Monday, December 8, 2008

Starbucks' strategy goes from open more stores to make people wait longer

Posted By on Mon, Dec 8, 2008 at 10:30 AM

starbucks_employee_thumb_200x271.jpg
Starbucks just can't seem to get its act together right now. Facing a drop-off in sales this past year -- which had to have been at least partly due to people tightening their budgets -- Starbucks decided to raise its prices. That strategy has backfired, and now Starbucks' stock sits at a 10-year low. Given the current economic climate, sales aren't likely to increase anytime soon.

CEO Howard Schultz has announced that the holidays could be particularly bad for the company, and it's going to make another $200 million in cost-cutting moves.

That's where most of the business stories end. But a little investigative research by our sister blog in Dallas revealed that these cost-cutting measures aren't going to happen by making stores more efficient or cutting management. Instead, they're cutting back on baristas.

After the jump, see how Starbucks is shortchanging its employees -- and, indirectly, its customers.  

Per Unfair Park:


The way each store determines how many people it schedules for

each shift is determined by a program that is tied to the cash

registers, which keeps track of the number of customers that are rung

up throughout the day. So let's say only 30 people buy something

during a single half-hour. The system recommends that that particular location post two

baristas on the

floor. Make it 50 transactions, and they earn another employee -- you

get the idea.

The store managers are expected to base

their schedules around the forecasted customer flow from past weeks

and keep their "variance" to the "ideal" coverage, to about zero

percent... Over the coming weeks, the scheduled coverage is being slashed, as

managers are expected to start keeping that variance to -3

percent. Translation: Understaffing!

I had to read that again to comprehend that negative 3 percent means Starbucks is purposely planning to run a skeleton crew that's going to be overwhelmed should a store experience a rush it's not expecting or suddenly gets busy again.

At one point around five years ago (though it might as well be 50 years ago), Starbucks would open another Starbucks if one was shown to have too-long lines. Now it looks as if Starbucks may be swinging too far the other direction. Sure, the Starbucks near me is less crowded, but in the morning it still gets its rush of customers who want their coffee and want it now! If it's going to make those people wait, they'll turn elsewhere.

The real losers are Starbucks employees. It was only a month ago that Starbucks switched to "optimal scheduling" for its employees. Turns out that optimal in this case meant demanding that full-time employees be available to work 70 percent of hours that a location was open. For a Starbucks that's open 6 a.m. to 10 p.m., that boils down to being on-call 80.5 hours a week. That's slightly more hours than medical residents are legally allowed to be on-call. The big catch, though, is that Starbucks doesn't guarantee any of its employees (including full-timers) that they'll work any of those hours. As Daniel Gross of The Big Money put it, "Optimal scheduling amounts to a permanent booty call; only the most boorish boyfriend would insist on such conditions."

Starbucks is handling this recession the way a small child might. Instead of making small cuts and shoring up its brand as a champion of good coffee and good employees, it's flailing around and doing what might seem to make sense in the short term but could hurt the company in the long term. At this pace, it could be Howard Schultz appearing before Congress next year and asking for a bailout.

-- Owen Morris

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