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
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.
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