labor productivity at Starbucks

Does Your Barista Do a Repeatable Routine?

Jan 18, 2014 • Behavioral Economics, Businesses, Demand, Supply, and Markets, Economic Humor, Innovation, Labor, Macroeconomic Measurement, Tech, Thinking Economically • 535 Views    No Comments

Starbucks calls it “transactions per hour” but from our perspective, it’s waiting in line. Researchers say that it takes only 3 minutes in a queue for us to become impatient.

Hoping to show their shorter line time and higher sales, Starbucks used this slide at a 2013 investors meeting:

Starbucks Labor Productivity and Monopolistic Competition

 

When I asked my barista Josh about Starbucks’s productivity, he suggested I look at LEAN. Originating with Toyota, the LEAN approach involves repeatable routines that minimize wasted movement.

When LEAN was first implemented at Starbucks, executives visited stores with stopwatches. They saw employees who were bending to scoop beans and blocking espresso machines when frothing milk. Observing 25 seconds per drive-in customer and 6 seconds for a drink to get its drizzle, they thought they could do better.

This recent video shows some of the results:

With I Love Lucy, the repeatable routine did not quite work.

In a monopolistically competitive market with many small coffee establishments that can enter and exit with relative ease, Starbucks needs more than popular products. The bottom line is also about labor productivity.

So from now on, instead of thinking of a factory when someone refers to labor productivity, just picture a well-trained barista.

US Productivity Reflects Starbucks Labor Productivity

Sources and Resources: Thanks to Josh for the idea for this post and to Quartz for their Starbucks graph. Meanwhile, I learned more about how LEAN affects labor productivity at Starbucks in a 2009 WSJ article and in a past econlife post, we looked at lines more closely.

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