You run a highly successful chain of high-end indoor cycling studios in New York City that targets working professionals. Your company (SoulCycle) runs 10 classes every day at an average price point of $25/class for non-members with the hope that they will sign up for a monthly membership of $250. On average, half of the students that occupy any given class are paying class-by-class while the other half has monthly memberships. Each class fits, on average, 40 students, and you typically have 75% of the seats in each class reserved before they begin. You have begun to notice that your studios are experiencing an increased number of customers who sign up for classes, but do not show up to the class. The number of no-shows has increased from 10% to 20% over the past five months. This is problematic because it makes it highly unlikely for them to sign up for a monthly membership (because you want them to do so). Instead, they will just walk-in and sign up which makes it even less likely that they would actually show up for a class. Eighty percent of them are paying class-by-class because those with month-to-month memberships get fined $10 for every class they no-show.

With some assumptions, I want you to give me an analysis of how much you are losing every month with this rate of no-show. Next, I want you to give me 3 ideas that you believe would help alleviate this problem. They can be promotional offerings, new products/services, new customer bases basically anything. Your ideas have to be justified through your assumptions and analysis.

The calculation is shown in the picture.

= 30 Assuming classes occupancy were remains unchanged i.e. 75 % x 40 Monthly Receipts can be compared in 2 cases :- Case ! 30% Members (M) & 50%. Non members (N) (15+15) No shows = 10% In terms of days (assuming 30 days in a month), 3 days no shows a. Members : 15M X $ 250p.m. 3750 b. Non members : 15 NX 27 days x 10 classes x$25 a 101,250 c. Fine from M : 3 x 10 classes x $10 300 TOTAL = 105,300 (A) Case 2 : 20%. M & 80%. N (6 + 24) No shows 20%. nie. 30x20%. = 6 days pin a. Members : 6 X $ 250 1500 b. Non members : 24 x (30-6) days x 10 classes 1825 = 144 000 c. Fine from M: 6 x 10 classes x $10 600 TOTAL =$146100 (6) -(A)./ 408.00 + (A2 105,300 38.740% The monthly receipts have increased by 384 % = 30 Assuming classes occupancy were remains unchanged i.e. 75 % x 40 Monthly Receipts can be compared in 2 cases :- Case ! 30% Members (M) & 50%. Non members (N) (15+15) No shows = 10% In terms of days (assuming 30 days in a month), 3 days no shows a. Members : 15M X $ 250p.m. 3750 b. Non members : 15 NX 27 days x 10 classes x$25 a 101,250 c. Fine from M : 3 x 10 classes x $10 300 TOTAL = 105,300 (A) Case 2 : 20%. M & 80%. N (6 + 24) No shows 20%. nie. 30x20%. = 6 days pin a. Members : 6 X $ 250 1500 b. Non members : 24 x (30-6) days x 10 classes 1825 = 144 000 c. Fine from M: 6 x 10 classes x $10 600 TOTAL =$146100 (6) -(A)./ 408.00 + (A2 105,300 38.740% The monthly receipts have increased by 384 %