Three partner-style cases
Store closures in the UK, a credit card launch in Brazil, and a rural rail line in Japan, each with pushback and a model answer.
Key takeaways
- The pushback was a real fact about stakeholders. It changed how to make the change, not whether the numbers support it.
- At about 9 percent losses the card breaks even. Below it the launch makes money; above it the launch loses money.
- A quick sizing or payback gives the judgment a base. Each number should end with its so-what, then move on to the decision.
Three original partner-style cases. Each gives you little data and asks for a lot of judgment, with a few quick numbers to anchor the view. Run them in Partner mode with a friend: the partner lines in the steps are the pushback your friend should use. Answer before you read each step.
Partner case 1: close the weakest stores?
Worked case
Partner case: should Hollin & Rye close its 30 weakest cafés?
The prompt
Hollin & Rye runs 180 bakery cafés across the UK. The CEO is asking whether to close the 30 weakest stores. It is your final round, and the partner says: "Forget the slides. What would you tell the CEO on Monday?"
Partner-led: an open, conversational case. The partner gives a few numbers when asked, pushes back twice, and wants a clear answer.
Clarifying questions, with the interviewer's answers
- What does "weakest" mean here: losing money, or only below average?Answer: The 30 stores lose money at store level after rent and staff, about GBP 120,000 a year each on average.
- What does it cost to close a store?Answer: About GBP 250,000 per store, one-off, for lease exit and redundancy.
- How are the other stores doing?Answer: The other 150 stores make about GBP 150,000 a year each at store level.
A hypothesis to say out loud: Stores that lose money after rent rarely recover on their own, so my hypothesis is that closing most of the 30 pays back within about two years, and that the real questions are which few are worth saving and how to close without harming the brand.
The structure
- Close, fix, or keep the 30 stores?
- Size of the problem: losses today
- Cost and payback of closing
- Key: Can they be fixed, and what would it take?
- Wider effects: investors, staff, brand, nearby stores
Working it through
1. Size the problem
Candidate: "Before I answer, let me size it. Thirty stores losing about GBP 120,000 a year each is:"
Annual loss from the 30 stores (GBP):30 × 120,000 = 3,600,0002. Put it in context
Candidate: "The other 150 stores make about GBP 22.5 million a year, so after these losses the estate makes about GBP 18.9 million. The losses equal this share of today's store profit, so closing would lift it by about a fifth:"
Loss as a share of store profit today (%):3,600,000 ÷ (150 × 150,000 - 3,600,000) × 100 = 19.053. Closure cost and payback
Candidate: "Closing costs GBP 250,000 a store, GBP 7.5 million in total, one-off. Against GBP 3.6 million a year of losses avoided, that pays back in about two years:"
Payback on closing all 30 (months):30 × 250,000 ÷ (30 × 120,000) × 12 = 254. Pushback 1: investors
Partner: "Closing 30 stores will look like failure to our investors." Candidate: "That is a fair concern, but I do not think it changes the answer. Investors usually worry more about losses that continue than about a clear plan to stop them. I would present it as focusing the business on 150 stores that make money, with about GBP 3.6 million a year added back to profit."
5. Pushback 2: the station stores
Partner: "Fifteen of the 30 are in train stations. Commuters are coming back. Give them time." Candidate: "That is a new fact, so let me test it. What does a station store sell today, and how much of each extra pound of sales is contribution?" Partner: "About GBP 600,000 a year each, and about 40 pence in the pound. Assume they lose the same GBP 120,000 as the average." Candidate: "Then if sales recover by 20 percent, the loss per store becomes:"
Loss per station store after a 20 percent recovery (GBP a year):120,000 - 600,000 × 0.2 × 0.4 = 72,0006. What recovery would it take?
Candidate: "To break even, sales would need to rise by half. That is far more than a return of commuters is likely to bring. So I hold the view, with one change: rent is the only lever big enough. I would use the closure plan to ask the station landlords for lower rent, and close any store where they say no."
