Case Interviews
What does a bottleneck mean in market sizing?
I've seen examples estimating the revenue of a coffee shop by looking at the number of cashiers and how many customers each cashier can serve. They call that the bottleneck. Why use that rather than just estimate customers, and how do I recognise a useful bottleneck in another question?
Ian’s Answer
The bottleneck is the point at which we can no longer "produce" more. This is a good way of conducting some market sizings because it can lead to a more efficient answer.
For example, can you picture in your head how many people walk in and out of a starbucks store in a given hour?
Of course not! However, you can definitely picture how many cashiers there are, what times of the day they're at "max" capacity, and what their churn rate is. You can take this to estimate maximum flow, then apply a % multiplier to any non-peak hours.
In terms of how to find them, it's pretty hard to explain how. You just have to look...where can you visualize the process and see a key point in the production chain?