Shelf Life
Following your exhibit analysis, the COO shares that Hartwell's average store runs 4,000 labor hours per month at a fully loaded cost (meaning total compensation including benefits) of $25 per hour. She believes scheduling improvements could reduce hours per store by 20% without impacting customer service levels. Assume 100 stores and 12 months in a year. How much annual savings does this represent, and what would be the margin impact if Hartwell's total annual revenue is $600M?
Case Exhibit
Rounding is standard practice in case interviews and almost always permitted with a quick ask. Both approaches are shown where it simplifies the calculation.
Step 1: Calculate current annual labor cost per store
4,000 hrs x $25 x 12 months = $1,200,000 per store per year (Already clean, no rounding needed)
Step 2: Calculate total network labor cost
$1.2M x 100 stores = $120M across the network
Step 3: Calculate savings from 20% hour reduction
$120M x 20% = $24M in annual savings
Step 4: Calculate margin impact
$24M / $600M revenue = 4 margin points recovered
Labor scheduling improvements alone could recover 4 of the 5 points of margin decline. This makes it by far the most impactful single lever available to Hartwell. The remaining 1 point likely sits in COGS, which has also drifted upward over the period and warrants a separate workstream around supplier contracts and discounting discipline.
