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Quite a common story that gets brought up around airports or business meetings when someone wants to provide a famous example of small change for massive savings is the olive story.

Apparently there was an airline that managed to save tens of thousands of dollars per year by removing a single olive from the salads in their meals, because it was hardly noticed by customers it was a massive win, tens of thousands of dollars without anyone noticing.

How true is this story? Did this actually get implemented or was it something that someone brought up at a meeting and it was never actioned although it became famous?

First place goes to American Airlines for the brilliant, yet simple cost cutting measure they implemented back in 1987. The airline was able to save $70,000 in 1987 by eliminating just one olive from each salad served in first class.

Most references I can find link it to AA, but there is nothing backing this up on either their website and its not referenced in the AA wikipedia article.

Is there any definitive proof that can confirm this (like a newspaper from 1987 with the story or a company flyer etc. that has this information)?

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I find it hard to believe that they actually counted how many olives exactly they put into salads for each customer. Whats next, removing exactly 4 rice grains from sushi? :) –  user288 Aug 25 '11 at 23:46
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@Sejanus I can certainly imagine that an airline would weigh everything. If you cut the weight of each dish by a few grams, multiplied by hundreds of meals per flight and thousands of flights per year, it's not inconceivable that it could add up to significant savings. I'm more skeptical about the counting of olives claim, though. Are they supposed to have saved money directly on the cost of olives, on fuel savings, or a combination? –  jozzas Aug 26 '11 at 1:15
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This is not a cost saving measure. This is downsizing and devaluing your product. –  Daniel Iankov Aug 26 '11 at 10:57
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Many large food operations do indeed have portioning control (aka number-of-olives checklist) –  horatio Aug 26 '11 at 17:47
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How is this a “massive win”? $70,000 shouldn’t even be noticeable in an airline’s yearly turnover. In fact, I’m not sure that it’s reliably measurable. –  Konrad Rudolph Aug 27 '11 at 11:28
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1 Answer 1

up vote 29 down vote accepted

This is attributed to Bob Crandall, the American Airlines CEO of that timeframe. He was indeed a very driven individual to reduce cost and make money. This particular exploit is covered in a book called Corporate Creativity: how innovation and improvement actually happen By Alan G. Robinson, Sam Stern. The story is detailed on page 107, although there it is claimed it saved $500,000 annually! Which is significantly over most of the references I found claiming anywhere from $40,000 to $80,000 (more in line with your question). Maybe that's accounting for inflation?

This is credible, but I can't find any original documentation yet. Please stand by. In the meantime, some additional discussion. (Still no reply from the museum. Please stand by.)

I found a site that also ran the calculation and attempted to debunk or confirm this. This site mentions the more reasonable sum of $40,000 in savings, and says

Probably True- I can't find a single good source on this, but many, many news stories mention this tidbit when discussing Bob Crandall, the former chief of American Airlines who supposedly instituted this change. Granted, being repeated often doesn't make a claim true, but this one seems reasonable enough. consider just how many flights a major airline like American has per year, and how many salads they were serving back when they still served food. Now consider how small $40,000 is in the grand scheme of things for an airline that big. It's only the cost of a single employee, even less if you consider higher paid employees like pilots.

That site also references this article on MSNBC that starts off with

It’s impossible to talk about cutting airline costs without mentioning Bob Crandall, the firebrand former chief of American Airlines. And so, let us revive the olive story. Most notorious among Crandall’s legendary cost-cutting was his idea to remove an olive from each salad served to passengers. A tiny garnish would never be missed, the reasoning went, and savings amounted to at least $40,000 a year.

Given the age of this particular cost saving measure, I think microfiche may be the best way to find out for sure. I do have a question in to the C.R. Smith Museum (American Airlines history museum), and will report back here if I get a reply.

In the meantime, let's do a little math. American Airlines flies over 3400 flights a day. A quick google search for olives yielded prices from $8 to $50 for olives. Assuming American Airlines gets them in bulk, and at a discount (wholesale), let's say that an olive is only $0.01 (given what I know of olives, seems low). That means that over 1,241,000 flights in a year, they need to eliminate 4,000,000 olives to save $40,000. Let's say that less than half the flights (a nice even 500,000) have first class service that serves a meal. And that there are a total of only 10 first class seats (which on many aircraft is very low). That gets you almost 5,000,000 olives on salads. Seems conceivable with those numbers which are probably very conservatives estimates on my part that a saving could be realized (and even a slight change in per olive pricing could have vast changes). It's not the weight in this case, it's simply a material expense that Bob Crandall figured the passengers wouldn't miss.

Again, if the American Airlines history museum gets back to me, I will revisit this with a more definitive answer.

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Thankfully, the olive was only removed from the salad, not the martinis.... –  Monkey Tuesday Aug 26 '11 at 3:58
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As soon as I read the title, I KNEW Larian LeQuella would answer. –  cularis Aug 26 '11 at 5:36
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@sklivvz it's a conditional answer until I get correspondence back from American Airlines. :) –  Larian LeQuella Aug 26 '11 at 11:55
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@larian soon you'll have to accept the simple fact that you are our resident expert on all thi –  Monkey Tuesday Aug 26 '11 at 21:39
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Wow - saving 40k$ (70k$?) per year, by banning olives from salads on 1.2 M passengers! I'm much impressed. If they had increased the flight prices for 10 ¢ instead, they would have made 120 k$! –  user unknown Aug 27 '11 at 15:42
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