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How an olive saved American Airlines $40,000

So.. on the spot, it might make you smile.. how is it possible that a company can save tens of thousands of dollars with "an olive"? The technique used is surprisingly effective as well as simple.

Do you know the story of the olive that saved American Airlines tens of thousands of dollars?

In 1987, the CEO of American Airlines, Robert Crandall, in order to optimize the costs of the company decided to remove a single olive from the salads served in the first class. That action allowed the company to save about $ 100,000 per year at the current value!

But how is it possible that he managed to achieve such an amazing result with such a seemingly small change?

The choice was determined following a study (on the leftovers in the trays) which showed that 72% of passengers did not eat all the olives in the salad. According to the data, American Airlines paid for the salads in relation to the number of ingredients they contained: up to 4 it cost them 60 cents, from 5 to 8 it cost them 80 cents. And olives were precisely that 5th ingredient that raised the price of salads by a third.

At this point, multiplying those 20 cents by the thousands of salads that were served each year by the company, the 100.000$ mentioned earlier has a meaning. 20 cents per meal is certainly a greater saving than a single olive, normally indicated with a cost 10 times lower, and the proportions in the end can return.

The key message we want to pass with this story is that even a microscopic optimization, when applied to large numbers or long periods of time, can lead to substantial savings.

For some time now, large companies have understood how advantageous it is to apply this kind of thinking. How multinationals can benefit from this principle, so do we as individuals in everyday life. For example, replacing a halogen bulb with a LED one, turning off the light in rooms where you are not at the moment, using a warm sweater at home rather than keeping the heating level high.


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