Restaurant Revenue Management. Mealtime duration Written by: Shima Zeroual Student number: Commissioner: Alinda Kokkinou

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1 Restaurant Revenue Management Mealtime duration Written by: Shima Zeroual Student number: Commissioner: Alinda Kokkinou 1

2 Abstract The Plaza Food Hall in the United States of America (USA) contains a restaurant with 238 seats. They seat around 1000 to 1200 people every day. Guests visiting the restaurant are willing to wait for 45 minutes, the small plates concept lends itself to shorter meals. The average mealtime duration of this restaurant is 27 minutes! Previous research in the USA indicates that it is possible to decrease the mealtime duration in restaurants with 20%, which could lead to an increase of 25% in revenue. The restaurant industry in the Netherlands are using some parts of restaurant revenue management such as: early birds discount, premium prices during peak time etc. Nevertheless, no research has been conducted concerning this subject in the Netherlands. Can restaurant revenue management be profitable for the Dutch restaurant industry? This study focuses on the probability of decreasing the mealtime duration in the Dutch restaurant industry. The main research question is: Can a decrease in mealtime duration lead to an increase of revenue? The sub-questions are: - What is the expected mealtime duration of guests in the Dutch restaurant industry? - Is there room to decrease the mealtime duration? - Would a decrease of the mealtime duration lead to an increase of revenue? The adopted method that is applied is the Time Sensitivity Measurement (TSM) which is survey based and consists of analysis of the responses to the four questions of Gabor and Granger, The TSM method is used to determine the optimal time point, the indifference point and the range of acceptable times. Results have shown that the mealtime duration could be increased with 25% without reducing the guests satisfaction. Decreasing the mealtime duration could then lead to doubling the seat turnover. As a result a 34% increase in revenue can be accomplished. Restaurant operators can train their employees in identifying revenue strategies and how to use them. Furthermore, with the use of a process map managers can recognize the bottlenecks and anticipate beforehand. 2

3 Table of Contents 1. Acknowledgements P Introduction P Literature review P Research questions and overview of methods P TSM results P TSM analysis P SPSS results P SPSS analysis P Conclusion P Limitations of the research P Recommendation P References P Appendices Appendices enclose on CD 1. Operationalisme of TSM 2. Survey 3. TSM Excel 4. SPSS output part SPSS output part SPSS output part 3 5. Process map 3

4 1. Acknowledgements First of all I would like to thank Mr. Josephi, lecturer at the NHTV. My interest for revenue management was born during his lectures in my second year. Besides that, Mr. Josephi and Mr. Melissen gave me the opportunity to share the process of my research via a blog on I would like to thank them for giving me the opportunity to broaden my network and my knowledge. And last but not least, I would like to thank my coach Alinda Kokkinou for inspiring and motivating me as well as for her support and feedback. 4

5 2. Introduction According to the Dutch Food Service Institute, Dutch bars and restaurants lost 860 million Euro of revenue in 2009 and 2010 compared to the previous years (FSIN, 2011).The recession has caused a decrease in consumer trust and disposable income that led to a decrease in the frequency of visits and spending in restaurants. In 2011, for the first time in three years restaurant revenues increased with 5.8%. And volume by 3.5% (CBS, 2012). Nevertheless, restaurants remain firmly under pressure due to the recession. Restaurant managers should choose a new direction in order to increase their profit. Restaurants could shift their strategy by implementing restaurant revenue management. Revenue Management (RM), also known as yield management, is rarely used in the restaurant industry (Kimes, Wirtz and Noone, 2002). RM started in the airline industry in the early 1980 s and later on extended in the hotel industry (Cross, 1998). RM is defined as allocating the right product, to the right customer, at the right time, for the right price (Kimes, Wirtz and Noone, 2002). Right in this definition is the essential element of RM and involves achieving the most revenue whilst delivering the most value or use to the customer (Kimes, Wirtz and Noone, 2002). Although many restaurants apply various types of RM practices, the application has been mostly tactical for example lunch menus versus dinner menus.(kimes, 1998). RM consist of two strategic levers, namely: duration control and demand-based pricing (Kimes and Chase, 1998). Demand-based pricing is one tactic that can be used to increase revenue. Many restaurant managers already offer price-related menu promotions (Kimes,2004). Another way of manipulating prices is to include day-part pricing, day-of-week pricing and price premiums or discount for different party sizes, tables, and customer types (Kimes, 2004). The other strategy to increase revenue is duration control. Managers can influence the mealtime duration by changing reservation policies, redesigning menus, speeding up the service procedure and making it more efficient (Kimes, 1998). Restaurant revenue management has been successfully implemented in the USA and has led to an increase in revenue (Kimes and Chase, 1998). Kimes, Wirtz and Noone (2002) have suggested that decreasing the mealtime duration with 20% could lead to an increase in revenue by 25%. However, this tool is not yet used in the Dutch restaurant industry. Therefore the purpose of this study is to investigate if restaurant revenue management could be implemented in the Netherlands. 5

