Restaurant Market Place Analytics Case Study Solution
It could be seen from the above table that the restaurant 1 is generating the negative returns for the company on the basis of an investment of $100000, despite of having the largest price for the basket and the largest Twitter followers. The major reason behind this is the high delivery costs with low number of Eaters and the average order per Eater. However, the other restaurants have a positive ROI with Restaurant 3 having the largest ROI despite of the lowest price per basket. The major reason behind it is the growth of the number of Eaters with high number of orders per Eater. Therefore, on the basis of the above analysis, Restaurant 3 would provide the highest value to Insta Food.
Maximization of ROI through change in Marketplace Fee Percentage
The ROI from each of the restaurant could be maximized by increasing the rate of Marketplace fees up to the maximum level i.e. 30%. Although, increase in the marketplace rate could hurt the restaurants and they may quit from being listed in the Insta Food. However, the probability of this is low as despite of a 30% marketplace fees, the restaurants would be earning a substantial rate of return and could continue being listed.
The maximum return on investment at an assumed investment level of $100000 for each restaurant with a marketplace fees of 30% is given in the Table 2 below.
Table-2
| Change in Marketplace Fees % | |
| Restaurant | ROI |
| Restaurant 1 | -2% |
| Restaurant 2 | 4% |
| Restaurant 3 | 10% |
It could be seen from the above table that the ROI from each of the restaurant has been increased with the declining negative ROI from restaurant 1, increasing ROI from 2% to 4% form restaurant 2 and from 9% to 10% form restaurant 3.
Although, an increase in the market place fees at a level of 30% for each restaurant would maximize the ROI, but, the restaurants could charge the Eaters an extra cost in any form excluding the basket price to compensate the change in the revenues. This could lead to a decline in the average order per Eater from each of the restaurant and result in the decline of total revenues. The impact of change in marketplace fees with a decline in the weekly orders on ROI is reflected in the Table 3 below.
Table-3
| Change in Marketplace Fees % and Decline in Weekly orders per Eater | |
| Restaurant | ROI |
| Restaurant 1 | -4% |
| Restaurant 2 | 3% |
| Restaurant 3 | 9% |
Conclusion
The return on investment for the Insta Food does not depend upon the average basket price per order only. The growth in the number of Eaters along with the average number of Eaters and the average order per Eater also have a huge impact on the return on investment for Insta Food……….
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