Part 1–FearlessIt is early 2019, and Fearless Breweries isa household name in the pub industry in England and Wales. Fearless operates a network of pubs, restaurants, off-licenses and other outlets. After a challenging few years, in which the company was largely written off byindustry experts, the company was rebranded in 2016, and is now considered one to watch.
In an effort to improve the selection of sites for Fearless pubs in the future, the company has been analysing data from its existing pubs in an attempt to understandthe main determinants of cost and revenue. The Excel file Fearless.xlscontains details of revenues for the past year (Revenue), measured in £millions, for 47 of Fearless’s 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 valueof 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.
(b) Described below are the details of two sites, which have been offered to Fearless. Which, if either, would you recommend the company should buy?
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