Guidelines for Implementing Revenue Management in the Restaurant Industry
Ammunet, Mika (2016)
Ammunet, Mika
Haaga-Helia ammattikorkeakoulu
2016
All rights reserved
Julkaisun pysyvä osoite on
https://urn.fi/URN:NBN:fi:amk-2016120719300
https://urn.fi/URN:NBN:fi:amk-2016120719300
Tiivistelmä
The aim of this thesis is to draw an outline of how to implement revenue management in the restaurant industry. The practice well-known in the hotel and airline industry is proven to be suitable for the food and beverage businesses.
First of all, the key strategic levers, price and duration, are presented and defined. Based on the basic principle that the demand for a product varies according to its price, the application of modern pricing and dynamic pricing is introduced in this thesis. Since many service industries are selling the time during which the product is available, the duration of the service or the usage of the product is taken into account.
Second of all, the thesis names the five P’s, Product, Person, Price, Period and Place, the restaurant needs to determine for creating a functioning setup. To maximize the revenue, the restaurant attempts to sell the right product, to the right person, for the right price, in the right period, at the right place.
Third of all, the compulsory characteristics of revenue management, fixed capacity, dynamic cost and pricing structure, perishable inventory, segmented market with predictable demand, time-variable demand and convenience factor, are explained with examples. The characteristics must be clear to the restaurateur to be able to apply the revenue management practice.
Finally, the core revenue management process is divided into strategic, tactical and operational subdivisions. The subdivisions define the time frame for every stage of the process together with concrete procedure examples. The final part of the thesis includes discussion and recommendations for future research.
The product of this thesis is a step by step guideline booklet for establishing a revenue management program in a restaurant, enclosed as the appendix 1. The “Guidelines for establishing a restaurant revenue management system” booklet is a generalized version to guide any type of restaurant or bar to establish and use restaurant revenue management as part of their operations. The product has clear six step strategy for implementing the practice, written with the expectation the reader acquires some basic knowledge on the terms included.
In essence, the time span of this thesis process reaches from the first semester in 2012 until the last one in 2016, for the reason the author has had a great passion for the revenue management practices since the first marketing and sales lecture in the Haaga-Helia University of Applied Sciences. Self-learning and successfully passing the Hospitality Sales and Marketing Association International, HSMAI, Revenue Management PRO course guided the author on creating this thesis. The PRO course was held in Breda, the Netherlands 2014, during the authors exchange studies.
First of all, the key strategic levers, price and duration, are presented and defined. Based on the basic principle that the demand for a product varies according to its price, the application of modern pricing and dynamic pricing is introduced in this thesis. Since many service industries are selling the time during which the product is available, the duration of the service or the usage of the product is taken into account.
Second of all, the thesis names the five P’s, Product, Person, Price, Period and Place, the restaurant needs to determine for creating a functioning setup. To maximize the revenue, the restaurant attempts to sell the right product, to the right person, for the right price, in the right period, at the right place.
Third of all, the compulsory characteristics of revenue management, fixed capacity, dynamic cost and pricing structure, perishable inventory, segmented market with predictable demand, time-variable demand and convenience factor, are explained with examples. The characteristics must be clear to the restaurateur to be able to apply the revenue management practice.
Finally, the core revenue management process is divided into strategic, tactical and operational subdivisions. The subdivisions define the time frame for every stage of the process together with concrete procedure examples. The final part of the thesis includes discussion and recommendations for future research.
The product of this thesis is a step by step guideline booklet for establishing a revenue management program in a restaurant, enclosed as the appendix 1. The “Guidelines for establishing a restaurant revenue management system” booklet is a generalized version to guide any type of restaurant or bar to establish and use restaurant revenue management as part of their operations. The product has clear six step strategy for implementing the practice, written with the expectation the reader acquires some basic knowledge on the terms included.
In essence, the time span of this thesis process reaches from the first semester in 2012 until the last one in 2016, for the reason the author has had a great passion for the revenue management practices since the first marketing and sales lecture in the Haaga-Helia University of Applied Sciences. Self-learning and successfully passing the Hospitality Sales and Marketing Association International, HSMAI, Revenue Management PRO course guided the author on creating this thesis. The PRO course was held in Breda, the Netherlands 2014, during the authors exchange studies.