Develop a Regression Model for Revenue UsingAssignment Task

Task

Part 1 - Prancing Ponies It is early 2022, and Prancing Ponies is a household name in the pub industry in England and Wales. Prancing Ponies operates a network of pubs, restaurants, off-licenses and other outlets. After a challenging pandemic period, in which the company's pubs had to be temporarily closed, the business has strongly rebounded since late 2021, and is now considered one to watch. In an effort to improve the selection of sites for Prancing Ponies pubs in the future, the company has been analysing data from its existing pubs in an attempt to understand the main determinants of cost and revenue. The Excel file Prancing_Ponies.xlsx contains details of revenues for the past year (Revenue), measured in millions, for 47 of Prancing Ponies' pubs. The other variables relate to data currently available at head office. This includes information on management (Management) and staff quality (Staff), both on 9- point scales (with 9 being very good and 1 being very poor); a measure of local per capita annual income (LocalIncome) measured in 000s; and an index of competitor density (Competition) measured in number of pubs within 2 miles of the site. There is also a dummy variable (ModernType), indicating the type of establishment. A value of 1 for ModernType indicates that the pub has a modern or unusual theme/ambience, and a value of 0 indicates that the pub is of a conventional type. Lastly, there is a variable (Location) that indicates the approximate location of the pub. For this variable, values of 1, 2, 3, 4 and 5 represent the midlands, north, east, south and west, respectively (a) Develop a regression model for revenue using the variables available. In your report, make sure to describe your modelling process, and to interpret your final model. (30 marks) (b) Described below are the details of two sites, which have been offered to Prancing Ponies. Which, if either, would you recommend the company should buy? (10 marks)

A rare opportunity to convert a disused church, St Peter's, in Leamington Spa. The marketing department is wild about the idea, which has made a number of people sceptical. There are currently 9 restaurants within 2 miles of the site, and market studies have suggested that a couple more could open within the next 12 months. Proponents of this site have suggested Page 2 of 3 that this level of competition will draw customers to the site. Staffing is not thought to be a problem, except that finding the right manager may be a little more difficult. Recent years have seen a number of tech companies moving into the area, pushing up the per capita income to 32,000 per year. Fixed and running costs, including rent, are thought to be around