Latest Starbucks Buzzword: 'Lean' Japanese Techniques

Wall Street Journal (8/1, Jargon) – Starbucks Corp. built its business as the anti-fast-food joint. Now, the recession and growing competition are forcing the coffeehouse giant to see the virtues of behaving more like its streamlined competitors…Starbucks says the efforts are already helping its bottom line, as shown by quarterly results last month that beat analysts' expectations…Starbucks's efficiency quest is an example of how even premium brands are re-engineering how they do business amid an economic crisis. Unlike in boom times, offering ever-fancier products and opening new stores is no longer a recipe for growth.

One of Starbucks's biggest expenses is store labor, which costs about $2.5 billion, or 24% of revenue, annually. When the economy was strong, Starbucks added workers to handle an expanding menu. The company employed 176,000 people world-wide as of Sept. 28. "We continued to add things, but we'd never had a real pressure on us to look at an optimal way to do the work," says Cliff Burrows, president of Starbucks U.S. "Lean has helped us relook at what we do every day." … At the beginning of April, Mr. Dobbertin's store had a customer-satisfaction score of 56%; by June, it jumped to 76%. His store has seen a 9% increase in transactions between April and June.