Instructions

This problem is designed to acquaint you with the process of reading and analyzing data to make business decisions. Please note that the raw data alone doesn't always indicate the correct choice. Rather, the data is viewed in context of other business priorities to fully inform the decision$-$making process.

For this problem, you will use the following Microsoft Excel Online file to review data and then answer the questions. Feel free to click on the Excel Online link now to open the spreadsheet $-$ it will open in a separate browser tab.

If you need help navigating Excel or knowing how to complete the tasks related to this problem, please click here to access Microsoft Support.

Scenario

You are the marketing analyst for Better Beans Coffee Company, which has nine stores nationwide. The company wants to build two additional stores. Your executive team has decided that rather than expand to new markets, they want Better Beans to begin opening additional stores in existing markets. While this will create cannibalization in the short term, it will create marketing and operating efficiencies as more stores are opened in each city.

As a scrappy and growing startup, Better Beans does not yet have access to complex marketing analytics software. Fortunately, you are an expert at gathering market data from inside and outside the company and crunching accurate numbers with nothing more than an Excel spreadsheet.

You have been tasked with calculating the two best markets for opening an additional store. You have already calculated two things that allow you to estimate the net additional revenue in each market after adding a second store:

Revenue for a second store in each market

The revenue lost from estimated cannibalization at the first store.

Important note: Due to the high investments already made in existing stores, management has specified that any market where cannibalization is $30\%$ or more should be eliminated from consideration.

Questions

Ignoring cannibalization rates for now, what two markets have the highest net revenue increases when adding a second store?

San Diego and Houston

Dallas and Los Angeles

Orlando and San Diego

Los Angeles and San Diego