Skill 01 · Frame the problem, and aim high
A gym chain wants to double its profit in three years. How would you approach it?
A classic opening question. The interviewer is testing whether you pick the right question and set the right ambition before you reach for a framework.
The question
Your client is FitNorth, a chain of 40 mid-priced gyms in two cities. The CEO has told the board she will double operating profit in three years.
- Operating profit
- $12M last year on $96M revenue
- Members
- about 80,000, paying $85 a month on average
- Other revenue
- personal training and classes, about $14M a year
- Growth
- revenue flat for two years; two budget chains opened nearby
“How would you approach this?”
2 min Think first. Jot down your answer, or say it out loud, before you open the steps. The steps make far more sense once you’ve tried it yourself.
A strong answer, step by step
Open each step in turn. This is our worked answer, not the only good one.
Step 1: Restate the goal, and ask what “double” means
“So the goal is to take operating profit from $12M to $24M by year three. Before I structure it, two questions. Is that $24M a hard commitment to the board, or an ambition we can reshape? And can we sell or close gyms, or must the footprint stay?”
Why it works: It turns a vague goal into a number, and the two questions could each change the plan. Asking “what do you mean by double?” after you’ve built a framework is too late.
Step 2: Size the gap before choosing a lever
“Doubling means $12M more profit. At today’s 12.5% margin, growing revenue alone would need about $96M more, so revenue roughly doubling. That’s unlikely in a flat market, so the plan probably needs both margin and growth.”
Why it works: One line of math shows the ambition is a stretch and tells you which branches matter. Strong candidates do this out loud, in round numbers.
Step 3: Structure it around the decision
Close a $12M profit gap
- Keep and grow members
- Cut churn (who leaves, and why?)
- Win members back from the budget chains
- Corporate memberships (new channel)
- Earn more per member
- Price tiers and off-peak plans
- Personal training and classes
- Run gyms for less
- Close or merge the weakest sites
- Staffing and energy per site
Why it works: Every branch ends in something the CEO could act on, and it leads with the levers big enough to close a $12M gap. The textbook “revenue minus costs” tree isn’t wrong; it just doesn’t tell you where to look first.
Step 4: Say where you’d start, and add one branch nobody expected
“I’d start with churn and pricing: members are the biggest lever, and the budget chains are probably taking the price-sensitive ones. I’d also test one less obvious idea: selling corporate memberships to large local employers, which could add members without a price war.”
Why it works: A clear first step shows judgment, and one unexpected branch shows you aimed higher than the template. Keep it to one, and say why you’d test it.
Common traps
- Starting with a memorised framework before you know what “double” means.
- Listing ten branches with no view on which matters most.
- Skipping the gap math, so you can’t tell a stretch goal from an easy one.