The 80/20 Guest

Ever wonder how some tables just seem to make your week, whilst other tables just seem to make your week worse? The Pareto Principle (or 80/20 rule) surmises that 20% of causes generate 80% of results (or thereabouts). You may have seen this rule applied to a great number of things- listen 80% of the time and only speak for 20% of the time (I like this one although I’m not very good at it), 80% of tax is paid by 20% of the people (I’m not so sure on this one, but you get the gist), and 80% of income comes from 20% of customers (and also, 80% of issues are generated by 20% of customers).

This is a simple truth that most operators feel, but very few actually track. Depending on your venue type, it might be that 80% of your income comes from 20% of your customer makeup and not necessarily from 20% of your total customers. If you’re a traditional pub, then maybe it’s the handful of old boys that prop up the bar every day. Or if you’re a tapas restaurant then maybe it’s the groups of friends that don’t fight over the bill, accept every upsell, and sing your praises all over social media. You’ll know who they are- they’re the ones that brighten your day a little when they walk in, or you might even swap your shifts around when they’ve booked a table. The customers that you like are quite often the ones that like you and because they like you, they tend to spend more money - they buy in to what you’re offering.

Unfortunately, most of this is just a “feeling” until it’s tracked and the easiest way to track something like this is via booking systems and loyalty cards - it’s a bit of a monotonous exercise, but spend some time looking through your booking system (if you have one), go through the metrics and see who booked in, when, and then compare this with your EPOS system to see what they’ve spent. It might seem obvious, but they key things to look out for are:

·        Customers that consistently leave reviews or speak about you on social media

·        Customers who show up regularly

·        Customers with a higher than average spend per head

·        Customers who make frequent bookings and not just for special occasions

Even the most basic of searches in your EPOS system can reveal patterns i.e. hourly sales reports and average cover values. This isn’t just about financial data; it’s about customer behaviour. You may not be the best person to spot these patterns - you might work a thousand hours a week in the business, but you’re probably consumed with 1 million different tasks… but your staff are there to focus on your customers, and they probably know a little bit more about their patterns and behaviours.

In most other industries, businesses tend to focus on a niche; Calendly focuses specifically on the specific pain point of scheduling meetings and getting around the back-and-forth of emailing availability, Evans and Co Hospitality Accountants (wink wink) focuses specifically on the hospitality industry, Peloton seems to focus on bikes that don’t move for affluent people, and Ariel Motor Company builds ultra-lightweight performance cars for track enthusiasts. Apple’s niche started out as creatives professionals and design enthusiasts but now even your nan probably has an iPhone, and The North Face was originally designed for rock climbers and outdoor adventurers, but by the early 2000s it seemed as though every 12-year-old boy was wandering round in a North Face coat.

Hospitality is full of niches if you think about it-  it’s now mainly around the type of food or drink that they’re serving, but there are still some examples of venues that cater for a specific set of people also known as - you guessed it - a niche. Places like the Liverpool Arts Bar that was created for people with a love of art, music, comedy, and entertainment, or Creamfields who focus on 18-30 year olds with a love of Electronic Dance Music. This doesn’t mean that the Liverpool Arts Bar won’t welcome people from different backgrounds, or that Creamfields won’t open its gates to people who usually attend Glastonbury, it just means that their niche is the market that they target. We specifically target hospitality, and over the years we’ve reduced the number of non-hospitality clients down to two - my garage and my plumber (try finding a garage that you can trust and a plumber that isn’t booked for the next 6 months straight).

Post Covid has been an incredibly trying time for hospitality, and so I can understand why business owners feel that they need to cast their net wider and why they wouldn’t ever think that narrowing down might actually generate growth. Some of the companies that I’ve listed above established a niche and they’ve stuck with it over the years, whereas others have grown their brand based on a niche and then expanded outwards - larger businesses can do this due to brand loyalty, context, and popularity. We tend to look at these large businesses that serve everyone and anyone and take this as the norm, so we model our own businesses out of the fear of missing out. Do you know what the above brands have in common? People feel connected to them - they popularise a specific lifestyle that their customers want to attain. It’s true that people buy from people, but what’s truer is that people buy from connectivity.

You’ve already got clients that feel connected to you - they show this through loyalty, so you need to figure out what the similarities are between these people that already love your brand. Once you know this, you can focus your marketing- niching doesn’t exclude people, it just makes your message easier to find for the people that want to connect with you.

Chasing the masses is just chasing the wrong 80%. My favourite example of this is when accountants describe themselves as “specialists in SMEs”- there were approximately 5.5 million private sector businesses in the UK in 2024, of which 99.8% of them were classed as SMEs. This is the restaurant equivalent of saying “we specialise in serving food to hungry people”.

You need to focus your energy on increasing the 20% of customers that generate 80% of your revenue to 21%, then 22%, and so on. When you focus your energy on the 20% you don’t alienate the other 80%, you simply stop designing your business around them. Hospitality isn’t about saying yes to everyone, it’s about saying yes to the right ones often enough so that they could never imagine saying no to you.