Not to be pessimistic, but this is also a somewhat common strategy to test how shitty you can make something. Basically, intentionally make things worse to test the impact on revenue. If profits don’t drop keep it that way. If the bottom line starts going down, slowly increase the quality again until they stabilize. It’s likely that changes were not reversed, they were just improved over the trash they made them for awhile. Chipotle has mastered this process. Raise prices, reduce quality, raise quality slightly but not to previous benchmark, repeat.
You’re probably right. It was just such a drastic drop in a short time. I’m sure some of those cuts stuck around elsewhere. It was just nice to see things bounce back at a place we otherwise frequent.
That’s true, but that’s not what a drop in the bottom line means in this context. If you reduce quality, you also reduce your cost of production. So you’re right if there’s no change in sales numbers at all, you were spending too much on something you didn’t need, and you made a good adjustment. But more often, these adjustments weigh the drop in sales vs the increase in profit that results from the lower cost. If the expected drop in revenue is offset by the increase in take home, they don’t care and keep it that way. What’s really shitty is that once the revenue trend stabilizes and customers adapt to the new lowered quality, there’s nearly always a price increase.
Customers tend to view quality more holistically than that, though. Not a lot of people are going to flip their conception of product quality on a single change, but will after a long series of changes. Once a company gets that reputation for poor quality, it’s not as simple as reversing the last corner they cut. It’s a hole that takes a lot of changes to dig out of. More than most companies are willing to reverse.
Not to be pessimistic, but this is also a somewhat common strategy to test how shitty you can make something. Basically, intentionally make things worse to test the impact on revenue. If profits don’t drop keep it that way. If the bottom line starts going down, slowly increase the quality again until they stabilize. It’s likely that changes were not reversed, they were just improved over the trash they made them for awhile. Chipotle has mastered this process. Raise prices, reduce quality, raise quality slightly but not to previous benchmark, repeat.
The fact that they had to close locations mean they changed too much, too fast, though. I doubt that was part of the plan.
Yes, good point.
You’re probably right. It was just such a drastic drop in a short time. I’m sure some of those cuts stuck around elsewhere. It was just nice to see things bounce back at a place we otherwise frequent.
I mean, sure. If a drop in “quality” doesn’t result in a drop in sales, then that quality wasn’t something the consumer actually cared about.
That’s true, but that’s not what a drop in the bottom line means in this context. If you reduce quality, you also reduce your cost of production. So you’re right if there’s no change in sales numbers at all, you were spending too much on something you didn’t need, and you made a good adjustment. But more often, these adjustments weigh the drop in sales vs the increase in profit that results from the lower cost. If the expected drop in revenue is offset by the increase in take home, they don’t care and keep it that way. What’s really shitty is that once the revenue trend stabilizes and customers adapt to the new lowered quality, there’s nearly always a price increase.
Customers tend to view quality more holistically than that, though. Not a lot of people are going to flip their conception of product quality on a single change, but will after a long series of changes. Once a company gets that reputation for poor quality, it’s not as simple as reversing the last corner they cut. It’s a hole that takes a lot of changes to dig out of. More than most companies are willing to reverse.