Why applying revenue management to restaurants can change the industry?

How far is the industry from recovering fully from the staff crisis? That, I do not know, I am afraid. I know we are going in the right direction, and the market is showing significant demand levels to support this recovery faster.

While restaurants are working hard to complete their teams, there are many reservations left behind as restaurants cannot accommodate them due to the lack of personnel.

My job has always been to ensure restaurants and hotels maximise their revenues by understanding demand better.

This is called yield management or revenue management. While the jargon might or might not be relevant here, it is vital to learn that some people dedicate their careers to optimise businesses like hotels or airlines by applying yielding techniques and exhaustive market analysis.

If you are interested in learning more about the beginning of revenue management, check this out:


Airlines, restaurants, theatres, cruises and cinemas share one thing. They are in the business of selling seats and time.

Hotels too, but they sell rooms instead.

Let me give you an example:

Imagine you have a hotel that has 80 rooms. Your hotel is in the city centre and attracts many tourists.

Let's assume over 150 people search hotels around the area and want to stay at your hotel.

Those 150 people are leisure travellers, corporates, and students. They are a couple, singles, families, groups, etc.

Also, people search your hotel by looking at your website directly, booking.com, Expedia, Trivago, travel agencies, etc.

Each of them has a different budget, and each reservation channel has a fee associated.

So you might know what I am about to say:


We must learn to choose the most profitable demand for our hotel/restaurant with the lowest cost associated.

And that is precisely the key for restaurants.

Let's now imagine you have a restaurant with 100 seats.

Due to staff limitations, you have restricted your book to only accommodate 170 reservations a day.

You will most likely reach that number easily as more demand is willing to visit your restaurant than seats you can offer. 


If demand is higher than the offer, it is the best time to be strategic.

Besides accommodating your VIPs, what other analysis/actions are you making from the demand, and how do you operate?

Is everyone booking you directly as opposed to via a third party?

Is your team pacing the bookings correctly to support your kitchen further?

Are you learning what the spend per head is from a table of 2 versus a table of 4 so you can adjust your floor plan?

Are you turning your tables on time to avoid wasting revenue?

Do you run a menu matrix instead of increasing menut items 50 pence here or there?

Are your upselling techniques working?


Every day is a Saturday.

If your restaurant restricts the reservation due to staff limitations, every day is a Saturday.

Why? Because Saturdays are the days for most restaurants when demand is higher than offering, these are the best days to become picky at choosing your guests.

You would not put a table of 10 in the middle of the peak hours on a Saturday night when you can accommodate five tables of 2'.

If you need to restrict your reservations daily due to a lack of staff, you can easily apply the same logic and choose more strategically what reservations shall bring more revenue to your premises.

Your restaurant can generate more while restricting the reservations, however there is a need for change in operators' mindsets, and it is not always easy due to the unsteady pace of the industry. It requires practice, dedication, time and the right tools.

Your reservation management tool and POS can assist you in mainly finding all the information you need.


Benchmarking data accelerates the process.

Imagine you have learned what you think the most profitable demand is and accommodated your books to get them.

Accessing data from your competitors can help you understand how they are dealing with the staff crisis. Are they restricting the books as much as I am doing?

If your restaurant occupancy is lower than your competitors and you share similar capacity, they are somehow recovering faster than you. This information can help you evaluate the team's productivity on the floor and in the kitchen.

We understand the industry talk and share figures, and the industry is finding support among peers of other businesses. It is all very encouraging. However, there is an element of competitiveness that must always remain present.

For this, accessing reliable data from a trusted source is more beneficial than sharing not contextualised numbers with other colleagues. 

Data, people, and brands are the most critical assets for a company, and it is our responsibility to protect them.

Author: Carmen Mallo

The Origin Of Revenue Management In The Hospitality Industry from the hospitality net




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