17 December 2003

Joining the Coffee Achievers

I grew up in Seattle, and remember the way Starbucks started out in the 1970s with one outlet near three of the major movie theaters. As a wine connoissuer, I'm sure that Professor Bainbridge has strong opinions on the results of inadequate quality control: nobody really enjoys it when bottle A from Vineyard X is substantially different from (let alone inferior to) bottle B (of the same basic style) from Vineyard X. One factor that probably influences the differences between the Starbucks central-ownership model and the Subway franchise model is the nature and extent of quality control required for the particular product. Making good coffee is, compared to making sandwiches, much the same way. It's a lot harder to screw up a sandwich than it is a cup/pot of coffee. Further, standardization of equipment is a lot more important in coffeemaking than in sandwichmaking. For example, it really doesn't matter what brand of utility knife one uses to cut bread for making a sub sandwich; a 4-5" blade with moderate serrations is all that matters. One can't say the same for coffee machines, or the cleanliness of the machines. Further, because the taste of coffee is so much stronger and more individualized than a sub sandwich, it's harder to replicate one's preference at O'Hare and Hartsfield without close central supervision than with it.

This requires more control than just "how hard the employees work." I infer that in Starbucks' opinion, the nature of its product requires central supervision of quality control efforts, including equipment maintenance and supplies purchase, to a much greater extent than Subway's opinion of how the nature of its product requires central supervision of quality control. Believe it or not, this opinion arises not from economics, but from military aircraft maintenance procedures. Certain kinds of aircraft maintenance functions are centralized, while others are done at local units. However, the complete nature of the aircraft mission strongly influences how much of each there is. Even since SAC and TAC merged to form Air Combat Command, nuclear-capable and stealth aircraft have continued to "enjoy" much more rigid central control over the tiniest aspects of maintenance than fighters, whether air superiority or otherwise. (Just ask anyone who's been there about "no-lone zones".) The centralized command structure of the former—using nuclear-capable or stealth aircraft requires a much higher level of command authority, by law, even when not used in a nuclear mode—certainly encourages it. In other words, the nature of the "product" influences how much autonomy the "franchise" (individual unit) has.