[Moneyverse] Coffee and Little's Law

The number of marriages in the first quarter of this year was the highest since the first quarter of 2018. Personally, I have also received noticeably more wedding invitations this year. After attending wedding ceremonies to offer congratulations and witness the event, guests typically move to the buffet-style reception hall. There, a variety of dishes made with meat, seafood, and vegetables—prepared in Chinese, Japanese, and Western styles—are served, along with rice, porridge, noodles, an assortment of desserts, a variety of fruits, soft drinks, beer, and soju. However, there is no coffee. Some venues do not provide coffee at all, while at others, it is served only outside the reception hall.

It is not just the reception halls. A popular restaurant, crowded with regulars, also removed its coffee vending machine last year. In its place, a notice was posted explaining, "We are responding to government policies aimed at reducing the use of disposable products," asking for customers' understanding.

Why do restaurant operators avoid serving coffee? The answer lies in 'Little's Law.' John Little, the first Ph.D. in management from MIT, introduced this law in 1961. If we adapt an example from the book "Management Concert," which discusses this law, it goes as follows:

Paramount Restaurant serves brunch. Its business hours are from 7 a.m. to 11 a.m., for a total of 4 hours. At other brunch restaurants, the average time a customer occupies a table is 40 minutes. By simplifying the menu, Paramount reduced that time to 10 minutes. How many more customers can this restaurant accommodate compared to others with the same number of seats during business hours?

The table turnover rate at other restaurants is 6, calculated by dividing the 240 minutes of business hours by the 40-minute average stay. At Paramount, the turnover rate is 24, dividing 240 minutes by 10 minutes. If the number of tables (seats) is the same, Paramount can serve four times as many customers as other restaurants.

Food closes mouths, but coffee opens up conversation. Coffee extends the time customers occupy a table. If a customer finishes their meal in 20 minutes on average, having coffee can allow them to stay an additional 20 minutes. As a result, the number of customers that can be served during fixed business hours is effectively cut in half.

This was my assumption, but I unexpectedly encountered a vivid explanation in a particular scene from the novel "The Pelican Brief" by John Grisham, a former lawyer. Adapted into a film, the novel begins with the assassination of two U.S. Supreme Court justices. Darby Shaw, a brilliant law student, writes the "Pelican Brief" report, speculating about the mastermind behind the killings. Gray Grantham, an investigative reporter at The Washington Post, uses the report as a lead to pursue the truth together with Darby.

Gray, feeling peckish, takes Darby to his favorite restaurant. The owner chides the pair, saying, "Hurry up, you two talk too much." As the owner moves quickly away, Gray explains to Darby, "He runs this place on high volume and low margins, so he doesn't serve coffee." He adds, "If he served coffee, customers would linger and chat, taking up valuable time."

"Meals at restaurants, coffee at coffee shops." Even without knowing Little's Law, this is the implicit principle that restaurant operators around the world intuitively understand and apply. In a sense, it's 'Little's Coffee Law.'

Woojin Baek, Economic Columnist

This content was produced with the assistance of AI translation services.