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INSEAD Working Paper 2013/71/TOM/ACGRE revised version of 2012/58/TOM/ACGRE
We analyze a large, detailed operational data set from a restaurant chain to shed new light on how workload (de ned as the number of tables or diners that a server simultaneously handles) affects servers' performance (measured as sales and meal duration). We use an exogenous shock - the implementation of labor scheduling software - and time-lagged instrumental variables to disentangle the endogeneity between demand and supply in this setting. We find that, when the overall workload is small, servers expend more and more sales efforts with the increase in workload at a cost of slower service speed. However, above a certain workload threshold, servers start to reduce their sales efforts and work more promptly with the further rise in workload. In the focal restaurant chain we find that this saturation point is currently not reached and, counter-intuitively, the chain can reduce the sta ng level and achieve both significantly higher sales (an estimated 3% increase) and lower labor costs (an estimated 17% decrease).