Sales increase needed to break even (%):120,000 ÷ (600,000 × 0.4) × 100 = 507. The conviction test
Partner: "So you are sure?" Candidate: "Sure enough to act. What would change my mind is a landlord offer that cuts rent on a station store by at least GBP 72,000 a year if sales recover by 20 percent, or by the full GBP 120,000 if they do not, or evidence that sales there are already up by close to half." Partner: "Have you ever had to close something you started?" (A fit question inside the case. Answer briefly with a real example, then return to the case.)
The recommendation
I would tell the CEO to close the 30 loss-making stores in phases, and to open rent talks on the 15 station stores first. First, the 30 stores lose about GBP 3.6 million a year, about 19 percent of store profit. Second, closing them pays back in about 25 months. Third, even a 20 percent sales recovery leaves each station store losing about GBP 72,000 a year; breaking even would need about 50 percent more sales, so only a rent cut can save them. The main risk is staff morale in the towns affected. Next, rank the 30 by lease end date.
Risks: Some customers of closed stores may stop buying from the brand rather than walk to the next store; Lease exit costs may be higher than GBP 250,000 per store where leases run longer; Morale in the remaining 150 stores may fall if the closures are poorly explained.
Next steps: Rank the 30 stores by loss, lease end date, and exit cost; Ask each station landlord for a rent cut large enough to reach breakeven within 12 months; Offer staff roles in nearby stores before any redundancy.
A strong candidate
Gave an answer in the first minute, anchored it with three quick numbers (loss, payback, recovery needed), treated the investor pushback as a framing question, and tested the station pushback with numbers before holding the view with one sensible change (rent talks).
A weak candidate
Asked for store-by-store data for ten minutes, said "it depends" when asked for a view, and switched to "keep them open" as soon as the partner mentioned commuters, without testing whether a recovery would be enough.
Partner case 2: launch a credit card?
Worked case
Partner case: should Jabuti Pay launch a credit card?
The prompt
Jabuti Pay is a Brazilian digital wallet with 12 million monthly active users. The founder wants to launch a credit card to all users next quarter. The partner asks: "You are advising the board. Yes or no, and why?"
Partner-led: judgment first. The partner expects a view within a few minutes, then pushes on it twice.
Clarifying questions, with the interviewer's answers
- How many active users does the wallet have, and how many might take a card?Answer: 12 million monthly active users. The founder expects about 5 percent to take a card within two years.
- What does each card earn and cost?Answer: Assume an average balance of BRL 2,000, income of 25 percent of the balance a year from interest and fees, funding cost of 12 percent a year, and operating cost of BRL 80 per card a year.
- What share of balances do we expect to lose to defaults?Answer: Nobody knows yet. Card lenders in Brazil often see high losses, and many of our users have short credit histories.
A hypothesis to say out loud: Card profits depend mostly on credit losses, so my hypothesis is that the answer turns on one number, the loss rate, and that we should launch small to learn it before launching big.
The structure
- Launch the card now, later, or as a test?
- How many cards, and what each earns before losses
- Key: The loss rate that makes it break even
- What we know about our users' risk
- How to launch: all at once or a test first
Working it through
1. How many cards
Candidate: "At 5 percent of 12 million users, the card would reach:"
Cards issued:12,000,000 × 0.05 = 600,0002. Earnings before losses
Candidate: "Per card, income is 25 percent of BRL 2,000, minus 12 percent for funding and BRL 80 of operating cost:"
Margin per card before credit losses (BRL a year):2,000 × 0.25 - 2,000 × 0.12 - 80 = 1803. The break-even loss rate
Candidate: "So the card breaks even if we lose this share of balances each year. This is the number the whole decision rests on."
Break-even annual loss rate (% of balance):(2,000 × 0.25 - 2,000 × 0.12 - 80) ÷ 2,000 × 100 = 94. The bad case
Candidate: "If losses are 12 percent, each card loses BRL 60 a year. Across 600,000 cards that is:"
Annual result at a 12 percent loss rate (BRL):600,000 × (180 - 2,000 × 0.12) = -36,000,0005. The good case
Candidate: "At 6 percent losses, the same launch makes about the same amount the other way. So the launch could make or lose about BRL 36 million a year, depending on one number we do not know."
