Market sizing questions are usually asked in consulting interviews but may be asked in IB or PE interviews since industry analysis is part of the job. It’s more important to explain the logic behind your assumptions and less important to get the right number.
It’s best to go with a top-down approach to this market sizing question. If there is a population of 8 million people in New York City, and we assume that the average New Yorker buys 1 coffee a week from a coffee shop, then 8 million coffees (8 million x 1) are purchased per week in New York City.
If we assume there are 50 weeks in a year in which New Yorkers consume coffee, excluding 2 weeks for Christmas holidays or vacations, then 400 million coffees (8 million x 50) are purchased per year in New
If we assume the average coffee at a coffee shop is $3, then the total size of the New York City coffee shop market is $3 x 400 million = $1.2 billion.