The 80/20 Principle: The Secret to Making More Profits

So what does an Italian economist and restaurants have in common? Stick around and I'll show you a simple formula for making more profits. Hey, TRC Nation. Donald Burns, the restaurant coach. Do you know why some restaurants are wildly successful while others struggle to survive? It's not just about the food service or decor. It's something more fundamental. If you're like most restaurant owners, you to want probably not using the 8020 principle to its full potential. So let's fix that. The 8020 principle is a theory that was first introduced by economist vilfredo Pareto in 1906. And he noticed kind of unusual thing. 20% of the pea pods in his garden were responsible for 80% of the harvest. Now in economics this is referred to as Pareto principle or the 8020 rule. It states that 80% of the results are due to only 20% of the causes. It's a very simple idea that has very big impact on many areas of your restaurant. Here are six tips that you can use to get more results and also make more money. Number one, you have to identify the 20%. If you've ever looked at the product mix report from your POS system, you've probably noticed there are some items that are big money makers, while others are actually money drains. The key to making more money is to focus more on the items that provide the most return on your investment. You want to design your menu and your marketing to push those high profit items. Number two, focus on key players. If you want to make more money, you need to focus on people who are actually making the restaurant money. Too many restaurants focus on people who are just taking money out of the restaurant. These people are often called seed players. The people you should be focusing on are the ones who are really delivering results. They're the ones who are the real workers in the restaurant. They're the ones who are going to make things happen. Number three, focus on key systems. If you want to make more money, you must identify the systems that are working and invest in them. Now, your restaurant has many systems that drive results that you achieve. The problem is that many of these systems are either broken or they've never really been developed fully. Now, depending on your background, you may have come into the restaurant business with a set of skills and systems that I hate to say are outdated. You really need to upgrade your systems and skills to the standards of today's modern restaurant. That means it's time to upgrade your tech stack. Number four, focus on key goals. If you want to make more money, you need to focus on your goals. Actually, you need to have some goals. Too many restaurant owners have goals that are way too small. Let me tell you, it is easier to take a restaurant from 1 million to 3 million in sales than it is to take a restaurant from 0 to 1 million sales. Most people just don't set the bar high enough. If you want to make more money, you need to set high level goals that require you to really stretch and grow. Remember, growth is the key to happiness. Number five, I want you to focus on key relationships. Here's the hard truth. You are the average of the people that you spend the most time with. If you want to make more money, you need to invest in relationships with your team and with mentors. Most restaurant owners assume that money is the primary motivator for people. Now to be honest, while money is a good motivator, it's not the only one. Great teams are built on shared values and culture that that is built on trust. Seriously, you can't fool people for long. Eventually they're going to figure out who you really are and that's what they'll expect from you. Number six. The most important person you need to focus on is you. You are the only person you can control. You are the only person you can change. You are the only person you should focus on improving. You need to focus on making you a better leader. If you want to make more money, work less, you need to take care of your physical, mental and emotional self. You're not going to like this, but that means taking time to exercise, meditate, and connect with your family and friends. Restaurant owners have a horrible reputation for working long hours. It's time to start changing that. You can make more money and work less by using the 8020 principle. You just need to shift your mindset and your focus to the 20% that's going to give you 80% of the results that you want. Here's an inside secret. Restaurant success is a habit. Now, restaurant success is not an overnight thing. It is a habit. And the good news is that success is a habit that you can learn. Once you learn the habits of a successful restaurant, it empowers you to use those tools to help build your own success habits and build your team. Now, real quick, here are three habits that you need to develop to become a successful restaurant owner. Number one, you got to be consistent. Being successful is not about having just one big victory. It's about the small, consistent actions that lead to the big victory. Successful restaurant owners are not afraid to work hard. They know it's in the small actions that they do every day, repeated over time. That builds the habit. Remember, just like all habits, success is a habit that you can learn. Number two, you gotta be persistent. Many restaurant owners quit before they reach their goals. If you want to reach your goals of making more money and working less than your restaurant, you must be prepared to reach beyond your own comfort zone. You need to push yourself. You need to push yourself to do things that you've never done before. You'll need to persevere when things get tough. You gotta be self aware. The restaurant industry is not for the faint of heart. I tell you, it will test your mental strength and your emotional stability. But you got to be self aware if you're going to be able to make it in this business. You got to know what triggers your emotions and you must be able to control those emotions. You must know yourself. And here's the thing, you have to be true to yourself. Also, without self awareness, you're going to be easy prey for negative emotions that are going to try to take over your conscious mind. When you're aware of your emotions, you'll be better able to control them. And trust me, your restaurant and your team will thank you. Hey, make sure to hit the like and subscribe button to get more tools, tips and ways to make more while working less in your restaurant. And speaking of making more, in my next video, I'm going to share five tools to help you double your profits.