line impact of adding 2 seats per restaurant?
Analysis
Additional Seats: 2
Peak Hours: 2 (let the candidate make this assumption)
Table turns per hour: 2 (let the candidate make this assumption)
Additional meals per restaurant= 2 x 2 x 2 = 8 meals
8 meals/restaurant x 700 restaurants (give this number when requested) = 5,600 meals total
5,600 meals x $50/average meal (give this number when requested) = $280,000 revenue
$280,000 revenue x 30% margin (give this number when requested) = $84,000 additional profit/day
$84,000/day x 360 days/year (let candidate make this assumption) = ~$30 M additional profit/year70
 Case 14: Euro Seafood
Profitability Bain Unknown Round
Synthesis of the case facts:
Customer Traffic
Traffic is the biggest contributor to SSS growth
Client should focus on initiatives that add the most value with minimal investment
Improved seat utilization could deliver an extra $30M annually in profits
Analysis Number of items
Average check size and margins are higher than competition

Price per menu item

Client already priced at a premium over competitors

Expected: The candidate will interpret handouts and offer insights while viewing them. The
candidate will also recognize the opportunity to optimize the table configurations.

Good: The candidate will do all of the above while also probing about the table configurations
Performance -line impact

Evaluation
Excellent: Candidate will do all of the above while also remembering to synthesize the entire case
before closing out. Making sure to educate the client on our findings and not focusing on the
opportunity to optimize the tables.

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 Case 14: Euro Seafood
Profitability Bain Unknown Round

Exhibit 1

Price per item Number of items Customer traffic

SSS change SSS change SSS change

30% 30% 30%
R² = 0.04 R² = 0.04 R² = 0.82

20 20 20

10 10 10

0 0 0

-10 -10 -10

-20 -20 -20

-10 -5 0 5 10 15% -20 -10 0 10 20% -20 -10 0 10 20 30%

Unit Price change # of items change Monthly Traffic

change

72
 Case 14: Euro Seafood
Profitability Bain Unknown Round

Exhibit 2

Average price per menu item

10.95
9.95 9.50
10 9.00 8.75
8

0
Client Chain 1 Chain 2 Chain 3 Chain 4

Items
4.4 4.6 4.1 4.7 3.9
per bill
Margin 30% 28% 27% 27% 16%
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 Case 14: Euro Seafood
Profitability Bain Unknown Round

Exhibit 3: Occupancy During Peak Hours

9+
Customer count 9
87
100% 8
6
5
6
80 4

60 3

4
40
2
20
2
0 1
Party size Table size

74
 Case 14: Euro Seafood
Profitability Bain Unknown Round

Exhibit 3: Interviewer Copy. DO NOT GIVE CANDIDATE

9+
Customer count 9
87
100% 8
6
5
6
80 4

60 3 75% efficient

4
40 50% efficient
2
20
2
0 1
Party size Table size

75