A School of Continuous Improvement research poster times forty-two bean-cost changes at a single office-precinct coffee cart, finding every drink's price adjusts to a cost rise within days and to a cost cut only after months.
An event-study of one coffee cart finds bean-cost cuts take ten times longer to reach the board than bean-cost rises
A flat white bought from the same coffee cart for three years turns out to be a data set. A research poster released today by the School of Continuous Improvement puts three years of that cart’s till receipts through an event-study, the method economists use to time how fast a price reacts to a cost shock, and finds the board reacts twice as fast to bad news as to good.
Sticky on the Way Down, by Dr Osei Vandermeer and Dr Marit Osayande, timed forty-two bean-cost changes against the day each drink’s own price actually moved. A rise clears the board within a week, on average; a cut takes closer to two months, and the pattern holds across the flat white, the latte, the long black and the chai latte alike. The team pre-registered a 120-day adjustment window before pulling a single receipt, ruling out the possibility that a slower fall was simply an earlier fall nobody had finished counting.
Every pricing committee assumes it’s watching one number. We found two: how fast bad news gets priced in, and how slowly good news does. The board never runs those past each other, but we can.
— Dr Osei Vandermeer, Research Fellow and Convenor, Review Cadence Observatory, School of Continuous Improvement
Dr Marit Osayande, Lecturer and Convenor of the Living Dashboard, said the next step is a second cart chosen specifically because its supplier changes prices more often, “to see whether the lag shrinks or just moves.” The finding extends the School’s running interest in what a number does once an institution starts trusting it, and the team’s working note on a campus-wide Beverage Pricing Integrity Protocol is now circulating for internal comment.
The full poster is available from the University’s research repository under an open licence, doi:10.5555/slop.zis8a9.