So, it’s confirmed: Starbucks has a “short cappucino” at a reduced rate. And it’s tasty. This made the rounds in a Slate article a while back, but I thought I’d elucidate with graphs, because that’s the fun kind of guy I am. Here’s a little slide show that’ll demonstrate:
The lesson: Keep an eye on Adam Smith’s invisible hand. You never know where it’s been.
You must be logged in to post a comment.
I'm Michael Condouris, and this is my second blog. The first one's Wacky Neighbor. I was born in 1975 in New Jersey. I live in Aberdeen, NJ, with my fiancée Carrie, in our new suburban paradise. We have two pets, a Shih Tzu named Coco and a beagledor named Zoë. I was on Jeopardy once. I lost, though, just like in the Weird Al song.
Besides Smallistry, my interests include robots, space, movies, movies about robots and/or space, and Mexican restaurants. Recently I've also become fond of the Wii and ancient history. I dislike conversations about food, sports, other people's children, and conspiracy theories. I'm ok with talking about the weather though. My hat size is 7 1/4, and I have no sense of smell.
I've pretty much stopped blogging in the last, oh, 6 months or so, because talking about tiny things got a bit stale and life had a habit of getting in the way. So for the time being, the site will live on as a Twitter feed of whatever floats through my head.
 |
|
 |
|
March 8th, 2007 at 6:23 pm
Interesting stuff on SBUX, but flawed.
1) They don’t take unit
volume into consideration. What if Alice doens’t like to pay more than a buck
because she has 5 cups a day? and Charlie is rich cause he’s a tightass and only
buys a Venti once every two days. Alice is money.
2) The difference between a
short and a tall is only about 15 cents. Problem could also be that we are
talking “cappucino”’ in the text but the graphs are talking “coffee” — big
difference in profit margin I’m sure, as a short drip is less than $1.50 and a short
cap is almost $1 more than that.
But to your theme: that’s probably why they don’t push drip coffee.
Adam Smith is widely know as the Al Bundy of economic minds. Always wash after shaking the invisible hand.
March 9th, 2007 at 12:21 am
On 1, though, I think his basic point is still true. Yes, it’s oversimplifying to suggest the only reason Alice might not want the $ coffee is because she’s poor. But even if she just won the lottery, the marginal value of more than the $1.00 quantity might be very low — either because she has a weak bladder, is extremely sensitive to caffeine, etc. But you’re right that creating a low-quality product (a la the no-frills line) might dissuade someone with a high unit volume.
The fact remains that Sbux’s can maximize profits if they can sell a $1 cup without cannibalizing their $2 sales.
As far as 2) goes, I just used simple numbers and a single product for my chart. In reality, drip coffee vs. fancy is a bit like the smaller coffee, although I’d guess it’s less labor intensive than the cappuccino too — and therefore the actual discrepancy in the production cost is more reflected in the price difference.
July 24th, 2007 at 5:25 am
[…] The Elusive Starbucks Short […]