Interview Questions › Guesstimate

Estimate how many coffee shops are needed for a city of 10M people

Estimate the total number of commercial coffee shops (chains + independent cafes + specialty coffee bars) needed to sustain a city of 10 million people.

Context

Consider coffee drinking demographics, daily out-of-home consumption habits, and average coffee shop economic capacity.

Clarifying questions to ask first

• Are we counting dedicated sit-down/takeaway cafes, or including roadside tea/coffee stalls and fast-food counters?
• Is this a coffee-centric culture (e.g. Seattle/Melbourne) or tea-dominant?

How to approach it

1. Demand-side: Population (10M) -> Coffee drinkers (% of population) -> Daily out-of-home cups bought
2. Supply-side: Average cups served per coffee shop per day to remain profitable (~250-400 cups/day)
3. Calculate required coffee shop count: Total Daily Out-of-Home Cups / Daily Cups per Shop
4. Segment by Cafe types: Global Chains, Local Independent Specialty, Quick-Kiosk

Framework: Total Coffee Shops = (Total Daily Out-of-Home Coffee Cups) / (Average Daily Cups Sold per Shop)

Sample answer

• Pop: 10M -> 5M working adults -> 30% drink out-of-home commercial coffee = 1.5M daily cups
• Average coffee shop capacity: 300 cups/day (peak morning rush + afternoon meetings)
• Required shops = 1,500,000 / 300 = 5,000 coffee shops

1. Demand: 10M × 50% adult pop × 30% out-of-home coffee drinkers = 1.5M cups/day
2. Supply: A standard cafe serves ~35 cups/hour over 8-10 active hours = ~300-350 cups/day
3. Total shops needed = 1.5M / 300 = ~4,500 to 5,000 cafes (~1 cafe per 2,000 residents)

Executive estimate: ~4,500 to 5,000 coffee shops needed in a 10M city (~1 cafe per 2,000 citizens; ~300 cups/day per shop).

What interviewers look for

• Out-of-Home Coffee Penetration
• Daily Cups per Coffee Drinker
• Store Unit Economics / Throughput
• Demand-Supply Equilibrium