Fewer Oreos, More Profit

It’s always good that Foodie Friday follows my shopping day, which is Thursday (gotta get that senior discount – Thursday only!). If you aren’t the primary shopper in your house and you haven’t been to a grocery store lately, you probably haven’t noticed that the shelves are less-full than usual. It’s not just the meat case (you’ve probably heard about the issues with meatpacking plants during the pandemic) or the toilet paper aisles that are on the empty side either. I’ve noticed lots of gaps.

It turns out that while it’s due to the current crisis, it might not be for the reasons you think. As CNN reported:

It’s also because major food companies — the ones that make our cookies, chips, and canned soups — have been paring down their product offerings. When stay-at-home orders went into effect this spring, Mondelez, General Mills, PepsiCo, J.M. Smucker, Campbell, Coca-Cola, and others saw a massive spike in demand for some products. To help meet that increase, they sped up production lines on their most popular items -— and that meant cutting back on more fringe offerings. That translates to fewer varieties of Jif peanut butter, Oreo cookies, and Frito-Lay chips at the store.

In other words, they reverted to the Pareto Principle and focused on the items that brought them the most revenue and profits and didn’t worry much about line extensions or the varieties that filled the shelves but not the corporate pockets, at least not as much as the main lines do.

Restaurants are doing much the same thing. Many places have trimmed their menus way back to focus on the most popular and profitable items. For example, Dave & Buster’s reduced its 40-item menu to 15 offerings and McDonald’s has cut salads, bagels, yogurt parfaits, and all-day breakfast during the crisis. IHOP used to have a 12-page menu. Now it’s giving guests a 2-page, disposable menu. This should improve economies of scale, simplify ordering supplies, make it easier on the staff, etc. 

Less can be more and the exercise that these businesses have conducted to deal with a crisis is something that your business might consider as well. What services are you providing that are less attractive or less profitable? Is your product line overextended? Is it better to focus on the more profitable sectors even if it costs you a few customers? Something to think about this weekend!

1 Comment

Filed under food, Helpful Hints

One response to “Fewer Oreos, More Profit

  1. Jeff Jacobs

    As always, your observations are timely, right-on-the-mark and perceptive. And you viewed the changes much better than 3 reporters and 4 ‘contributors’ did in Saturday’s Wall Street Journal (“Betting That Less Is Now More”).

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