Restaurant Revenue Management Can Have A Profound Effect On The Bottom Line

On any given night, restaurants have a certain number of tables and a set amount of time to serve food. The variables become the number of customers that need service and the times that those customers arrive. It is up to the manager to run the restaurant as efficiently as possible, which involves minimizing wait time and maximizing revenue. To both large and small independent restaurants, hotels, and chains, restaurant revenue management is of the utmost importance. The financial performance of the restaurant can vary wildly based on the success or failure of the food service management.

Most food service management relies upon intuition and years of experience to determine when and where to seat customers. A good manager can make a huge difference in the bottom line of the company. Some of the decisions that any manager might have to deal with include determining the value of walk-ins versus reservations. The manager must worry not only about filling tables through reservations, but must also protect the business from the risk of no-shows. When a party of three walks into the restaurant, but only a table for six is available, should the manager seat the party or wait and hope for a larger party to fill the seats? Intuition can only take a manager so far. Studies have been conducted on restaurant revenue management and effective analytical tools have been developed to identify problems, optimizing revenue generation. These tools can make a huge difference in the bottom line of a restaurant, regardless of its size or market share.

The goal of running a restaurant is to serve customers in the most efficient way possible while increasing the restaurant's profitability. In order to do so, managers are increasingly needed to have a broad yet in-depth knowledge of all aspects of the restaurant business. In addition to having to provide counsel and manage the staff, managers need to consider meal duration, pricing and occupancy when attempting to maximize profit. To improve restaurant revenue management, managers often turn to service blueprints to enhance service delivery and upgrade customer service. The restaurant business relies not only upon attracting customers, but also on customer retention. The small difference in customer service can be the difference between a one-time customer and a loyal returning customer. Providing the best service possible through a customer-focused approach will have a profound effect on the bottom line and market share of a restaurant.

Food service managers have the difficult role of handling the various aspects of the food service industry. Without utilizing the tools that are now available, it is virtually impossible for a manager to handle client flow, menu planning, dining time, optimal table mix, meal duration and pricing in the most efficient manner. To increase the market share and profitability of a restaurant, managers need to take a closer look at restaurant revenue management and utilize the analytical tools that are available. Under the surface, the restaurant business is very complex, but valuable tools are now available to make maximizing revenue a lot easier.


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David Shoemaker is Vice President of Learning Solutions and Innovation at eCornell. For more information on food service management, restaurant revenue management, or eCornell, please visit http://www.eCornell.com


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