Annual result at a 6 percent loss rate (BRL):600,000 × (180 - 2,000 × 0.06) = 36,000,0006. Pushback 1: the rival
Partner: "Our biggest rival launched a card last year and grew users 40 percent. We cannot wait." Candidate: "Growth matters, but the rival's user growth does not tell us whether its cards make money. If our loss rate is 12 percent, faster growth means losing money faster. I would not change the answer, but I would move quickly on a test so we do not fall far behind."
7. Pushback 2: a new fact
Partner: "Our data team says our payment data predicts risk better than a bank's credit score." Candidate: "That is new and it matters: it makes a loss rate below 9 percent more believable. It does not prove it. So I would update the plan, not the answer: a test with the 50,000 users our model rates safest. Even if losses reach 12 percent, the test costs at most about BRL 3 million a year, which is a fair price for the one number the decision rests on."
Worst-case annual cost of the test (BRL):50,000 × (2,000 × 0.12 - 180) = 3,000,000
The recommendation
Do not launch to all users next quarter; launch a 50,000-card test now and scale only if losses stay below about 9 percent. First, the card breaks even at a loss rate of about 9 percent of balances a year, so everything depends on that rate. Second, the swing at full launch is large: about BRL 36 million a year of profit at 6 percent losses, or a BRL 36 million loss at 12 percent. Third, the test costs at most about BRL 3 million a year and checks the data team's claim directly. Main risks: a rival signs up the best customers first, and the safest test users may understate losses for the full base. Next steps: build the risk model, choose the 50,000 test users, and agree in advance the loss rate that triggers a full launch.
Risks: Test users are chosen as the safest, so their losses may understate losses for the full base; A rival may sign up the best customers first; Interest rates may change, which moves the funding cost.
Next steps: Build and back-test the risk model on past payment data; Launch to 50,000 users with low starting limits; Agree now the loss rate and time period that will trigger a wider launch.
A strong candidate
Found the single number that drives the decision (the break-even loss rate), showed the swing in both directions, held the view against a growth argument that contained no profit fact, and updated the plan when the partner added a real fact.
A weak candidate
Said yes because the rival grew fast, or said no without showing what loss rate would make it work, and did not offer a way to find out.
Partner case 3: close a rural rail line?
Worked case
Partner case: should Minesaka Railway replace its branch line with buses?
The prompt
Minesaka Railway is a private railway company in Japan. Its main line is profitable, but a 40 km rural branch line loses money every year as the valley's population ages and shrinks. The CEO asks whether to close the branch line and replace it with buses. The partner says: "What would you tell the CEO, and how would you handle the prefecture?"
Partner-led: a judgment case with public-interest issues. A little math anchors the answer; most of the time goes on stakeholders and pushback.
Clarifying questions, with the interviewer's answers
- How many people use the branch line, and what do they pay?Answer: About 1,000 trips a day, every day of the year, at an average fare of JPY 400.
- What does the line cost to run, and who helps pay?Answer: About JPY 876 million a year, including staff, trains, and track upkeep. The prefecture pays a subsidy of JPY 300 million a year toward the loss.
- What would a replacement bus service cost, and is any big spending coming?Answer: About JPY 250 million a year. The team expects about 20 percent of riders to stop using public transport if the train goes. A bridge on the line needs about JPY 3 billion of repairs within five years.
A hypothesis to say out loud: Rural lines with this few riders rarely cover their costs, so my hypothesis is that a bus service is far cheaper, and that the harder part of the answer is how to make the change with the prefecture and the towns, not whether the numbers work.
The structure
- Keep the line, replace it, or change it?
- Economics today: loss per year and per trip
- The bus option and the saving
- Key: Stakeholders: prefecture, towns, riders, staff
- How and when to make the change
Working it through
1. Trips a year
Candidate: "About 1,000 trips a day for 365 days gives:"
Trips a year:1,000 × 365 = 365,0002. The rail loss
Candidate: "Fare income is about JPY 146 million a year against JPY 876 million of cost, so before subsidy the line loses:"
Annual rail loss before subsidy (JPY):876,000,000 - 365,000 × 400 = 730,000,0003. Loss per trip
Candidate: "Each trip costs about JPY 2,400 to provide and earns JPY 400, so every trip loses about JPY 2,000."
