Revenue Management for restaurants…Touristology’s point of view!

When Real-time Web and associated technologies (Nodejs, Single Page application, sockets…) appear on my radar it was love at first glance. I said to myself “That it is!” I love real-time connections and the possibilities that they represent in order to improve Touristology in general and revenue management in particular .

I love to try to explain everything in a single slide (I will try to explain Revenue Management for Restaurants in this post, see figure below!) so, the SPA or Single Page Application idea, one of the paradigms in Real-time Web, seems natural to me!

So, here we are, with a restaurant willing to increase the revenues (and profits, I Touristologistly add!!!) using the strategies and tactics of Revenue Management. Usually, when we talk about Restaurants we change the RevPar or GopPar used in hotels for RevPASH (Revenue Per Available Seat and Hour). The main reason to do that is the two biggest differences between hotels and restaurants.

1) Sharing: I mean the possibility and the desire of sharing a table in restaurants. Usually you don’t have/offer these possibilities in hotels (apart from hostels where it can be seen as normal.
2) Rotation: In a turn, I mean, breakfast, lunch, dinner… you offer more than one serving. That is not usually the case in hotels (nowadays appear some interesting exceptions that we will comment in a moment).

These two characteristics can physically materialize in a queue or line in your restaurant that you have to learn how to manage in order to increase both, your revenues/profits and the satisfaction level of your customers.

One interesting idea in order to successfully manage a queue is to stop having one. Hard Rock Coffee offers a creative way to do that. They offer a kind of mobile device to their customers that allow them to visit the city instead of waiting patiently. When their table is ready they will get a warning.

You also have to think how to make the line fun or at least not boring. You can have special places where your customers wait playing games or enjoying a juice, for instance. As, is the norm in Touristology you can provide these services or add in your chain of value organizations which provide them. 

Let’s clarify this once and for all… Your business is NOT selling rooms or F&B… Your business is to satisfy your customer, providing what they need, when they need it, in the way they need it!

Another idea to take into consideration is when it is convenient not to follow the First-come, first-served (FCFS) rule. For instance, when you have a free table and appear a group whose size is exactly the same. Or when appears regular customers which are members of your loyalty program and you wish to offer them the possibilities to jump the queue making them feel special and promoting to the rest of the customers what a good idea is to become a member of the Loyalty Program!

VIPs are also another reason to break the FCFS rule BUT… remember to be perceived as fair to everybody, especially your customers, must agree about who is a VIP. Maybe your friends and relatives don’t fit in this category. 

Jordi, this is MY restaurant and I do as I please! Maybe, just remember, successful enterprises in XXI century are NOT MY enterprise but OUR ones.

Ok, let’s go deeper with sharing characteristic shall, we?

Do you remember the video that we share here about Virgin Atlantic? Do you remember the video shared here about KML which allow the passenger to choose where to seat in order to be together with interesting or complementary people? Do you believe that we can offer something similar to our restaurant? Do you believe that we can make this fun using a little bit of Gamification? Do you think that we can both, increase profits and increase the level of customer satisfaction? I hope so, We are Touristologists!

What about rotation? All your customers appear at the same time? Maybe you can offer special prices for different schedules. Maybe you can customize the menus (more quantity, this flavor of the month ingredient only at first or last hour…)

Do you believe that we can reduce the time customers are at the table? Making our customers happier and providing more profits? What about using a few chain of value related ideas. For instance,

A) Creating a special and separate room where customer can enjoy the best coffee /tea in town. Or where an expert can read Tarot, get a massage… for free but only is they ask for the service before a scheduled time. For instance, maximum one hour after they order.

B) Making deals with members of the chain of value. For instance, a cinema where the customer can go with a discount after enjoying a trailer in the special room we talked about in point A.

So, in a nutshell, Revenue Management in restaurants is the same BUT different. Basically, because of sharing and rotation characteristics. Ready for more? Follow this link maybe you will enjoy solving this study case!

We say that hotels, usually, don’t have rotation in their services but we can see some exceptions, for instance, blink that we introduce here OR byhours (here we can see a video).

By the way, talking about Blink and Byhours… which one do you think have more opportunities of becoming successful?

I know, I know, blink was bought by Groupon…. ( As I mentioned here) BUT let’s do the analysis thinking before the acquisition. Can you use the matrix of Super 2, Super 3 and my own 1,2,3 ?

Come on Touristologists! We are the best minds working in the best sector ever… time to prove it!