Long Lines Brewing
- by Senthil Veeraraghavan
The Wall Street Journal recently reported that Starbucks is asking its baristas to make no more than two drinks at a time.
Among many other new rules at the coffee chain, baristas are now required to steam milk for each drink rather than steaming an entire pitcher to be used for several beverages. For many coffee connoisseurs, this is a welcome change that will improve quality. Starbucks also believes the move will ensure the “quality of the beverage in taste, temperature and appearance” while also reducing the “possibility for errors.” As a coffee aficionado myself, I entirely agree. However, many baristas (correctly) worry that this change will eventually lead to longer lines, causing some customers to drop out.
Making a good cup of cappuccino, like many things in life, takes time. But no one would wait forever for a cup of coffee. (The writer-comedian Larry David had a hilarious take on this issue, in one of his Curb Your Enthusiasm episodes, in which he talks about “sample abuse” at an ice-cream parlor.) This dichotomy between consumers’ valuing a service that takes more time and their dislike towards waiting for the same service is not peculiar to coffee alone.
Think of waiting for an appointment with a tax consultant or a primary care doctor. Of course, no customer likes long waiting times. However, during these appointments, the same customer would prefer that the tax consultant or the doctor to spend more time with him or her (because the service value improves in time). On one hand, addressing this preference implies a higher waiting time for all future customers. On the other hand, to cut wait-times, the service provider may have to speed up and reduce quality, which helps no one.
So, is Starbucks right in slowing down? Will this slow-down cause more waiting lines for customers? Yes and yes. Theory suggests that it is in the interest of a high-quality firm to slow its service down, even at the risk of increased waiting time. I addressed this tradeoff in a paper called the Quality-Speed Conundrum.
Unfortunately, even a small change in service time creates a non-linear and significant impact on waiting times. Eventually, Starbucks has to cut wait times for customers and generate revenues. There are several options to improve revenues: increase the number of shops at a location, or the number of baristas per shop, or decrease the variety of options available at a shop. Unfortunately, some of these changes would mean that prices may have to go up.