Financial Data
Updated 27 Sep 2020

How Starbucks master operations

Did you know that by giving permission for Starbucks’ baristas to throw out espresso that isn’t good enough and start again resulted in less waste? Here’s how operations can save you loads of money.

15 March 2015  Share  0 comments  Print

All the answers to your unique business lifestage questions

Howard Schultz is the founder of Starbucks, a business that isn’t just worth $69 billion dollars but serves over four billion cups of coffee a year.

One of the things that’s made Starbucks such a hit (and it’s not a matter of price), is the consistent quality of its coffee no matter which one of the 23 000 store in 63 countries you visit. And this comes down to the leadership of Howard Schultz who’s operations systems see 160 000 employees providing the best for customers.

Related: Setting up systems

The counter-intuitive logic that changed everything

Schultz has famously said, “If the espresso isn’t good enough, you have my permission to pour it out and begin again.”Starbucks -coffee -bar

At first glance it may seem like thousands of dollars would end up being poured down the drain, when in fact the opposite held true. Why? Because it wasn’t just a matter of identifying a problem, it became an issue of solving it through the correct processes and training – something that every business, no matter how large or small can benefit from.

Schultz had discovered that bad habits of steaming more milk than necessary to make some of its listed beverages in order to save time was actually producing an inferior product and seeing thousands of litres of reheated milk being thrown down the drain – and we all know the fall out of a dissatisfied customer isn’t just them failing to returning, but them encouraging their friends, family and colleagues to boycott as well.

Bold and not-so-bold moves for improved operations

Stopping everything in its tracks for a several hours one evening for training was a costly move, but ultimately saved millions of dollars in wasted product and increased customer satisfaction.

So what can be learnt from this anecdote? Franchising is such a successful business format because every single process and operation is documented into step-by-step procedures that are reinforced with on-going training.

How this applies to your business is that something as small as employees printing unnecessary emails doesn’t seem to add up to much, but with ink and paper compounded over the course of a few months or even a year, can wind up being a huge expense.

Similarly, stopping to answer an email or phone call can break ones concentration from an important task and result in almost 45 minutes of wasted productivity.

First start with observation

If you’re able to, take time away from your daily tasks to observe your employees’ behaviour to look for inefficiencies or outright waste. Then, before reprimanding, seek to find out why they are behaving in the way they are.

From there, discuss with your employees ways that the inefficient or costly behaviour can be addressed or what existing solutions need to be reinforced with training.

Related: Are restraints of trade enforceable?

It’s of paramount importance that, in order to get buy in from employees, that they understand the costs of their behaviour on the business, the environment, and ultimately what it means for them too – for example not reaching incentive targets, or getting a raise through improved profitability. 

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