Question

Starbucks is hoping to make use of its excess restaurant capacity in the evenings by experimenting with selling beer and wine. It speculates that the only additional costs are hiring more of the same sort of workers to cover the additional hours and costs of the new line of beverages. What hidden costs might emerge?

(200 words)

Answer 1

In the given case Starbucks wants to utilize its excess restaurant capacity in evenings by experimenting with selling beer and wine.Apart from bearing additional costs of hiring more or same sort of workers and new line of beverages there are many other hidden costs which have to be incurred by Starbucks.Since it is planning to sell beer and wine, there may be many other hidden costs. Alcohol cause people to get drunk and this may result in making people out of senses and can cause problems.This will lead to employ security personnel to control the drunk people, cost of installing surveillance cameras to keep a check on the activities of customers and staff.Also, the new staff has to be trained on how to serve alcohol. So this will result in training costs of the employees.Also new type of crockery, beer mugs and other materials required for serving alcohol will be required. So, this will also lead to depriciation of new equipment resulting in additional costs.Also, some live music may be required by public while enjoying alcohol. So, this will result in additional expenses to be borne by Starbucks. Above all are the marketing and advertising expenses which have to be incurred by Starbucks as only through advertising people will come to know about the new service line offering beer and wine being served by Starbucks.