The prompt
Interviewer says
Your client is PawPort Day Club, a premium dog daycare chain with 25 locations in the southeastern US. The CEO wants to expand into the West Coast, and is asking whether they should enter San Francisco as their first market. Should she?
Question 1 · Clarifying questions
Interviewer says
Before you start, do you have any questions?
For the interviewerAnswer only what the candidate asks. If a question would be answered later in the case (market size, competitors), say: we'll come to that.
| If the candidate asks about | Answer with |
|---|---|
| What makes PawPort premium | Trained staff, small play groups, live video of the dogs, convenient hours |
| The CEO's goal or target | An operating margin above 15% within two years |
| Timing | She wants a decision within 12 months |
| Ownership or franchising | All 25 locations are company-owned |
| Capital or budget limits | No fixed capital constraint |
| How members pay | A monthly membership; most members are on an unlimited plan |
| Market size or competitors | That's part of the case: we'll come to it |
Question 2 · Framework
Interviewer says
How would you evaluate whether PawPort should enter San Francisco?
For the interviewerGive the candidate a minute to structure. Then ask: where would you start, and why?
Question 3 · Market sizing
Interviewer says
What is the market size for dog daycare in San Francisco?
For the interviewerNo exhibit. Let the candidate set up the equation and make assumptions. Only if they ask for a number, give:
| If the candidate asks about | Answer with |
|---|---|
| Population | About 800,000 people |
| Household size | About 2.5 people per household |
| Share of households with a dog | Ask what they would assume; 40% is reasonable |
| Share using paid daycare | Ask what they would assume; about 25% |
| Spend | Daycare runs about $50 a day |
Question 4 · The math
Interviewer says
Let's look at the economics of one San Francisco location. Here are the team's best estimates for a new site. What margin would it make?
For the interviewerRead out or show these numbers:
| One San Francisco location (team's best estimate) | |
|---|---|
| Members | 600 |
| Membership price | $240 a month |
| Visits per member | 8 a month |
| Variable cost | $18 per visit |
| Fixed cost | $600,000 a year |
For the interviewerIf they stop at the margin, ask: so what does that mean for the CEO?
Question 5 · Exhibit
Interviewer says
Here is data from one of PawPort's existing, mature locations. What does this tell you?
Source: PawPort operating data, one representative mature location, average week.
For the interviewerIf asked: capacity is 260 dogs a day; the site is open Monday to Saturday.
Question 6 · Brainstorm
Interviewer says
How could PawPort improve a location's economics while protecting the customer experience?
For the interviewerPush for structure, then ask: which would you try first, and what's the risk?
Question 7 · Recommendation
Interviewer says
The CEO just walked in. What do you recommend?
For the interviewerGive 30 seconds to prepare. A strong answer leads with the answer, gives the two or three facts that support it, then a risk and a next step.
Answer key
What a strong answer covers. It does not need these words: check it has the same pieces.
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1 · Clarifying questions
- Restates the decision: open in San Francisco or not
- Asks what makes PawPort premium (shapes costs and pricing)
- Asks for the goal and timing: 15% margin within two years
- Asks about the business model: owned vs franchised, how members pay
- Asks about capital limits; skips questions the case will answer (market size, competitors)
2 · Framework
- San Francisco market: size and growth (return to office), competitors, their prices and locations
- Economics of one location: revenue (membership price × members), fixed and variable costs, margin vs 15%
- Launch plan: which neighborhoods, lease or buy, winning the first members, hiring trained staff
- Start with: the market, to see if San Francisco is worth it at all
3 · Market sizing
- Equation first, in words: households × share with a dog × share using paid daycare × weekly spend × 52
- 800,000 ÷ 2.5 = 320,000 households
- × 40% with a dog = 128,000 (below the US average: small apartments)
- × 25% using paid daycare = 32,000 (return to office, but many work from home)
- × $100 a week (2 days at $50) × 52 ≈ $166M a year
- Sanity check: about $5,200 a year per paying household
- So what: compare with existing cities; can we capture enough to hit 15%?
4 · The math
- Revenue: 600 × $240 × 12 = $1,728,000
- Variable cost: 600 × 8 × 12 = 57,600 visits × $18 = $1,036,800
- Fixed cost: $600,000
- Profit: $91,200, a margin of about 5.3%
- So what: about a third of the 15% goal; the model needs price, usage, cost per visit or fill to change
5 · Exhibit
- Overview: dogs per day vs 260 capacity, and the share of visits from unlimited members, Monday to Saturday
- Trend: Tuesday to Thursday at or near capacity (250 to 260); Monday, Friday, Saturday quiet (60 to 150)
- Unlimited members are 84 to 88% of the full days
- Insight: the ~70% average fill hides the problem; the site is full three days and empty three
- So what: adding members on today's plan crowds the full days; shift demand to quiet days or charge for peak days
6 · Brainstorm
- Price: premium for guaranteed Tuesday to Thursday spots; paid add-ons (grooming, training, pickup); higher price for new unlimited members
- Members and visits: visit-based plans instead of unlimited; a cheaper quiet-day plan; employer partnerships for quiet days
- Cost: staff to reservations, not the peak; use quiet-day staff for grooming and training; buy supplies centrally
- First: visit-based plans plus peak-day reservations; risk: members see it as less flexible, so test at one site
7 · Recommendation
- Answer first: do not enter San Francisco yet
- The market is there (about $166M a year)
- But one site makes about 5%, a third of the 15% goal
- Pricing and quiet-day plans could lift the margin, but are unproven
- Risk: a competitor moves first. Next step: pilot the changes at existing sites, then revisit