Issue #1 · 5 November 2026
the one question that cracks profitability cases
Welcome to the first Case Flex weekly! Every issue gives you three things: one concept explained simply, one case broken down step by step, and one prompt to practise. This week: profitability — the most common case in consulting interviews.
📖 This week's concept
Profitability framework
The go-to structure for ‘profits are down — why?’
Most candidates jump into a memorised framework. Strong candidates ask one question first: is the drop revenue-led or cost-led? That single split cuts the case in half before any maths.
Read the full concept →🧩 Case breakdown
The café whose profits fell 20%
A popular café chain in Pune saw profits fall 20% over the last year, even though the number of customers stayed about the same. The owner wants to know why, and what to do.
- 1
Clarify
Ask: over what period? Is it all stores or a few? Has anything changed — menu, prices, suppliers, competition?
- 2
Split profit
Profit = Revenue − Cost. Customers are flat, so check average bill size (price × items per customer) for revenue.
- 3
Check revenue
Suppose the average bill went up 5% after a menu refresh. Revenue grew — so the problem must be on the cost side.
- 4
Dig into cost
Split into fixed (rent, salaries) and variable (milk, coffee beans, packaging, delivery commissions). Ask which line grew fastest.
- 5
Find the driver
Delivery orders grew from 10% to 35% of sales, and aggregators take ~25% commission. That alone explains most of the margin squeeze.
✅ The answer
Profits fell because more sales moved to delivery apps with high commissions. Recommend: push direct ordering (own app or WhatsApp ordering with a small discount), price delivery menus 10–15% higher, and keep dine-in experience strong. Risk: losing some delivery volume.
💪 Practice with us
A gym chain's profits dropped 15% this year. Memberships are up 8%. Where would you look first, and why?
Hint: If memberships are up, what must be true about revenue per member or costs?
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