CEO of Dreamy Beans Coffee Shop Chain: At our current staffing levels, people who work in our shops are often seen chatting with customers rather than working. We estimate that the time staff members are seen chatting amounts to on average approximately 8 percent of their time on the job. Therefore, it is clear that we can increase profitability significantly by reducing labor costs via staffing our shops with up to 8 percent fewer people.
Which of the following is an assumption upon which the CEO’s conclusion depends?
Dreamy Beans could not reduce total expenses significantly by reducing the amount of supplies and inventory wasted every day.
Most people who patronize coffee shops do not cite social relationships that they have with staff members as key reasons for choosing a particular shop.
People who have gained knowledge and experience over years of working at Dreamy Beans are not valuable assets to the company.
Adding new styles and flavors of coffee drinks to the menu would not increase profitability more than reducing staffing would.
Understaffing of Dreamy Beans shops would not at times result in customers’ waiting in excessively long lines.
Scott Woodbury-Stewart
Founder and Expert GMAT Instructor
Solution:
Breakdown of the Argument:
Premise: People who work in Dreamy Beans shops are often seen chatting with customers rather than working.
Premise: The time spent chatting amounts to approximately 8% of staff members’ time on the job.
Conclusion: It is clear that Dreamy Beans can increase profitability by reducing staffing by up to 8%.
It seems to make sense that, if the shops’ staff members are spending 8% of their time on the job chatting rather than working, the shops could operate with 8% fewer staff members and thus operate more profitably. At the same time, it could be that the chatting somehow positively impacts profitability. So, in coming to the conclusion, the CEO is assuming that eliminating time for chatting will not be eliminating something that is important for the profitability of the shops.
(A) Dreamy Beans could not reduce total expenses significantly by reducing the amount of supplies and inventory wasted every day.
This is an “alternative plan” answer choice. One might be tempted to assume that, if the CEO is considering one way of reducing expenses, he is assuming that an alternative way is not available. The truth is, however, that the CEO’s conclusion is simply that reducing staffing would improve profitability. That conclusion would hold regardless of whether there are other ways to reduce expenses.
CORRECT ANSWER(B) Most people who patronize coffee shops do not cite social relationships that they have with staff members as key reasons for choosing a particular shop.
In coming to the conclusion that it is clear that Dreamy Beans can increase profitability by reducing staffing, the CEO is assuming that the positive effects on profitability of reducing staffing would be greater than any negative effects on profitability of eliminating time for chatting with customers. If social relationships that customers have with staff members were key reasons for choosing a particular shop, eliminating time for chatting with customers could result in significantly fewer people patronizing Dreamy Beans’ shops. Therefore, the CEO must be assuming that most customers do not cite such relationships as key reasons for choosing a particular shop.
(C) People who have gained knowledge and experience over years of working at Dreamy Beans are not valuable assets to the company.
This is not an assumption upon which the argument depends, because, for one thing, the CEO did not say that reducing staffing would involve laying off experienced staff members, and, for another thing, even if reducing staffing would involve laying off experienced staff members, the CEO could still feel that those people represent valuable assets of the company.
(D) Adding new styles and flavors of coffee drinks to the menu would not increase profitability more than reducing staffing would.
This is a “better plan” answer choice. The conclusion that reducing staffing would result in increased profitability does not depend on the assumption that there is not a way to increase profitability even more than reducing staffing would increase it. In other words, the CEO is not saying that there is not a better way to increase profitability; he’s simply saying that reducing staffing would result in increased profitability.
(E) Understaffing of Dreamy Beans shops would not at times result in customers’ waiting in excessively long lines.
What this choice says does not express an assumption necessary for making the argument, because we are not given a reason to believe that reducing staffing by 8% or less would result in understaffing. On the contrary, the CEO makes the case that reducing staffing by 8 percent would result in a more appropriate level of staffing.
