麥肯錫案例分析題及答案

1、Client Goal: Should Great Burger acquire Heavenly Donuts as part of its growth strategy?Our client is Great Burger (GB) a fast food chain that competes head+o-head with McDonald's,Wendy's, Burger King, KFC, etc.Description of Great BurgerGB is the fourth largest fast food chain worldwide, me

2、asured by the number of stores in operation. As most of its competitors do, GB offers food and "combos" for the three largest meal occasions: breakfast, lunch, and dinner.Even though GB owns some of its stores, it operates under the franchising business model with 85 percent of its stores

3、owned by franchisees (individuals own and manage stores, pay franchise fee to GB, but major business decisions (e.g., menu, look of store) controlled by GB).McKinsey studyAs part of its growth strategy GB has analyzed some potential acquisition targets including Heavenly Donuts (HD), a growing dough

4、nut producer with both a U.S. and international store presence.HD operates under the franchising business model too, though a little bit differently than GB. While GB franchises restaurants, HD franchises areas or regions in which the franchisee is required to open a certain number of stores.GB'

5、s CEO has hired McKinsey to advise him on whether they should acquire HD or not.QUESTION 1What areas would you want to explore to determine whether GB should acquire HD?ANSWER 1Some possible areas are given below. Great job if you identified several of these and perhaps others.?Stand alone value of

6、HDoGrowth in market for doughnutsoHD's past and projected future sales growth (break down into growth in number ofstores, and growth in same store sales)oCompetition are there any other major national chains that are doing better thanHD in terms of growth/profit. What does this imply for future

7、growth?oProfitability/profit marginoCapital required to fund growth (capital investment to open new stores, workingcapital)?Synergies/strategic fitoBrand quality similar? Would they enhance or detract from each other if marketedside by side?oHow much overlap of customer base ? (very little overlap m

8、ight cause concern thatbrands are not compatible, too much might imply little room to expand sales by cross-marketing)oSynergies (Hint: do not dive deep on this, as it will be covered later)?Management team/cultural fitoCapabilities/skills of top, middle managementoCultural fit, if very different, w

9、hat percent of key management would likely be ableto adjust?Ability to execute merger/combine companiesoGB experience with mergers in past/experience in integrating companiesoFranchise structure differences. Detail"dive" into franchising structures. Wouldthese different structures affect t

10、he deal? Can we manage two different franchising structures at the same time?The team started thinking about potential synergies that could be achieved by acquiring HD. Here are some key facts on GB and HD.Exhibit 1StoresGB HDTotal 5,0001,020North America 3,5001000Europe 1,00020Asia 4000Other 1000An

11、nual growth in stores 10%15%FinancialsGB HDTotal store sales $5,500m $700mParent company revenue $1,900m $200mKey expenses (% sales)Cost of sales 51%40%Restaurant operating costs 24%26%Restaurant property & equipment costs4.6%8.5%Corporate general & administrative costs8%15%Profit as % of sa

12、les 6.3%4.9%Sales/stores $1.1m$0.7mIndustry average$0.9m$0.8mQUESTION 2What potential synergies can you think of between GB and HD?ANSWER 2We are looking for a few responses similar to the ones below:?Lower costsoBiggest opportunity likely in corporate selling, general, and administrative expenses(S

13、G&A) by integrating corporate managementoMay be some opportunity to lower food costs with larger purchasing volume onsimilar food items (e.g., beverages, deep frying oil), however overlaps may be low as ingredients are very differentoGB appears to have an advantage in property and equipment cost

14、s which might beleveragable to HD (e.g., superior skills in lease negotiation)?Increase revenuesoSell doughnuts in GB stores, or some selected GB products in HD storesoGB has much greater international presence thus likely has knowledge/skills toenable HD to expand outside of North AmericaoGB may ha

15、ve superior skills in identifying attractive locations for stores as its salesper store are higher than industry average, whereas HD's is lower than industry average; might be able to leverage this when opening new HD stores to increase HD average sales per storeoExpand HD faster than it could d

16、o on own PB, as a larger company with lower debt,may have better access to capitalQUESTION 3The team thinks that with synergies, it should be possible to double HD' s U.S. market share in thenext 5 years, and that GB ' s access to capital wilt tolowpand the number of HD stores by 2.5 times.

17、What sales per store will HD require in 5 years in order for GB to achieve these goals? Use any data from Exhibit 1 you need, additionally, your interviewer would provide the following assumptions for you:Doughnut consumption/capita in the U.S. is $10/year today, and is projected to grow to $20/year

18、 in 5 years.For ease of calculation, assume U.S. population is 300m.ANSWER 3You should always feel free to ask your interviewer additional questions to help you with your response.Possible responses might include the following:Market share today: $700M HD sales (from Exhibit 1)+ $3B U.S. market ($10

19、 x 300M people)=23% (round to 25% for simplicity sake)U.S. market in 5 years = $20 x 300 = $6BHD sales if double market share: 50% x $6B = $3BPer store sales: $3B/2.5 (1000 stores) = $1.2MDoes this seem reasonable?Yes, given it implies less than double same store sales growth and per capita consumpt

20、ion is predicted to double.QUESTION 4One of the synergies that the team thinks might have a big potential is the idea of increasing the businesses' overall profitability by selling doughnuts in GB stores. How would you assess the profitability impact of this synergy?ANSWER 4Be sure you can clear

21、ly explain how the assessment you are proposing would help to answer the question posed.Some possible answers include:Calculate incremental revenues by selling doughnuts in GB stores (calculate how many doughnuts per store, times price per doughnut, times number of GB stores)Calculate incremental co

22、sts by selling doughnuts in GB stores (costs of production, incremental number of employees, employee training, software changes, incremental marketing and advertising, incremental cost of distribution if we cannot produce doughnuts in house, etc.)Calculate incremental investments. Do we need more s

23、pace in each store if we think we are going to attract new customers? Do we need to invest in store layout to have in-house doughnut production?If your answer were to take into account cannibalization, what would be the rate of cannibalization with GB offerings? Doughnut cannibalization will be high

24、er with breakfast products than lunch and dinner products, etc.One way to calculate this cannibalization is to look at historic cannibalization rates with new product/offering launchings within GB storesMight also cannibalize other HD stores if they are nearby GB storetould estimate thisimpact by se

25、eing historical change in HD' s sales when competitoraroughnust searbyQUESTION 6You run into the CEO of GB in the hall. He asks you to summarize McKinsey' s perspective so far onwhether GB should acquire HD. Pretend the interviewer is the CEOmhat would you say?ANSWER 6You may have a slightly different list. Whatever your approach, we love to see candidates come at a problem in more than one way, but still address the issue as directly and practically as possible.Answers may vary, but here is an example of a response:?Early findings lea