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Market Sizing: Coffee Shops in NYC

McKinseyTechnicalDifficulty: Easy
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Question Explain

Estimate the number of coffee shops in New York City.

Requirements:

  • Structure your approach
  • Show your calculations
  • State your assumptions
  • Consider market factors

Example framework: Population → Target Market → Consumption → Competition

Answer Example

Market Sizing Analysis:

  1. Framework:
interface MarketSizing {
  population: number;
  targetMarket: {
    percentage: number;
    frequency: number;
  };
  competition: {
    marketShare: number;
    averageRevenue: number;
  };
}

class MarketAnalysis {
  calculateMarketSize(): number {
    const nyc = {
      population: 8_400_000,
      workingAge: 0.65,
      coffeeConsumers: 0.70
    };
    
    return this.calculateTotalShops(nyc);
  }
}
  1. Calculations: a) Target Market

    • NYC Population: 8.4M
    • Working age (18-65): 65% = 5.46M
    • Coffee drinkers: 70% = 3.82M

    b) Consumption Pattern

    • Average visits: 3x/week
    • Annual visits: 156 visits/person
    • Total visits: 596M visits/year

    c) Shop Capacity

    • Average daily customers: 200
    • Operating days: 360
    • Annual capacity: 72,000 customers
  2. Result:

    • Required shops = 596M / 72,000 ≈ 8,300 shops
  3. Validation:

    • Population density check
    • Competition analysis
    • Market saturation
    • Geographic distribution

Company Context (McKinsey):

  • Structured thinking
  • Clear assumptions
  • Data-driven approach
  • Practical considerations