Description: This project focuses on analyzing the impact of a new menu launch with television advertising on the profitability of Round Roasters, an upscale coffee chain. The objective is to determine whether the menu changes should be applied to all stores based on the results of a 12-week experiment conducted in two test markets: Denver and Chicago. The analysis aims to identify the incremental lift in profit growth compared to the comparative period and assess the return on investment (ROI) of the marketing campaign.
Key Points:
- Objective: Analyze the impact of a new menu launch with television advertising on profitability.
- Business Problem: Determine whether the menu changes should be implemented chain-wide based on the experiment results.
- Data Sources:
1. Transaction data for all stores from 2015-January-21 to 2016-August-18.
2. Listing of all Round Roasters stores.
3. Listing of the 10 stores (5 in each market) used as test markets.
- Experiment Details:
- Duration: 12 weeks (2016-April-29 to 2016-July-21).
- Test Markets: Denver and Chicago.
- Variables of Interest: Profit (represented by gross_margin).
- Analysis:
1. Compare the profitability of the test markets during the experiment period with the comparative period of the previous year.
2. Calculate the incremental lift in profit growth compared to the control stores.
3. Assess whether the predicted impact on profitability justifies the increased marketing budget.
- Decision: Determine whether to apply the menu changes to all stores based on the analysis findings.
Note: This project aims to evaluate the impact of a new menu launch and television advertising on the profitability of Round Roasters. By conducting an AB test in two test markets, the analysis will assess the incremental lift in profit growth compared to the comparative period. The decision to implement the menu changes chain-wide will be based on the predicted impact on profitability, ensuring it meets the minimum threshold of an 18% increase. The project will leverage transaction data and store listings to analyze the results and provide actionable insights to the management team.