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Starter: Corner & Co: store profit halved while sales grew

You run the case. Read the prompt, answer questions from the notes below, and share data only when the candidate asks for it or gets stuck. Score at the end.

Case timer

00:00

Target length:

1. Read the prompt aloud

Read it slowly, then pause. Let the candidate ask questions before they structure.

Corner & Co runs 300 convenience stores in the UK. Sales per store grew, but profit per store halved. The exhibit shows the average store. Why, and what should it do?

Format note: Difficulty: Starter. Format: interviewer-led, with an exhibit. Industry: Retail. Region: UK. Interview length: about 25 minutes. The company is fictional and all figures are illustrative.

2. Answers to clarifying questions

Give these answers only if the candidate asks. If they ask something not listed, give a sensible answer or say it does not matter here.

If asked: Is this one store or the average?
Answer: The average store; all stores look similar.
If asked: Did the store count change?
Answer: No.
If asked: What changed in the market?
Answer: Shoppers are more price-conscious; promotions have grown.

3. The hypothesis a strong candidate states

Listen for an early, testable guess like this one. It does not need to match word for word.

Revenue rose, so my hypothesis is that margin or cost moved: probably a lower gross margin from more promotions, plus higher staff costs.

4. A model structure

Compare the candidate's structure with this one. A different split can be just as good if it is clean and fits the problem.

Store profit = revenue x gross margin - staff - rent
- Revenue
- Key: Gross margin
- Staff costs
- Rent and rates

Exhibit 1

Reveal to candidate: when they ask for this data, say "Open Exhibit 1" (they press "Show exhibit 1" on their screen).

Average Corner & Co store, GBP thousands a year (illustrative)

Average Corner & Co store, GBP thousands a year (illustrative)
Measure	Last year	This year
Revenue	2,000	2,100
Gross margin (%)	25	22
Staff costs	250	280
Rent and rates	120	120

So-what

Sales grew 5 percent, but a 3-point margin drop and higher staff costs more than cancelled it out.

5. The working, step by step

Each step shows how a strong candidate works it out. Share a new fact from it only when the candidate asks or is stuck, and let them do the math: the result in the dark box is what they should reach.

Step 1: Gross profit last year
What a strong candidate does: GBP 2,000 thousand of revenue at a 25 percent margin.
Gross profit last year (GBP thousands): 2,000 × 0.25 = 500
Step 2: Gross profit this year
What a strong candidate does: GBP 2,100 thousand at 22 percent.
Gross profit this year (GBP thousands): 2,100 × 0.22 = 462
Step 3: Store profit last year
What a strong candidate does: Minus staff and rent.
Profit last year (GBP thousands): 2,000 × 0.25 - 250 - 120 = 130
Step 4: Store profit this year
What a strong candidate does: Staff costs rose to GBP 280 thousand.
Profit this year (GBP thousands): 2,100 × 0.22 - 280 - 120 = 62
Step 5: Profit bridge
What a strong candidate does: Revenue growth at the old margin, minus the margin drop, minus higher staff costs.
Change in profit (GBP thousands): (2,100 - 2,000) × 0.25 - 2,100 × (0.25 - 0.22) - (280 - 250) = -68
Step 6: Staff cost rise
What a strong candidate does: Mostly the higher minimum wage, the interviewer confirms.
Staff cost rise (%): (280 - 250) ÷ 250 × 100 = 12
Step 7: Curveball: why the margin fell
What a strong candidate does: Interviewer: "Promotions now make up 40 percent of sales, up from 25 percent. Promoted items earn a 10 percent margin; full-price items earn 30 percent." The blended margin this year:
Blended margin this year (%): 0.4 × 10 + 0.6 × 30 = 22

The recommendation to listen for

At the end, say: "The CEO walks in. What is your recommendation?"

Profit per store fell GBP 68 thousand, mainly because promotions grew. First, the margin drop from 25 to 22 percent cost GBP 63 thousand per store, and it comes from promotions rising from 25 to 40 percent of sales. Second, staff costs rose 12 percent, mostly from the minimum wage, costing GBP 30 thousand. Third, sales growth added only GBP 25 thousand of gross profit. Cut promotions that do not bring extra shoppers, keep the ones that do, and offset wage costs with self-checkouts and better staff scheduling at quiet times.

Risks a strong answer names: Fewer promotions may lose price-sensitive shoppers; Self-checkouts can raise theft.

Next steps: Rank promotions by extra profit, not extra sales; Pilot new staff schedules in 20 stores.

Strong versus weak

A strong answer

Built a profit bridge, found that the margin drop was the biggest driver, and used the curveball to explain it through promotion mix.

A weak answer

Celebrated the sales growth and blamed "rising costs" in general.

Score the candidate

Score each criterion from 1 to 5. A 2 or a 4 sits between the descriptions.

Structuring

1: No clear structure, or a memorized framework that does not fit the problem.
3: A sensible structure, but with some overlap, a gap, or no clear priority.
5: A structure built for this problem, with no overlap and no gaps, a stated hypothesis, and a clear first step.

Math

1: Frequent errors, no units, or needed heavy help to finish.
3: Right answers but slow or messy working, or one error caught late.
5: Accurate and clearly narrated, with units, a sense check, and what the number means.

Exhibit reading

1: Read the chart aloud without finding the number that matters.
3: Found the key number but gave only part of the so-what.
5: Pulled the right number quickly and said what it means for the case.

Synthesis

1: Summarized what was done, with no clear answer.
3: Gave an answer, but with weak reasons or no next step.
5: Answer first, then two or three reasons with numbers, the main risk, and next steps.

Communication

1: Hard to follow: long silences, no signposting.
3: Clear most of the time, with some rambling.
5: Calm and concise, signposted each step, and checked in with the interviewer.

Total

0 out of 25

Score all five criteria to see the band and the feedback template.