The three Cs: what it is and what to do instead

The idea worth keeping

Not as boxes to fill, but as questions that fall out of the maths of the goal:

• Customers: how many will buy, how often, and at what price?
• Company: what does it cost us to serve them, and what do we do better?
• Competitors: how will rivals react, and what does that do to our price or volume?

Why reaching for it fails in an interview

• It is generic. Customers, company and competitors could open any case in any industry, so the interviewer learns nothing.
• It misses the driver that matters. For a café chain the answer sits in cups sold per café per day, which none of the three Cs names.
• It sounds rehearsed. Saying "I would look at the three Cs" is one of the most common openings interviewers hear.

What to do instead: a worked case

1. 1

   Pin the question

   Decide whether cafés in the new country can pay back their opening cost within the four years the board requires.

2. 2

   Write the maths of the goal

   • Profit per café per year = cups per day x days open x average spend x profit margin
   • Payback in years = cost to open a café / profit per café per year
3. 3

   Use what you know about the business

   • In a café, rent and staff are mostly fixed, so profit depends on how many cups each café sells a day.
   • Cups per day depend on footfall at the site, so location matters more than the brand.
   • Local habits set the average spend: a quick espresso at the bar earns less than a large takeaway drink with food.

   The structure that falls out of it

   • Cups per café per day
     • Footfall at the sites we could get
     • Share of passers-by who buy
   • Spend and margin
     • Average spend given local habits
     • Rent and wages in the new country
   • Cost to open
     • Fit-out
     • Time to reach full sales

   Hypothesis: The answer depends on whether sites in the new country can sell enough cups a day, so I would test cups per day first.

4. 4

   Find the facts that decide it

   • At 400 cups a day, 360 days a year and 4.00 a cup, a café takes 576,000 a year; at a 15% margin that is 86,400 of profit. A café costs 400,000 to open: payback = 400,000 / 86,400, about 4.6 years, longer than the four the board wants.
   • At 470 cups a day: 470 x 360 x 4.00 x 0.15 = 101,520 a year, and payback falls to about 3.9 years.
5. 5

   Say so what

   Enter only where sites can sell about 470 cups a day or more; at a typical 400, payback is about 4.6 years, beyond the board's limit. Open five flagship sites in the busiest districts first and expand only if they reach 470 cups a day within a year. The risk is that high-footfall sites carry higher rent, which would raise the cups needed.

Build the acumen behind it

The worked case used two things a list cannot give you: the five moves, and knowing how this kind of business makes money. These pages teach both.