• Skip to main content
  • Skip to header right navigation
  • Skip to site footer
Rebel Ventures

Rebel Ventures

We solve your business problems differently

  • Rebel
    Hospo
  • Rebel
    minds
  • Rebel
    Beverage
  • Rebel
    Yell
  • US Rebels

The 80/20 Principle Effect on Hospitality

November 15, 2021 by Duncan

No doubt you’ve heard of the 80/20 principle. In fact, we probably first heard about it in school all those years ago, and forgot about it like most things from that time! It’s time to take a look again, refresh our memories and see how this theory impacts our industry and how we can use the understanding of this principle to our benefit. What is the 80/20 principle? Simplistically it’s a relationship between the time (or money) we spend on something and the impact or outcome we get. At the home it’s the simple perspective that we wear 20% of our clothes 80% of the time.

80/20 in Hospo

Much like our daily life the 80/20 principle is evident in all aspects of our business from people management to product management

  • 80% of our time is typically spent on 20% of the workforce (the under-performers)
  • 20% of our menu items create 80% of our sales
  • 20% of our beer selection account for 80% of our beverage revenue
  • 80% of our revenue comes from 20% of our customer base – our regulars

Flip the 80/20 on its head

80/20 and People Management

According to research, if we focus only 20% of our time on the under-performers (hopefully less than 10% of our workforce) that leaves 80% of our time to focus on those committed to the organisation and the stars. I would hazard a guess, albeit a calculated one, that both the ensuing peer pressure and or the FOMO (fear of missing out) attention will lead those same under-performers to either depart without need for a push or improve their own performance. 

80/20 and Menu Engineering

We know that under normal circumstances a menu or beverage list cannot purely represent “best sellers”, so the key is how do we treat the 80% of the menu that only sells 20% of the items? The first step is to ensure that you only spend 20% of your time dedicated to menu engineering focusing on these items. After all gaining an additional $1 in profit from an item selling 10 portions is insignificant to an additional $1 gained from and item selling 200 portions.

check out “The Art of Menu Engineering” for more on this topic

80/20 and Marketing efforts

Whilst there may be nothing wrong with diverting 80% to your marketing effort/spend to social media/digital, the big question is, who are you targeting? If your target audience is not well defined and segmented then that 80% spend or time and effort could only reach a customer base representing 20% of your revenues. And if 80% of your customers aren’t using the social media platform you prefer, again, it’s clearly not an effective use of resources.  

80/20 and Restaurant-Bar Floor Management

Coming back to our customers, how do we allocate management’s time? While ensuring we “touch” all our tables, is it sufficient? For those 20% who are generating 80% of our revenues, the more bespoke our efforts, the more likely they’ll be even more loyal to your business. Do you have a dedicated resource in your business whose key responsibility is to genuinely pamper your regulars, identify up-in-coming fans, and build your database?

check out “The Importance of a Host in Hospitality” for more on this topic

These are just a snapshot of where the 80/20 principle is evident in the Hospitality field.

Ready to bring the 80/20 principle to your business?

Give us a Rebel Yell

Curious About…

Ice Ice Baby

January 17, 2023 No Comments

The ubiquitous ice cube, glorified at best, misunderstood and misused at worst. This simple item…

Read More

The WHY of Franchising

September 9, 2022 No Comments

Understanding the WHY of Franchising from both the Franchisor and Franchisee perspective is critical for…

Read More

The Guest Room of the Future

November 16, 2021 No Comments

I have recently read an article referencing the impact of Air B&B on the Hotel…

Read More

Dream Global, Think Local

November 16, 2021 No Comments

When you get into a Franchise you may think the world is at your feet…

Read More

The Magic Art of Menu Engineering

November 16, 2021 No Comments

For those stalwarts of the hospitality industry we likely remember “Menu Engineering” as something introduced…

Read More

The Importance of the Host in Hospitality

November 16, 2021 No Comments

When prepping for this topic I thought I had better do some more detailed research…

Read More
Category: Hospo

About Duncan

With 37 Years of Hotel and Restaurant Experience throughout the Asia-Pacific Region and USA, across brands such as Four Seasons, Regent, Radisson, Hard Rock and Jamie Oliver. Duncan is a multi faceted hospitality professional who brings a depth of knowledge and perspective to any problem or challenge.

Reader Interactions

Leave a Reply Cancel reply

Your email address will not be published. Required fields are marked *

To Solve Your Hospitality Problems Differently

Give us a Yell

Copyright © 2023 Rebel Ventures – All Rights Reserved