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How can RedBus improve its profitability?

Updated: Apr 20

Here is another interviewer led case of a medium complexity, including structuring, math, creativity and exhibit reading questions. Can you solve it?

Suggested answer is available here.


Our client is RedBus, one of several operators of iconic double-decker public transport buses in London. Over the past three years RedBus have experienced declining profitability, as a result of reduced demand for buses due to growth in affordable taxi services, such as Uber. The client is looking to improve profitability.

Additional information:

  • Single-decker bus capacity: 30

  • Double decker bus capacity: 60

  • Cost of a ride is £1.50

Q1: How would you approach helping our client?

Q2: What is the breakeven number of passengers for a double decker bus?

Exhibit 1 - RedBus Financial and Operational Metrics

Q3: The client has shared passenger information on 5 of its routes. What can you learn from the information?

Exhibit 2: Number of passengers by route and time of day

Q4: Math: Unfortunately, the frequency of buses is regulated and RedBus cannot reduce it. However, RedBus is considering acquiring single decker buses to fully operate on some routes, and during off-peak hours on others. Their investment threshold is a 3 year payback period. Should they do it?

Exhibit 3 - Single decker bus economics

* Other costs are the same as for a double decker bus; assume 350 days per year

Q5: Creativity: After looking at the cost side, RedBus would like to evaluate some ideas for increasing revenues.

Recommendation: We are meeting with the CEO of RedBus, what would you tell her?

Feel free to post your questions or answers in the comments. Don't forget to review the preparation plan for tips on approaching this and other cases. Book a coaching session to get expert feedback on your performance and ways to improve.

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Consulting Case PRO was started by Ben Gutkovich.

Ben is a former Engagement Manager with McKinsey & Company and an MBA graduate from London Business School. At LBS, Ben secured offers from McKinsey, BCG and Bain. At McKinsey, he led the firm’s recruiting efforts at top UK universities.

 

Ben helped 100+ candidates secure an offer from top tier consulting firms since leaving McKinsey, and started Consulting Case PRO to give more candidates access to his exclusive interview preparation techniques. 

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