Skip to main content

Surely you already know that hotels and airlines change their prices dynamically. Depending on the season, events, weather… in short, depending on the expected demand, they apply different prices.

The reason for these dynamic pricing strategies is simple. Both hotels and airlines have limited inventory. In the face of fluctuations in demand, they cannot adapt their productive capacity in an agile way. Therefore, its main reaction mechanism to these changes in demand is price adjustments.

This dynamic pricing policy is the tip of the iceberg of what is known as Revenue Management, but the discipline covers much more!

From the management of inventories and air fleets (in the case of airlines) to the distribution strategy in the several channels such as Booking.com, Expedia.com, etc.

In the field of restaurants, these types of strategies are 100% replicable!

Thus, we can talk about several Revenue Management Levers that we can activate in restaurants.

Pricing

Dynamic pricing is 100% adaptable to restaurants.  We will seek to optimize the profitability of the premises in periods of high demand and at the same time attract customers when we expect the restaurant emptier. With this we will be able to adapt the offer to different profiles of consumers and therefore have greater market coverage. A good dynamic pricing strategy can condition the choice of our customers and optimize the product mix. With this we will achieve that those dishes that are most interesting to give output for reasons of margin, rotation of tables or stock will be consumed.

Menu Engineering

Restaurants have long applied techniques to improve the display of their menus to boost their sales and margins. These menu engineering strategies have undergone a revolution thanks to the extension in the use of dynamic menus in restaurants. A dynamic digital menu allows you to change the menu and the offer of the restaurant, adapting it to the customer profile that we are going to have, as well as to the forecast of demand, stock, etc. With this we will be able to have a more personalized offer, improving the customer experience and maximizing the contribution margin for the restaurant.

Inventory and reservation management

A good optimization of the restaurant’s service space will allow to improve the occupancy of tables and their rotation. On the other hand, it is essential that the restaurant performs an effective management of its reservations, understanding when to accept certain tables, when not and how to apply a stricter cancellation policy. These approaches will be especially decisive in periods of high demand. During these periods having an empty table that could have been occupied is much more harmful to the results of the restaurant.

Channel management

A restaurant that distributes its product through delivery platforms must take into account the different conditions with which each channel works, as well as the different customer profiles of each channel to optimize its profitability. Each delivery channel applies different conditions and allows different menu configurations and promotions. Additionally, the customer profile of each platform differs (the typical Uber Eats customer does not necessarily have the same preferences as the typical Glovo customer). That is why restaurants must do the exercise of understanding their delivery customer. This will allow them to discriminate their offer based on the channel, as well as the time of day, demand and kitchen capacity to ensure good service.

In successive posts we will talk more about Revenue Management and how we can apply each of these levers to improve the results of the restaurant.