Loss per trip (JPY):(876,000,000 - 365,000 × 400) ÷ 365,000 = 2,0004. The bus option
Candidate: "Buses cost about JPY 250 million a year. If 20 percent of riders stop traveling, fare income falls to about JPY 117 million, so the bus service loses:"
Annual bus loss (JPY):250,000,000 - 365,000 × 0.8 × 400 = 133,200,0005. The saving
Candidate: "Switching saves about JPY 597 million a year. And the JPY 3 billion bridge repair equals about five years of that saving, so waiting makes the choice harder, not easier."
Annual saving from switching (JPY):(876,000,000 - 365,000 × 400) - (250,000,000 - 365,000 × 0.8 × 400) = 596,800,0006. Pushback 1: the prefecture
Partner: "The governor will be furious, and we need the prefecture for our station redevelopment projects on the main line." Candidate: "That is a real cost I had left out, and it changes how we do this, not whether. I would not announce a closure. I would take the numbers to the prefecture privately with a joint plan. Its JPY 300 million subsidy covers well under half of the loss today; the company still carries about JPY 430 million a year. A bus network would cost less than the subsidy alone, so the prefecture's money could buy a better service."
Loss the company carries after the subsidy (JPY a year):876,000,000 - 365,000 × 400 - 300,000,000 = 430,000,0007. Pushback 2: the riders
Partner: "Buses are slower, and many riders are elderly." Candidate: "Agreed, so the plan must answer that directly: low-floor buses, more departures than the train has today, which the saving easily pays for, and stops closer to homes than the stations are. In the upper valley I would test small on-demand buses. If ridership falls much more than 20 percent in the first year, we should revisit the design."
The recommendation
Recommend replacing the branch line with a bus service, agreed with the prefecture rather than announced to it. First, the line loses about JPY 730 million a year before subsidy, about JPY 2,000 per trip, while a bus service would lose about JPY 133 million, saving about JPY 597 million a year. Second, the JPY 3 billion bridge repair equals about five years of that saving, so delay makes the choice more expensive. Third, the prefecture's JPY 300 million subsidy alone is more than the bus network's JPY 250 million running cost, leaving money for more departures than today's trains, so riders can gain frequency even as they lose the train. The main risks are the relationship with the prefecture and access for older riders. Next steps: share the numbers privately with the prefecture, design the bus network with the towns, and set a transition date before the bridge work must start.
Risks: The prefecture may block or delay the change, which would affect other projects with the company; More than 20 percent of riders may stop traveling, especially older people; Local media may frame the change as abandoning the valley.
Next steps: Meet the prefecture privately with the numbers and a draft joint plan; Design routes and timetables with the towns and a group of regular riders; Plan redeployment for the line's staff to the main line or the bus service.
A strong candidate
Anchored the answer with three quick numbers (loss per trip, the saving, the bridge), then spent most of the time on the prefecture and the riders. Treated the governor pushback as a fact that changes the plan, not the answer, and turned the subsidy into part of the solution.
A weak candidate
Recommended closing the line on the numbers alone and had no answer when the partner raised the governor, or dropped the recommendation entirely at the first sign of political difficulty.
Practice
A Dubai restaurant group can close a branch that loses AED 400,000 a year. Closing costs AED 600,000 one-off. How many months does closing take to pay back?
An Indian lender earns 30 percent of the loan balance a year, pays 10 percent to fund it, and spends 5 percent on operations. At what annual loss rate, in percent of balance, does it break even?
A bus route in Riyadh costs SAR 12 million a year to run and carries 1.5 million trips a year at a fare of SAR 3. How much subsidy is needed per trip, in SAR?
In the rail case, the partner raises the governor's reaction. What did the strong candidate do?
In the credit card case, why is the break-even loss rate the most useful number?
A partner case has only two or three numbers. How much math should you do?
Sources for this lesson (1)
- Recognized public explanations of case-interview concepts and frameworks
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