PowerPoint Presentation
MANAGING YOUR REVENUE: Module 1BASIC PRINCIPLES OF REVENUE
MANAGEMENT
INTERNATIONALCULINARY CENTERWhats the best way to be
profitable?
INTERNATIONALCULINARY CENTERWhat is revenue management?Tracking
information and applying knowledge to allocate the right capacity
to the right customer at the right price at the right time
RIGHT means maximizing potential for the operator and maximizing
value to the customer
INTERNATIONALCULINARY CENTERManaging Restaurant Revenue(c)
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The Levers of Good Revenue Management
INTERNATIONALCULINARY CENTERRevenue management can be used
forany business that has the following:
INTERNATIONALCULINARY CENTERManaging Restaurant Revenue(c)
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Fixed CapacityNumber of seats Staffing Kitchen capacity Menu
item limitations Experiential capacity
INTERNATIONALCULINARY CENTERManaging Restaurant Revenue(c)
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Variable (but Predictable) DemandReservations (maybe)Arrival
patterns Varying duration depending on party size or meal
periodSeasonal and day-of-week fluctuations
INTERNATIONALCULINARY CENTERManaging Restaurant Revenue(c)
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Total Number of Occupied Seats Total Number of Seats in
Restaurant
Seat Occupancy
INTERNATIONALCULINARY CENTERManaging Restaurant Revenue(c)
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Seat OccupancyIncrease seat occupancy by seating parties at the
right size of table whenever possible
INTERNATIONALCULINARY CENTERManaging Restaurant Revenue(c)
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Perishable InventoryIts not just the food the seat!An unfilled
seat is revenue lost foreverInventory measured in available seat
hours (ASH)Sample calculation: 110 seat restaurant, open from 5:00
pm to 12:00 pm Tuesday through SundayASH = 110 x 7 hours x 6 days =
4,620 ASH per week
INTERNATIONALCULINARY CENTERManaging Restaurant Revenue(c)
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In restaurants, the goal is to maximize revenue per available
seat hourLow RevPASH (Cold hours): Increase demandIncrease average
check through upsellingHigh RevPASH (Hot hours): Increase seat
utilizationIncrease price where feasible
INTERNATIONALCULINARY CENTERManaging Restaurant Revenue(c)
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INTERNATIONALCULINARY CENTERREVENUE MANAGEMENTMANAGING
DEMANDMANAGING PRICEWAITLIST MANAGEMENTDURATION
MANAGEMENTDISCOUNTINGMENU ENGINEERING
