80/20 Rule

A few years ago I came across a business principal called ‘The 80/20 Rule ’ which claims that it can help you get bigger returns on your efforts by applying a universal concept called ‘the Paretos principle’. Named after Italian economist, Vilfredo Pareto, its basic premise is that for most events, roughly 80% of the effects come from 20% of the causes. In essence, it’s saying to concentrate your scarce resources (time) on the areas that have the most impact.

The rule has  many applications, both in personal and business life. Whilst the percentages may not be perfect, the rule seems to work in nearly all situations.

How is it applicable to a café and Bakery situation, I hear you ask? Here are some examples:

Staffing

If 80% of your turnover happens in 20% of your opening hours, use this incredibly useful piece of information when you draw up rosters. Get the staff numbers up during these peak times to make sure everything runs smoothly. Make sure your ‘guns’ are around when they are needed most and allow junior staff to look after things when you are quieter.

Regulars

If 80% of your turnover comes from just 20% of your customers, you need to make sure you show these guys a lot of love. Make sure your staff learn these customers’ names and their preferences. These are the guys you need to keep loyal to keep the money coming into the till.

Storage areas

If you know that 20% of your ingredients comprise 80% of your total offering, put the stuff you use most frequently in the most prominent and accessible positions. These are the also the ingredients that you should be buying in bulk and getting the best pricing for.

Sales Best Sellers

If 20% of your menu items contribute 80% of your sales, e.g. bread tins for sandwiches, or Cakes for your coffee & cake special’s, it pay’s too make sure you have ample stock of those items(as you know if you run out of these item’s you may upset customers).  Secondary sales items could be rotated in and out of stock to keep customers guessing. Cup cakes Monday, Canoli Tuesday.

Costings of best sellers

If 20% of your menu items contribute 80% of your turnover, it’s critical that you know the exact costings on all of these items. If you are selling many items of a particular line and your costings aren’t correct it will have a big effect on your gross profit.

Mistakes

Mistakes create bottlenecks and result in unhappy customers. If you start a log of mistakes, you will find that they are primarily caused by a small percentage of situations, eg an ordering system that is unclear or, more often, a less than diligent staff member. Engineer the mistake out of the system or re-educate the staff member to get things running more smoothly.

You will be surprised how often you can use this principle once you understand the concept. At the end of the day, we’re all looking for better results with less effort to our life a little bit easier!

 

WASEAGE TIP,

Have a healthy stock of items with a medium to long term shelf life;

  • La Parisienne Slices,                           Up to 3 Weeks
  • La Parisienne Brekky Bars,               Up to  3 Weeks
  • La Parisienne Individual Tarts         Up to 5 Days
  • La Parisienne Friands,                       Up to 4 Days
80/20 Rule

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