These estimation questions always feel deceptively simple and then you're standing there trying to remember if you should start from supply or demand.
Break the problem into a top-down estimation: start with a well-defined geography (e.g., a major city) and segment the market by delivery type (restaurant meals vs. groceries) and user frequency. Use assumptions about population, adoption rates, order frequency, and average order value to calculate annual market size, then scale to other regions if needed.
Pro tip: State your assumptions clearly and round numbers to make calculations easy; interviewers care more about your structured thinking than precise arithmetic. Also, acknowledge that bicycle couriers are typically used in dense urban areas, so focus on cities rather than entire countries.
Clarify what 'food delivery market' includes (e.g., restaurant meals, groceries, meal kits) and specify the target geography (e.g., a single city, country, or global). Assume a representative city like San Francisco for initial estimation.
Determine the population of the chosen area and narrow it to potential users (e.g., adults with smartphones, disposable income, and living in areas where bicycle couriers operate).
Assume a penetration rate for food delivery apps among the addressable population, then estimate average order frequency (e.g., orders per user per month) and average order value (AOV).
Multiply the number of users by order frequency and AOV to get annual market size for the city. Adjust for the proportion of deliveries that are actually done by bicycle couriers (e.g., in dense urban areas, it might be 50-80%).
If needed, scale the city estimate to a larger region (e.g., all major cities in the US) by multiplying by the number of similar cities. Sanity-check the result against known industry reports or common sense.
AI-generated suggestions, not part of the candidate's original notes. May be inaccurate — verify before relying on them.