Sometimes we complicate things. I’m always amazed when I see the options/varieties some restaurants offer, for instance. I wonder, would their profits grow with a greater menu focus?

Some very profitable restaurants are embracing the 80/20 rule in their operations. How is that, you ask? They’re focusing on the top moneymakers, which are the 20% of items that drive 80% of the profits.

For example, at Thanksgiving this would come down to cooking your core product–turkey, stuffing, gravy.

In the Harvard Business Review, an article was written about a fast-food company in California, In-N-Out Burger. They offer only four types of items on the menu. Called “innovation fulcrum,” it’s having enough products to satisfy customers without creating complexity.

The method is apparently working for them, as the company has been expanding in sales at twice the normal growth rate for fast-food companies. (This private company would have the ability to expand even faster if publicly-traded, which may occur in the not to distant future as the 200 location, family-owned business, is in a transitional phase.)

In addition to a menu focus, restaurant owners should use barter to increase their profits. BarterNews has published an excellent report, “Why and How Savvy Restaurateurs Trade.”
TRADE

Trade exchange owners looking to sign up new restaurant clients often buy this report as a third party closing tool.

This entry was posted on Thursday, March 13th, 2008 at 9:53 am and is filed under Restaurants. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.