Starbucks
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This document summarizes a presentation about improving operations at a specific Starbucks location. It outlines recommendations to: 1) revamp the employee reward system to better motivate workers; 2) tighten the focus on creating a relaxing atmosphere as the "third place"; and 3) measure profitability based on sales of profitable items rather than just reducing labor costs. A three-step action plan is proposed to decrease turnover, improve accessibility and cleanliness, and enhance the store's atmosphere. Potential risks and benefits of the recommendations are also discussed.
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Starbucks
- 1. Starbucks Presented by: Adam Berger, Justin Buchman, Donald Chase & Suzana Hsu THE FRAPPUCCINOS
- 12. Company Financial Performance (1998 FY)
- 13. Site Analysis
- 22. The use of IT at Starbucks Corporate IT System Individual Stores Individual Stores Sales, Inventory, Staffing Sales, Inventory, Staffing Individual Stores Inventory, Orders, Transfers Vendors, Distributors, Mgmt., Channel Members Orders, Budgets, Future Sales
- 24. Order Cycle Times Bottleneck Capacity 114 / Hr Take Customer’s Order Bottleneck Order? Pastry? .53 Min .53 Min Yes Yes No Pastry? .40 Min .27 Min Yes No No
- 28. Recommendations
- 33. Focused Recommendation Improve “Third Place” Environment
Editor's Notes
- Fixed Expense increase in 1998 over 1997 due to higher depreciation expense, advertising expense, and salaries in 1997 than in 1998.
- Controllable expenses include cost of sales, labor and benefits, supplies, inventory mark outs and adjustments, and store costs for donations, entertainment, and customer relations.
- Tall corporate hierarchy affects communication between the corporate HQ and individual stores.
- Staffing direction based on direct hour allowances Inventory control and ordering Check list of daily job tasks
- Overall store capacity a function of the number of workers on the floor. Both at the register and at the bottleneck. With two people at bottleneck, cycle times are more around .29 minutes and hourly capacity is 208 units / hr. Store capacity much higher based on number of employees working, number of registers working, and exact product mix of sales.
- Management steps in and out as needed, but is not overbearing. Wages have normally been maximized for economic reasons. We saw two excellent examples of employee empowerment.
- This is directly from the Starbucks Mission Statement To communicate this, all employees get the Partner Information Manual We saw a great work environment in action at this location
- The benefits package is not relevant to employees who are under the age of twenty. Remind that with the raises, standard policy has been to give maximum allow to keep overall wages competitive.
- We estimate that the additional $16K is enough to hire 2 more PT partners.