The Pareto Priniciple in Hospitality: Improving Sales

September 5, 2019

Every staff member is your Business Card!

Your sales ultimately determine the success or the demise of your business. Tracking and forecasting your sales accurately should be on top of your list. Yet around 60% of restaurants end up closing after one year and 85% of restaurants close after five years. This is due to a lack of foresight and sales strategy. By applying the Pareto Principle for sales, you will be able to determine where your money is coming from. It will allow you to create a strategy to market your business towards 20% of your guest who makes up 80% of your sales. Even with the proper forecasting and adjustment plan, the Pareto principle comes in handy to know how to increase your sales of the business. The right forecasting system will provide you with the necessary information on what works and what needs to be improved.

Customer Engagement:

As mentioned before, 20% of your guests make up for 80% of your sales. This implicates that your focus should be to please your customers to the best of your abilities. If your regulars receive the best experience every time, they will become the brand ambassadors marketing your establishment through word of mouth. Accomplishing this would take a concerted effort to train your staff to build an authentic rapport with your regulars as well as everyone else in your establishment. Tend to their needs without them having to find where you are. The aim is to provide them have them with an experience that is worth coming back for.

Gone are the days where the restaurant staff rely on a memorized script to upsell a particular dish or drink on the menu. As more guests are exposed to constant sales and marketing pitches, more young adults turn to social media platforms to make decisions on where to dine. It’s more about experience dining now than ever before.

Prevent trying to have your staff as sales robots. Encourage them to be more authenticly as well as balancing professionalism.

Be humble, be relatable! Most guests like to have an experience that makes them feel at home. The problem is most establishments do not offer such experiences all that often. The focus for most establishments is on guest turnover, especially in an era where fast-casual is starting to become a trend. So, the waitstaff tends to hurry the guest to finish their food or drink, pay their bill, and leave the premises immediately. This is not the proper way to approach authentic customer service. Stay true to who you are, and the guest will love you for that. An acronym that best sets the overall guest experience with you would be the SOLER approach.

SOLER is an acronym for the service team to remember when approaching a table:

S – smile (it’s a universal sign of a friend)

O – openness (don’t be stiff)

L – lean forward (it shows you’re engaged)

E – eye contact (remember to look at the left eye)

R – relax (your energy level will transfer to the guest)

Mark Bowden, President of Truth Plane mentions in his Ted Talk about the importance of body language when it comes to strangers you encounter. He states that there are four categories that people will immediately place you in upon meeting you for the first time; Friend, Predator, Intimate Partner, and Indifferent. As a manager, it is vital to encourage your staff to consistently have a friendly and non-indifferent approach to all guests, not just to your regulars. Applying this method with your staff will increase your sales percentage. Eventually, you will have more people coming into your establishment more often.

Follow the Trends, Follow the Data

An ABC analysis is instrumental in preparing your restaurant staff and kitchen for anything they may encounter. There are three methodologies you can use to accurately determine your best 20% days out of the year that makes up for 80% of your overall annual sales:

– Overall Growth Trends

– Weekly Fluctuations

– Yearly Seasonality

You also need to include other factors that may or will affect your business positively or negatively:

– Weather/Temperature

– Events: Holidays, Sporting, Events, etc.

– Traffic: How often have your guest entered your establishment

Finally, when all the information has been gathered, you as a manager need to build a proper plan. Order the 20% of your stock that make-up 80% of your sales. Schedule 20% of your best staff that account for 80% of your sales. For instance, if things change in the foreseeable future, create an adjustment plan that can be implemented immediately. A great way to apply this practice is having a daily notebook of any events that may occur in the future. It can be anything that may affect the business moving forward. Here are 3 sections where adjustments can be made:

– Adjust your daily prep sheets

– Fill out the labour gaps with your part-time employees

– Tweak menus to fit the specific occasion

Conclusion

Forecast your sales to create a cohesive strategy and adjust to this plan whenever unexpected events arrive. This will better help get your ship sailing in the right direction. The crew members of your ship (wait staff, bartenders, managers) should have an understanding of treating all guests as family and not to force an upsell tactic on to them. This will increase your 20% category of guest, thus growing your 80% sales bracket.

 

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