Restaurant Revenue Management Flashcards
RM objective
To maximize revenue per available time-based inventory unit
Why can RM be applied to restaurants?
- Relatively fixed capacity
- Perishable inventory
- Predictable and time-variable demand.
- Cost and Pricing structure
3 aspects of RevPASH
- Restaurant RM focuses on selling seat-hours, not seats or food
- RevPASH is equivalent to hotel RevPAR except that RevPASH is for one hour, not one night
- RevPASH could be different for each of the operating hours
Four types of data to analyze restaurant RM
- Arrival patterns
- Table and seat occupancy
- RevPASH patterns
- Mean and deviation of dining time
Two strategies to increase restaurant revenue
- Duration management
2. Price management
What are the three aspects of duration management?
- Manage arrival uncertainty
- Manage duration uncertainty
- Improve turnover
What are the three aspects of price management?
- Variable or demand-based pricing
- Rate fences to segment the markets
- Perceived fairness
How do your manage guest arrival?
- Arrival forecasting - historical data
- Reservation - advanced data
- Using price to shift arrival patterns
- Table mix - optimal mix of different table sizes
How do you manage duration?
- Forecast meal length accurately (controls # of tables available)
- Reduce variability of guests’ dining time through
a. Menu design
b. Service process design
c. Labor scheduling
d. Communication tools
What are demand-based pricing benefits to restaurant operators?
- Increase revenue and profits
2. Help to off-load excess product and increase utilization of resources
What are demand-based pricing benefits to customers?
Price-sensitive customers can be priced into the market
What are (4) examples of physical rate fences?
- Menu type
- Private room
- Party size
- Table amenity
What are (5) examples of non-physical / intangible rate fences?
- Time of day, day of week
- Buyer characteristics
- Transaction characteristics
- Quantity of purchase
- Controlled availability
Describe the restaurant RM implementation process
- Analyze data and establish the baseline
- Understand the drivers for RevPASH
- Develop and implement strategies
- Evaluate RM performance
Why do restaurants need third-party websites more than hotels?
Lack of scale and brand name
