Question

Always Fresh is in the business of delivering home meal kits. Noah the Chief Marketing Officer for Always Fresh wants to assess how much the firm is worth. To do so, Noah assesses transactional data for 2019 (Prior research in Finance has concluded that 1 year of transaction data is an acceptable amount of time to arrive at firm value).

Always Fresh has two SKU's (Stock keeping units) - individual meals and a bouquet of 10 meals. Each is delivered directly to the customer's doorsteps. To keep the operation lean, Always Fresh has followed a 100% digital business model by not owning any physical property. It has partnered with certified professionals across the country who source, pack, and ship the orders. The following is the transactional data for 2019.

	Individual meal	Bouquet of 10 meals
Orders (in thousands)	2544	120
Customers (in thousands)	2895	111
Average Order Value	57.52	556.91
Average Revenue per Customer	50.54	602.06

For individual meal customers, Always Fresh spent USD 6.3 mn dollars in 2019 to acquire them. The retention rate for these customers is 15% per annum and Always Fresh makes a 30% margin on these orders.

For customers that order 10 meals, Always Fresh spent USD 2.1 mn dollars in 2019 to acquire them. The retention rate for these customers is 22% and Always Fresh makes a hefty 40% margin on these orders.

Based on the above information, you have to help Noah in computing the customer value Always Fresh.

You can assume the discount rate to be 2%. As time is not mentioned, you should assume time to be infinity.

Answer 1

Caluculate Margin
	No of orders ('000)	Average order value	Order Value ('000)	Margin Rate	Excepected Margin('000)
Individual meal	2544	57.52	146330.88	30%	43899.264
Bouquet of 10 meals	120	556.91	66829.2	40%	26731.68
	Order Value        =	No of orders * Average order value
	Expected Margin =	Order Value * Margin Rate

No of of Customers Analysis
	Customers ('000)	Retention rate of customers	Retention Customers('000)	Balance customers ('000)
Individual meal	2895	15%	434.25	2460.75
Bouquet of 10 meals	111	22%	24.42	86.58
	Retention Customers =	No of customers * Retention rate
	Balance Customers =	No of customers-Retention customers

Revenue Analysis
	Retention Customers('000)	Balance customers ('000)	Average revenue per customer	Retention Customer Revenue ('000)	Balance Customers Revenue('000)	Discount 2% per balance customers	Balance Customers Revenue after Discount	Total Revenue('000)
Individual meal	434.25	2460.75	50.54	21946.995	124366.305	2487.3261	121878.9789	143825.974
Bouquet of 10 meals	24.42	86.58	602.06	14702.3052	52126.3548	1042.527096	51083.8277	65786.1329
	Retention Customers    Revenue =	Retention Customers * Average Revenue per customer
	Balance Customers Revenue =	Balance Customers * Average Revenue per customer
	Discount    =   Balnce Customers Revenue * 2%      (Note : retention rate is exist in the customers so no need to given discount on them)
	Total Revenue = Retention customers revenue + Balance customers revenue

Customer Value Analysis
	Acquring Cost ('000)	Expected Margin ('000)	Expected Revenue ('000)	Actual Revenue ('000)	Excess Revenue ('000)	Customers ('000)	Excess revenue/Customers
Individual meal	6300	43899.26	50199.26	143825.974	93626.71	2895	32.34% per meal
Bouquet of 10 meals	2100	26731.68	28831.68	65786.1329	36954.45	111.00	3.33 per 10 meal
	Expected Revenue = Acquiring cost+Expected Margin
	Excess Revenue = Actual Revenue- Expected Revenue
	On based on above caluculation Bouquet meals has excess customers compared to individual meal