If there’s one sector that’s struggling to get to grips with Revenue Management, it’s the catering industry. Yet, at first glance, restaurants seem perfectly eligible for this practice, which has been widely deployed in the leisure industry (transport, accommodation, ticketing…). But what is the situation? What are the obstacles? Is the sector less eligible than it seems? What levers can be deployed? In an ailing market hard hit by rising costs, the subject of Yield can quickly become critical.
In fact, RM is a bit like cooking. Its vocabulary can largely be borrowed from that of the catering industry, which makes it easier to understand.
Catering, a sector full of potential
First of all, all the ingredients are there: limited stock, fluctuating and seasonal demand, booking processes, variety of offers. There’s no shortage of factors to qualify for Yield. But there are still a few hairs on the soup: the proportion of reservations remains relatively low (as in parking lots, hairdressing salons or certain sports arenas), and dynamic pricing is limited (we’re not going to charge more for the latest chicken supreme).
On the other hand, the general framework offered by the catering industry enables us to envisage additional levers that would be inconceivable in other industries. For example, the modular capacity of tables to avoid empty seats, or the ability to adjust the opening hours. These levers are virtually non-existent in the airline industry, and hardly at all in the hotel sector, apart from communicating rooms or mobile curtains in the medium-haul sector.
All these elements of the sectoral context make it possible to use MR in the foodservice sector, with Yield levers that are quite similar to those used elsewhere. This is why a number of operators have already adopted this practice, and why colleagues such as Revenue Management Solution and Flynt have already taken up the subject to offer them solutions.
The levers of Revenue Management in the restaurant industry
Among the levers, on the menu or à la carte, we can mention:
- First of all, of course, there’s the in-depth work on price positioning following the spill/spoilage analysis: a restaurant that’s regularly full and refusing customers needs to raise its prices – that’s basic yield. In the same way, a proliferation of last-minute special offers to fill a restaurant’s capacity is a sign that the initial positioning is too high. This is basic yield;
- No-show billing, which is on the increase. We take a bank imprint and charge the rascal when he doesn’t honor his reservation;
- Booking incentives with Early Booking or Happy Hour discounts at certain times and on certain days of the week. This makes it possible to anticipate and optimize table plans, especially when the number of guests is odd;
- Theme menus such as Christmas, Valentine’s Day… and even the absence of menus on specific days;
- Optimization of the product mix, with packaged products (Tasting menus, for example, to secure the average basket);
- Add-on policies, such as coffee or digestifs, are never included in menus and with high margins.
To find out more about RM optimisation levers
The sauce begins to take…
- Distribution mix optimization, using occupancy forecasts to define the right quotas and offers for commissioned players (such as TheFork);
- Optimization of the table mix (with “we’re fully booked” for single customers, or for pairs when there are only tables of 4 left);
- Increasing ancillary revenues (catering, gift vouchers, click & collect, etc.);
- Highlighting, which, after analyzing contributions, makes it possible to give instructions in the dining room to promote high-margin products/menus;
- Enhancing the value of camping sites. The Sphere panoramic restaurant at the top of Berlin’s TV Tower, for example, charges more for the menu next to the windows where the views are best;
- And, the cherry on top, loyalty offers (proposed by Airtag or Avomark, for example);
In conclusion, a non-exhaustive list of levers that provides a fine playground for a Revenue Manager. He too is a chef. He has to compose with his ingredients, test his pricing recipes, write them down and reproduce them if they’re good. And have the right tools and equipment. We’re in much the same business…
And both of us, each in our own way, « put butter in the spinach »…
Keywords: Catering, Revenue Management, optimisation levers, Dynamic Pricing, pricing
