McKinsey Case Interview

ChocolateCo: Profits are not so sweet

Prompt:
Your client is ChocolateCo, a regional, high-end chocolatier located in Philadelphia,
Pennsylvania. ChocolateCo prides itself on its ornate wrapped chocolates and seasonal treats.
Over the last two years, ChocolateCo has seen a rise in popularity. However, despite the media
attention, ChocolateCo’s profits have remained flat.

Your firm has been hired to determine why profit growth has stalled and how they can
remedy this.

Clarifying Questions:
Information to be given to interviewee when asked

• You say that profits have remained flat. Is this unique to ChocolateCo or are competitors
experiencing similar headwinds?
o This is unique to ChocolateCo
• What is their average price point? How does this compare to the large manufacturers
(Hershey’s, Mars etc)?
o ChocolateCo places an emphasis on quality. The average price of an item is $4.
‒ Note to interviewer: (This information will be helpful as part of Exhibit 3)
• What does the ChocolateCo value chain look like?
o ChocolateCo is involved at every step of the Chocolate making process. They source
their ingredients from all over the world, make the chocolates in their factory on the
Schuylkill river, and distribute the products to their namesake stores and local high-end
grocers.
• Does ChocolateCo have its own stores?
o The Company has 4 stores in Philadelphia and distribution with FullFoods store, an
upscale grocery chain, in the northeast

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Additional Background: The Chocolate Making Process
Information for Interviewee

• The Company has seen a considerable increase in popularity over the last few years. Despite
local fame, ChocolateCo remains true to its artisanal roots.
• ChocolateCo employs a team of chocolatiers and bakers in each of their factories. ChocolateCo
gives each employee considerable artistic license.
• The Chocolate making process is as follows:
o The team creates a liquid chocolate mixture.
o The liquid chocolate is then hand poured into molding trays with seasonal shapes and
themes.
o The trays are placed in a freezer to solidify.
o The hardened chocolates are decorated, wrapped, and placed into the display case.

Note: The interviewee may have already driven the case to the Chocolate Making Process – that
is great!

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Brainstorm: What could be causing the inconsistency in load factors?
Information for Interviewer

• A good brainstorm takes no more than 30 seconds and remains organized and case specific

Sample Conclusion
For Interviewer

• Key Takeaway: After examining why profits have remained flat, we have concluded that
ChocolateCo is not fully utilizing its chocolate moulding capacity due to a lack of employee
training and clearly defined best practices. As a result of inconsistent moulding practices,
ChocolateCo is missing out on a potential revenue upside of ~$8M due to unmet demand.

• Conclusion: ChocolateCo should work with employees to create a comprehensive training and
best practices program that will allow for consistent loading practices and the optimization of
production capacity.

• Risks: Employees currently enjoy a lot of autonomy with an emphasis placed on artisanal
chocolates. Mandating procedures could create cultural issues and attrition at ChocolateCo.

• Mitigant: Management should collaborate with employees to maintain culture while

formalizing business practices and creating buy-in.

• Next Steps: Do a deep dive on current operating practices and conduct employee interviews
to understand current procedures.

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