This newsletter has always been vocal about the fact that every decision involves a tradeoff. However, I don’t think only those who study operations research care about tradeoffs. In fact, I think economists believe that tradeoffs amidst scarce resources is the hallmark of economics. Nevertheless, the main difference is that economists tend to assume these tradeoffs (like diminishing returns to scale), whereas we, ops people, tend to study them from first principles and ground them in the operational reality of the firm: the inventory system, bottlenecks, queues, etc.
Luxury goods generally have negative price elasticities. If Starbucks is a luxury good for enough of its customers, the additional wait time (and therefore cost) would increase the value of the drink. Furthermore, with both the firm and the consumer adding the virtual signaling of the re-usable cup, the product not only contributes to consumption-based status games, but also virtue-based status games.
The option for using a re-usable cup might also allow for customers to self-select into receiving more human interaction, under the pretense of caring about the environment.
Furthermore, the official support for re-usable cups allows consumers to proudly display their starbucks branded cups and not have others know if they had it filled up with a $6 latte from SBUX or $0.50 K-cup from Home.
Using reusable cups maybe more sustainable, but if it increases the wait time in the drive thru, the gain in sustainability may be offset by the additional emissions from customers idling the car longer while waiting for coffee. As utilization rates and percentage of reusable cups increase, the sustainability impact diminishes, unless all customers drive EVs to pickup coffee at the drive thru!
I view this through the lens of status games.
Luxury goods generally have negative price elasticities. If Starbucks is a luxury good for enough of its customers, the additional wait time (and therefore cost) would increase the value of the drink. Furthermore, with both the firm and the consumer adding the virtual signaling of the re-usable cup, the product not only contributes to consumption-based status games, but also virtue-based status games.
The option for using a re-usable cup might also allow for customers to self-select into receiving more human interaction, under the pretense of caring about the environment.
Furthermore, the official support for re-usable cups allows consumers to proudly display their starbucks branded cups and not have others know if they had it filled up with a $6 latte from SBUX or $0.50 K-cup from Home.
Using reusable cups maybe more sustainable, but if it increases the wait time in the drive thru, the gain in sustainability may be offset by the additional emissions from customers idling the car longer while waiting for coffee. As utilization rates and percentage of reusable cups increase, the sustainability impact diminishes, unless all customers drive EVs to pickup coffee at the drive thru!