Basil & Co: Is the Growth Worth What It Costs?
Basil & Co sells quick service restaurants subscriptions in India. Growth has been strong and the board has asked whether it is profitable growth.
Marketing spends ₹39 Cr a month and acquires about 3,477 new customers in that time. Average revenue per user is ₹962 a month at a 58% gross margin. Monthly logo churn runs at 1.7%.
Roughly 48% of new customers come through paid channels; the rest arrive organically but are counted in the same blended figure. The CMO reports a healthy LTV/CAC and wants to double the budget.
spend
- new customers per month
- 3477
- monthly marketing spend cr
- 39
- paid share of new customers pct
- 48
economics
- arpu monthly
- 962
- gross margin pct
- 58
- monthly churn pct
- 1.7
derived hints
- blended cac
- 112166
- payback months
- 201
- ltv gross margin basis
- 32808
- implied lifetime months
- 58.8
Advise the board. Your answer should provide:
- Analysis — CAC, LTV on a margin basis, the ratio, and payback in months. Show the working.
- Risks — what the blended number is hiding.
- Recommendation — scale, hold or cut, and where.
State any assumptions you make.
80 points, 60% to pass.
- recommendation20
- market analysis20
- risk assessment15
- financial analysis25
Reveal suggested structure
CAC = spend / customers acquired. LTV = ARPU x gross margin x 1/churn. Judge on payback period and on unblended channel economics.