Interviewer view · keep this screen to yourself
Stretch: Laojie Hotpot: grow through new restaurants or delivery kitchens?
You run the case. Read the prompt, answer questions from the notes below, and share data only when the candidate asks for it or gets stuck. Score at the end.
Case timer
00:00
1. Read the prompt aloud
Read it slowly, then pause. Let the candidate ask questions before they structure.
Laojie Hotpot runs 50 hotpot restaurants in Chengdu and Chongqing. It wants to grow revenue by 30 percent in three years. It could open more dine-in restaurants or open delivery-only kitchens that sell hotpot sets through delivery apps. Which route should it take?
Format note: Difficulty: Stretch. Format: candidate-led, with interviewer dialogue. Industry: Restaurants. Region: Mainland China. Interview length: about 35 minutes. The company is fictional and all figures are illustrative.
2. Answers to clarifying questions
Give these answers only if the candidate asks. If they ask something not listed, give a sensible answer or say it does not matter here.
If asked: How big is the business now?
Answer: Each restaurant takes about CNY 12 million a year, so CNY 600 million in total (illustrative).
If asked: What do the two formats look like?
Answer: A new dine-in restaurant takes about CNY 10 million a year, costs CNY 4 million to open and keeps 15 percent of sales as profit. A delivery kitchen takes CNY 3 million a year, costs CNY 0.6 million to open and keeps 10 percent after app commissions and packaging (illustrative).
If asked: How much money is there to spend?
Answer: About CNY 60 million over three years (illustrative).
3. The hypothesis a strong candidate states
Listen for an early, testable guess like this one. It does not need to match word for word.
Delivery kitchens are cheap to open but earn a thinner margin. My hypothesis is that they reach the target with less money, and that the answer depends on the return on that money.
4. A model structure
Compare the candidate's structure with this one. A different split can be just as good if it is clean and fits the problem.
- For each route: units needed = revenue to add / revenue per unit; then money needed and return on it
- Revenue to add: 30 percent of today
- Key: Units needed and money to open them, by format
- Profit margin and return on the money spent
- Orders taken from the chain's own restaurants
5. The working, step by step
Each step shows how a strong candidate works it out. Share a new fact from it only when the candidate asks or is stuck, and let them do the math: the result in the dark box is what they should reach.
Step 1: Revenue to add
What a strong candidate does: Candidate: "30 percent of CNY 600 million."
Revenue to add (CNY a year): 50 × 12,000,000 × 0.3 = 180,000,000
Step 2: Restaurants needed
What a strong candidate does: Candidate: "At CNY 10 million each."
New restaurants needed: 50 × 12,000,000 × 0.3 ÷ 10,000,000 = 18
Step 3: Money for restaurants
What a strong candidate does: Candidate: "CNY 4 million each to open."
Money to open restaurants (CNY): 18 × 4,000,000 = 72,000,000
Step 4: Kitchens needed
What a strong candidate does: Candidate: "At CNY 3 million each."
Delivery kitchens needed: 50 × 12,000,000 × 0.3 ÷ 3,000,000 = 60
Step 5: Money for kitchens
What a strong candidate does: Candidate: "CNY 0.6 million each to open."
Money to open kitchens (CNY): 60 × 600,000 = 36,000,000
Step 6: Return on money, restaurants
What a strong candidate does: Candidate: "15 percent of the new revenue each year, over the money spent."
Yearly return on money, restaurants (%): 50 × 12,000,000 × 0.3 × 0.15 ÷ (18 × 4,000,000) × 100 = 37.5
Step 7: Return on money, kitchens
What a strong candidate does: Candidate: "10 percent of the new revenue, over a much smaller outlay."
Yearly return on money, kitchens (%): 50 × 12,000,000 × 0.3 × 0.1 ÷ (60 × 600,000) × 100 = 50
Step 8: Curveball: orders taken from our restaurants
What a strong candidate does: Interviewer: "In a test, a fifth of each kitchen's orders came from people who used to order delivery from our own restaurants." Candidate: "Only CNY 2.4 million per kitchen is new, so we need more kitchens:"
Delivery kitchens needed with a fifth taken from own restaurants: 50 × 12,000,000 × 0.3 ÷ (3,000,000 × 0.8) = 75
Step 9: Return with the extra kitchens
What a strong candidate does: Candidate: "The same new profit, over 75 kitchens at CNY 0.6 million, or CNY 45 million."
Yearly return on money, 75 kitchens (%): 50 × 12,000,000 × 0.3 × 0.1 ÷ (75 × 600,000) × 100 = 40
The recommendation to listen for
At the end, say: "The CEO walks in. What is your recommendation?"
Laojie should grow mainly through delivery kitchens, because only that route fits its CNY 60 million budget. First, adding CNY 180 million of revenue needs 18 new restaurants and CNY 72 million, more than the budget, against 60 kitchens and CNY 36 million. Second, kitchens earn a thinner margin but return 50 percent a year on their money, against 37.5 percent for restaurants. Third, even if a fifth of kitchen orders come from its own restaurants, it needs 75 kitchens and still returns about 40 percent. Use the money left over for a few flagship restaurants that keep the brand visible. Pilot 10 kitchens first and track how many orders are truly new.
Risks a strong answer names: Delivery apps may raise their commissions, which would cut the kitchens' thin margin; Hotpot sets eaten at home may weaken the dine-in experience the brand is known for.
Next steps: Pilot 10 kitchens in districts far from current restaurants; Track new and repeat customers per kitchen each month.
Strong versus weak
A strong answer
Turned the growth target into units and money for each route, compared returns on the money, and tested how many kitchen orders are really new.
A weak answer
Chose restaurants because their margin is higher, without noticing they need more money than the chain has.
Score the candidate
Score each criterion from 1 to 5. A 2 or a 4 sits between the descriptions.
This case has no exhibit. Score Exhibit reading on how the candidate used the data you gave them: did they pick out the number that matters and say what it means?
Total
0 out of 25
Score all five criteria to see the band and the feedback template.
Next: another case in Partner mode
Swap roles and run the next case, so you both practise answering and scoring.