By: Billy Liang Wu

Do you go to cafes often? Have you been in a situation when you walked into the cafe and saw the line there, thinking that you do not have enough time now? Your decision seems obvious and understandable; still, for the company, this situation is quite unfortunate as it loses potential sales thanks to such a choice. Waiting lines are common phenomena for retail shops, restaurants and all sorts of businesses in general. However, long waiting queues impose certain hidden costs for businesses. Clients decide to go somewhere else or do not come back again after spending so much time waiting for something that takes place later. The waiting time has its impact on revenues, client satisfaction and overall performance of companies. We need to understand this aspect to develop an efficient strategy.
When Waiting Means Lost Sales
Customer unwillingness to stand in queue constitutes one of the major disadvantages associated with waiting lines since such clients miss orders. It is obvious that a client leaving without making an order results in one missed transaction of sales. Consider, for example, a small cafe operating early in the morning. There is an inflow of clients arriving at the establishment in order to purchase their drinks quickly before going to schools or working places. Due to delays associated with queues, a considerable proportion of clients will
leave the establishment due to lack of time despite sufficient quantity of beverages being sold and desire among clients to consume them.
The study conducted in Management Science revealed negative relationship between wait times in form of queues and actual purchase decision in terms of sales at retail outlets. Namely, it was discovered that increase in waiting times reduces probability of purchases irrespective of uncertainty associated with waiting time itself. It indicates the loss in revenues resulting from inefficient internal processes and not from failure to meet certain requirements related to pricing and products offered.
The Hidden Cost of Customer Time
The phenomenon discussed has a significant influence on the perception of the company among consumers. Even if consumers decide to buy, their negative experience may push them out of returning to the store in future. For instance, let us compare two restaurants that offer equal products at similar prices. One works effectively and serves consumers fast enough; another one keeps consumers waiting without reasonable explanations for a very long period. Obviously, consumers preferring to save their time will go to the first restaurant next time. It goes beyond one lost purchase. When consumers stop coming to a business, they also deprive this business of their potential purchasing power and positive recommendations. Data published in the Journal of Operations Management based on research including 94,000 visits to a restaurant showed that higher waiting times led to customers leaving and coming slower to the restaurant.
At the same time, not every long queue is harmful for a business. Consumers can sometimes stand queues in front of a famous restaurant or product if this product really appeals to them. However, in each particular case, a consumer decides whether his/her benefits outweigh the waiting time costs individually.
Why Not Just Hire More Employees?
It is natural to suggest that increasing the number of employees in order to decrease wait times and line costs is an obvious choice for business owners. Such a suggestion does not take into account one critical element of the process, which is the cost side of employing additional workers. Employment expenses include not only salaries, but also taxes, bonuses and benefits. Employees’ salaries have to be paid both during peak periods when they can process a higher amount of orders and off-peak periods when they do not have too many orders. Thus, there has to be made a comparison of how much money the improvement of waiting time costs could bring
versus improvement expenses. Suppose that one café observes long lines only between 7:30 am and 9:00 am. In this case, hiring extra staff members is possible to perform precisely during this hour instead of doing it throughout all day. Apart from the employment improvement, business owners can implement other measures in order to reduce wait times including improved ordering
procedures, optimization of space, pre-cooked food options and others.
Finding the Right Balance
There is no need for removing all waiting lines since such measures could become extremely costly or simply unrealizable at times of extremely high loads. Businesses face an objective challenge to meet customers’ demands for efficiency while keeping costs low.
Here comes operations management. Operations management includes planning and improving of business activities related to production and provision of services. When speaking about a café, operations management means defining staffing levels for rush hours, developing efficient order processing techniques, and improving coffee-making procedures, among other things. All these activities can be guided by the sales reports, customer complaints, observations of rush periods, etc. If customers usually leave a cafe at lunchtime due to excessive wait time, then it would be sensible to evaluate the problem in terms of additional staff, faster payment processing, new ordering system, etc. Different solutions can prove more effective depending on businesses. Fast-food chains may need more efficient solutions since they aim to serve fast meals while fancy restaurants may consider waiting times as inherent elements of high-end dining. Operations management allows evaluating customers’ preferences together with operational constraints in order to create appropriate solutions.
What Young Entrepreneurs Can Learn
This concept can prove quite beneficial for young entrepreneurs who work with smaller companies selling handicrafts, giving lessons or doing other sorts of work. Poor time management leads to lost sales since potential buyers leave due to excessively long queues for
orders. Let us consider an example involving a student working at the event organized at his or her
university. The student spends several minutes processing each customer’s request because of lack of pre-prepared goods, poor organization, confusing pricing policy etc. It results in lost customers going to other booths instead. Simple solutions like preparation, pricing visibility, creation of a queue system etc. could significantly improve the process. All these improvements sound quite trivial but they allow making good usage of available time resources. Resource optimization is crucial here since young entrepreneurs cannot afford wasting money, effort and time during their startup phase. Nevertheless, young entrepreneurs should realize that speed is not always the solution as low-quality items become more expensive and inefficient use of resources increases costs. Speed should be combined with quality and resource optimization.
Every Minute Has a Business Cost
A long queue implies much more than simply people waiting to make purchases since it is associated with lost sales opportunities, annoyed clients and the way resources are allocated by firms. One can think of queues from two aspects: the cost incurred due to additional staff hired and quicker solutions and the loss of revenue caused by slower processes. From the perspective
of managers, all solutions have to be evaluated and implemented considering possible consequences since it does not necessarily mean that fast processing leads to better performance. Entrepreneurs who develop their ventures have to understand that a business should care not only about its products themselves but also about how clients deal with purchasing them. Improving the buying process itself sometimes brings significant advantages to business performance.

Sources
● https://pubsonline.informs.org/doi/10.1287/mnsc.1120.1686
● https://onlinelibrary.wiley.com/doi/full/10.1016/j.jom.2018.05.001
● https://business.columbia.edu/insights/brand-talk/research-cost-queue
● https://www.investopedia.com/terms/o/operations-management.asp