Knowledge Series - Revenue Management

The principles of revenue management can be applied to restaurants, given that the restaurant's unit of sale is the time it takes for a complete meal cycle, rather than just the meal itself.

Moreover, restaurants have classic characteristics that invite revenue-management strategies (those characteristics being relatively fixed capacity, perishable inventory, a demand inventory, time-variable demand, appropriate cost structure, and segmentable customers).

When a restaurant's operation is gauged by the time-related measure called revenue per available seat-hour, or RevPASH, managers can analyze operations and menus to improve that statistic.

Using RevPASH allows managers to capture more of the restaurant's actual performance in their analysis than does average check or typical food- or laborcost percentages.

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