[Ask Tim] Applying the 80/20 Rule to Menu Design

It's likely that 20% of your menu makes up about 80% of your sales. You've identified your main cash cows by using a system with comprehensive data management tools, such as Sphere POS. What can you do with this information?

It’s likely that the 80/20 rule is familiar to you. The rule, also known as the Pareto Principle, states that 20% of events are responsible for 80% of the results. While the exact percentages may differ, this axiom also holds true for restaurant sales. In other words, it’s likely that 20% of your menu makes up about 80% of your sales.

But let’s say you’ve identified your main cash cows by using a system with comprehensive data management tools, such as Sphere POS. What can you do with this information?

Do you go ahead and axe 80% of the menu in an attempt to reduce operational costs and food wastage? And if not, is maintaining the rest of the menu worth the extra 20% in sales? While I can’t give you a solution without knowing the context of your restaurant, here are three things you can do to come to a decision.

Firstly, crunch the numbers. One additional dollar of sales may be only ten cents more of profit, but a dollar of cost saved is a dollar more in profit. Do the numbers and figure out how which move increases your profitability. It’s not about how much you sell, it’s about how much you earn.

Secondly, view data by time frame. For example, you happen to be operating a bistro. Coffee might account for a very small percentage of your overall sales, but might account for 90% of sales between lunch and dinner. Remember to examine data within the context of the situation. An empty seat is wasted rent.

Finally, check the dish to inventory overlap. By reducing the variety and amount of stock in your kitchen, you can reduce the amount of food wasted. The variability of food wasted from week to week will also go down, simply because it is much simpler to maintain and track. Simplifying your menu is one of the main ways you can reduce inventory wastage and increase overall profitability.

Hopefully, these points have been useful to you, whether you decide to go ahead with concentrating on the 20% or not. Keep reading our blog for more posts on other optimisation techniques for your menu.

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