Restaurant Revenue Management 103

Most restaurants are only viable when operating at the capacity they were designed for, yet the current climate indicates that restaurants will re-open at decreased capacity. Revenue management strategies developed to optimize capacity must now also consider the protection of guests and employees.

Update your reservations policies

Well-managed reservation books are going to be far more important than ever before. Being able to actively manage capacity through the reservation slots you offer is critical to ensuring that you are serving the maximum number of guests at any given point in time. Because your regulated capacity will be much lower and be more highly policed, you will need to ensure that every ‘body’ in the restaurant is generating as much revenue as possible. For example, having guests wait for their table by the door or in a bar area will reduce the number of guests you can serve at a table, and thus diminishes your opportunity to maximize revenue.

Implement cancellation fees

Due to newly enforced capacity restrictions, the historical cancellation-hedging strategies of overbooking and encouraging walk-in guests will no longer be viable. Instead, utilize cancellation fees to increase the likelihood that guests will arrive for their reservation. A great paper on guest perception of reservations by Sheri Kimes from Cornell’s School of Hotel Administration shows that guests are generally accepting of cancellation fees. To reduce the risk of guest-frustration over cancellations:

  1. Ensure that it is easy to cancel a reservation (both OpenTable and Resy support the collection of cancellation fees).
  2. Waive cancellation fees for mitigating circumstances.
  3. If your business is in a position to do so, you can consider donating cancellation fees to your employee relief fund or a designated organization such as The Robinhood Foundation or Restaurant Workers’ Community Foundation.

Cancellation fees should be based upon the number of guests in a party, and the amount should align with the pricing of your menu.

Offer ticketed reservations

If your restaurant’s style of service can accommodate it (e.g., if you have a prix-fixe or tasting menu) consider moving to a ticketed dining experience to have precise control over when and how many guests arrive at your restaurant at any given time. Tock, a restaurant reservation platform founded by Nick Kokonas, is built to make this process seamless for restaurants of any size. OpenTable and Resy also provide this functionality.

Manage your turn times

Ensuring that you can efficiently serve as many guests as possible is even more important when your capacity is artificially constrained. You can maximize the revenue you collect with lower turn-times. Reducing turn-times starts before the guests enter the restaurant:

Consistently update your online menu

Encourage guests to browse through the menu before they arrive to reduce their time spent at the table deciding what to eat. Many restaurants are successfully utilizing Instagram to advertise daily specials.

Offer to-go dessert

Offer a selection of desserts that guests can enjoy in their own home or outside (weather permitting). Cookie boxes, pints of ice cream, slices of or whole cakes, and ‘pudding-like’ desserts (tiramisu, panna cotta, trifles) are all desserts that travel well and can be made in advance and packaged to go. This helps reduce turn times while maximizing your average check.

An additional benefit of a to-go dessert is the opportunity to spread out employee shifts in your restaurant. If your pastry team can make desserts in the morning, they will have limited crossover with your savory team working in the afternoon and evening.


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