Lessons From the Cheesecake Factory


Yet another fascinating piece from Atul Gawande at the New Yorker. He marvels at the Cheesecake Factory's ingenious methods of production, and asks why health care can't be delivered as efficiently as restaurant meals.

What won me over instantly was the surprising lack of condescension about the quality of the Cheesecake Factory's product. So refreshingly un-New Yorker.

The place is huge, but it's invariably packed, and you can see why. The typical entrée is under fifteen dollars. The décor is fancy, in an accessible, Disney-cruise-ship sort of way: faux Egyptian columns, earth-tone murals, vaulted ceilings. The waiters are efficient and friendly. They wear all white (crisp white oxford shirt, pants, apron, sneakers) and try to make you feel as if it were a special night out. As for the food--can I say this without losing forever my chance of getting a reservation at Per Se?--it was delicious...

I'd come from the hospital that day. In medicine, too, we are trying to deliver a range of services to millions of people at a reasonable cost and with a consistent level of quality. Unlike the Cheesecake Factory, we haven't figured out how. Our costs are soaring, the service is typically mediocre, and the quality is unreliable.

Toward the end, admittedly, he took the edge off my pleasure with an observation that his reporting didn't seem to support:

Our new models come from industries that have learned to increase the capabilities and efficiency of the human beings who work for them. Yet the same industries have also tended to devalue those employees. The frontline worker, whether he is making cars, solar panels, or wasabi-crusted ahi tuna, now generates unprecedented value but receives little of the wealth he is creating. Can we avoid this as we revolutionize health care?

Well, of course, it's the enterprise as a whole that generates value. (As President Obama would be the first to tell you, it wasn't the workers who built that.) The real question is whether the firm is somehow exploiting its staff: Does the Cheesecake Factory "devalue" its employees? The article didn't give me that impression at all.

Aside from that, my only substantive disagreement with Gawande concerns this:

Big chains thrive because they provide goods and services of greater variety, better quality, and lower cost than would otherwise be available. Size is the key. It gives them buying power, lets them centralize common functions, and allows them to adopt and diffuse innovations faster than they could if they were a bunch of small, independent operations.

Size is the key? I think it would be more accurate to say that size is the consequence. Competition is the key--and competition works because enterprises like the Cheesecake Factory are answerable to their customers. As Gawande's health-care examples attest, that's the missing link in health care. Many would argue that accountability and competition can't be made to work in health care. I don't dismiss that possibility by any means. But surely that's the question. The issue isn't how do we scale up health-care delivery organizations to give them buying power and centralized common functions. It's how far can the consumers of health care be empowered to discipline the producers.

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Clive Crook is a senior editor of The Atlantic and a columnist for Bloomberg View. He was the Washington columnist for the Financial Times, and before that worked at The Economist for more than 20 years, including 11 years as deputy editor. Crook writes about the intersection of politics and economics. More

Crook writes about the intersection of politics and economics.

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