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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)?

Larian LeQuella
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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? :) –  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? – John Lyon Aug 26 '11 at 01:15
  • sounds apocryphal, but makes a certain degree of sense. – Monkey Tuesday Aug 26 '11 at 03:57
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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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    I totally agree with @Konrad. This is not massive win, in fact it's irrelevant for a company with revenue of multiple **billions** of dollars. – vartec Jul 17 '12 at 09:39
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    First off... You are using daily flight numbers of 2010 numbers for your flight data when the Crandall story would be referencing his time at the helm in the late 80's. Also, you assume 1/2 the flights have first class seats and assume those each serve a meal to ten passengers. Those are all unreasonable. Most flights are only a couple of hours or less where a meal wouldn't be served even back then and even the ones that have a meal served aren't serving salads every time. I am firmly in the column of not believing this story one bit. –  Aug 28 '12 at 06:38
  • I'd challenge the part about *no-one noticing the missing olive*. By induction you could reduce the menus step by step until nothing remains without anybody ever noticing - which obviously is not going to work. This is called the *Sorites Paradox*, or *heap of sand problem* (https://en.wikipedia.org/wiki/Sorites_paradox). – fgysin Apr 28 '16 at 12:10

1 Answers1

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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.

Larian LeQuella
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    Thankfully, the olive was only removed from the salad, not the martinis.... – Monkey Tuesday Aug 26 '11 at 03:58
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    As soon as I read the title, I KNEW Larian LeQuella would answer. – cularis Aug 26 '11 at 05:36
  • Uhm, so 1. I don't get if your answer is yes or no (or where your math leads us to) and 2. What I want to know is whether this was actually done, and not if someone thought of it, or if the math makes sense. – Sklivvz Aug 26 '11 at 06:48
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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
  • In the grand scheme 40k is not that much. Do that 10 times and you have 400k. And while it may only provide the funds of half of one job, would you give up your job so that people can have olives on their salads that more than half will pick out and throw away anyway. – Chad Aug 26 '11 at 13:08
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    @Chad, that is right, $40K isn't much for one initiative. However, Bob Crandall was legendary for having 100s of ideas like this (I think the olives were actually #5 on his list that day). So a couple $K here, another $K there, and soon enough it may add up to real money. :) – Larian LeQuella Aug 26 '11 at 14:39
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    @larian soon you'll have to accept the simple fact that you are our resident expert on all thi – Monkey Tuesday Aug 26 '11 at 21:39
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    Ngs dealing with controlled sustained heavier than air flight. Damn iPhone... – Monkey Tuesday Aug 26 '11 at 21:42
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    Wow - saving 40k$ (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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    @user unknown, the "philosophy" that Bob Crandall was advocating is that the passengers would never notice the olive change. Whereas they _would_ notice a price change. – Larian LeQuella Aug 27 '11 at 15:50
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    Yea, a price change of one cent. Why wouldn't they recognize a missing olive? Friends of the olive would recognize such a minor change. And of course, 40 000 US$ is nothing for an airline. A minor change in fuel costs will make a bigger change. – user unknown Aug 27 '11 at 16:07
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    The $40k is just the tip of the iceberg. Such changes rarely come alone, it's just the anecdotal part of a larger campaign to cut cost without discomforting the customer. This might also include reusing paperclips (for example). 1000 small things that each save $40k a year end up saving $40 million and that's hardly small change yet are quite possible to achieve for a company the size of American Airlines. – jwenting Aug 30 '11 at 07:03
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    Still no reply from the museum... – Larian LeQuella Dec 14 '11 at 02:41
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    Important point to note in Alan G. Robinson book that you referenced is that 72% of people didn't eat the olive. So by removing it, the product was possibly improved for the majority rather than diminishing the quality. – Rincewind42 Jan 29 '12 at 07:08
  • Also Alan G. Robinson's book gives the price of the olive as two cents, not one as in your calculation. – Rincewind42 Jan 29 '12 at 07:14
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    @Rincewind42 thanks for those updates. :) I was trying to be as conservative as possible in my calculations. – Larian LeQuella Jan 29 '12 at 14:24
  • @LarianLeQuella: can you include AA's revenue of 1987 for comparison? – vartec Jul 17 '12 at 09:41
  • @vartec I am on the road currently, but I'll see what I can dig up. – Larian LeQuella Jul 18 '12 at 00:25
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    Of course, if there was only ever one olive, reducing to zero would probably make an even bigger cost saving. – Benjol Jul 20 '12 at 10:16
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    Yes if the olive count was reduced from one to zero then there's a much bigger labour saving in eliminating a processing step than there is in the cost of the olive. But it's also a very noticeable change for the customers. – bdsl Aug 21 '15 at 14:46
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    You forgot one thing: the weight of the olives. (Some simple scratch math here... nothing scientific). If an olive weighed 6 grams, there were 5 million olives saved, and an average passenger's total weight (including their luggage) was around 225 pounds (a number off the top of my head), that'd be equivalent of not having to pay for jet fuel for 66,138.7 pounds of olives (close to the weight of 294 passengers) – Anonymous Penguin Aug 24 '15 at 02:18
  • @userunknown He didn’t “ban” olives. He removed ONE. Or so the story goes. – Django Reinhardt Apr 08 '23 at 10:01
  • @userunknown And if they did both, they’d have made $160k – Django Reinhardt Apr 08 '23 at 10:04