Estimation question
How much revenue does your favorite restaurant makes each year?
- Estimation
- Easy
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What this question tests
Estimation combining seating capacity, turnover, and average spend into a defensible revenue figure.
How to approach it
- Pick a concrete restaurant type to ground the estimate, for example a mid-size sit-down restaurant with about 40 seats.
- Estimate table turnover, assuming each seat turns over roughly 2 times at lunch and 2 times at dinner, about 4 turns daily.
- Estimate average spend per customer, assuming around 25 dollars including drinks, a reasonable mid-tier assumption.
- Calculate daily revenue: 40 seats times 4 turns times 25 dollars equals 4,000 dollars per day.
- Annualize: 4,000 dollars times 365 days gives roughly 1.46 million dollars, adjusted down slightly for slower weekdays to around 1.2 to 1.4 million.
- Sanity check against typical restaurant industry revenue benchmarks for a similarly sized establishment.
What a strong answer includes
- Builds the estimate from concrete, checkable inputs, seats, turnover, and spend, instead of guessing a lump revenue figure.
- States each assumption explicitly and adjusts for real-world variance, weekday versus weekend.
- Sanity checks the result against known industry norms for a similarly sized restaurant.
- Presents a reasoned range instead of one falsely precise number.
Common mistakes
- Guessing an annual revenue number with no visible decomposition.
- Ignoring day-of-week variance in turnover and demand.
- Not sanity-checking the final figure against any real-world reference.
Likely follow-up questions
- How would this estimate change for a fast-casual versus fine-dining restaurant?
- What data would you look for to validate this figure?
- How would seasonality affect your estimate?
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Learn the skill behind it
Chapters of the AI PM course that teach what this question tests.
- Chapter 2: Data fluency: SQL, logs, and reading the truth yourself
- Chapter 9: Prove it paid off: outcomes, economics, and pricing
- Chapter 14: Get the job: the AI PM interview loop