6 3. Literature review Restaurant revenue management Revenue management started in the airline industry and was later adapted by other service industries including the hotel industry. These industries are characterized by fixed capacity, perishable inventory, high overhead cost, low variable costs, predictable demand and varying customer willingness to pay. Revenue management allows these capacity-constrained industries to maximize the revenue they generate. The restaurant industry also possesses these characteristics. Although hotels offer room rates that change according to demand or in relation to customers' length of stay (Kimes,2004), restaurants can offer different menu prices, in the form of discounting or premium pricing. For example during low demand, restaurants can offer discounts such as: happy hour, early birds or coupons, during peak time they can limit their offer to special (higher priced) menu s (Kimes,2004). RevPASH The intention of restaurant revenue management is to improve restaurant profitability by managing both capacity and demand (Thomspon,2009). A suitable indicator to measure restaurant productivity is RevPASH, revenue per available seat hour (Kimes, 1998). This indicator captures simultaneously the effects of revenue, time and capacity (Thomspon,2009), by combining the information of the average check and its utilization of the seats (McAdams, 2011). Another measure closely related to RevPASH and representing the seat utilization is seat turnover. Seat turnover indicates how many times the seat has been sold. It can be increased by decreasing the mealtime duration and lead to an increase in RevPASH. Duration control Duration control is one of the levers in restaurant revenue management and is used to decrease the mealtime length in order to increase seat turnover. To control mealtime duration, managers can use either internal means (i.e those that do not involve customers) or external means (i.e those that do involve customers) (Kimes, 1999). There are several ways to manage mealtime duration internally without involving the customer. One way is to regulate and redesign service processes in order to speed up service, promote seat turnover and benefit from an optimal table mix. For example, a restaurant can train its staff to provide faster service. A second way is to forecast arrivals and party size of customers. This will allow the restaurant to improve its labor scheduling. A third way is for restaurants to implement inventory control such as overbooking when taking reservations. There are two different ways to manage the mealtime duration externally. Managers can include booking fees when guest make their reservation or guarantee the reservations on a credit card. A second way is to restrict the length of time, by limiting the use of the table. For example, receiving guests at 18:00hrs and at 20:00hrs. Not surprisingly, most firms have chosen to manage duration internally, so as not to risk dissatisfied customers (Kimes,1999). 6

7 Mealtime duration reduction measures can be controversial. Many restaurant owners believe that they may lead to a reduction in customer service. Therefore, studies have examined customers desired mealtime duration. These studies have used time sensitivity measurement (TSM). TSM can be used to determine the indifference point and optimal duration of a service encounter, helping managers better understand customers expectations and as a result improve their service delivery system to meet them (Kimes, Wirtz and Noone, 2002). For example, Kimes,. et al found that the expected mealtime duration of Asian guests was 57.2 minutes, for North-American guests this was 59.0 minutes and for European guests this was 77.3 minutes. However, a limitation of their study was their sample, as they only used 11 European students at the North-American university as representative of European dining habits. Furthermore, since eating behaviors vary in different European countries and this research is focused on Dutch restaurants, the study of Kimes,. et al will be replicated in the Netherlands. Restaurant revenue management in the Netherlands The majority of restaurant revenue management research has a North-American focus. In 2004, Kimes had implemented restaurant revenue management in Chevys Arrowhead. This restaurant has 230 seats in their main dining room and 50 seats in the bar. The purpose of the research was to develop, implement and evaluate restaurant revenue management. A five-step approach was used and the focus was on internal revenue management (Kimes, 2004). The implementation was successful due to the improved table mix, changes in the service delivery and improved training. Restaurant revenue management has received little research attention in the Netherlands, even though revenue management has been widely embraced by hotels. Yet, according to Patrick Landman (2010), Dutch hotels are behind in terms of revenue management as opposed to their American counterparts. Although they are well trained in operations, they lack sufficient financial knowledge and insight in business economics in order to create more revenue. The same observation could apply to restaurants and explains why there is no study on restaurant revenue management in the Netherlands. Dutch restaurant industry There are slightly more than restaurants in the Netherlands (CBS). The recession has hit the industry hard. Although it seems to be recovering there are certain characteristics of the Dutch market that make recovery challenging. In addition of consumers trust and disposable income issues the average restaurant guest has become more accustomed to restaurants and therefore more demanding. Simultaneously loyalty has become less of a given(delta Lloyd, 2011). Dutch dining Habits The Dutch dining habits are very different compared to those in most other countries. It is customary in the Netherlands to eat three times a day, with lunch normally being between 12:00 and 13:00 o clock and dinner between 18:00 and 19:00 o clock (Holland.com, 2012). 7

8 Horeca Entree indicated in 2008 that time or rather the lack of time appears to be the main drive for eating outdoor. Working hours have increased which lead to lesser time to cook, shop and eat. Furthermore, the number of single households has increased and they are less willing to cook and therefore dine out more. Moreover, consumers would like to know where they can eat, preferably fast, easy and healthy. The big battle between competitors (restaurants, take away industries etc.) is regarding the two hours a day the Dutch guests has time to consume. These are still different standards than in the USA, where it is normal to eat outside. Smulweb, which is a culinary online community has conducted a survey that 3000 people filled out (Horecaentree,2009). The outcome revealed that 44% goes out for dinner once or twice a month. Followed by four to six times a year (31%) and 4% goes out for dinner several times a week. The reason for dining out are divided into: 1. No special occasion (51%) 2. To catch up with friends (22%) 3. Celebrating (18%) 4. Business contacts (1%) 52% of the respondents has dinner with their partner, 25% with family, 21% with friends and 1% with colleagues or business-partners. 8

9 4. Research question and overview of methods From the literature review one can read that several studies on restaurant revenue management have been conducted in the USA but until now none has been conducted in the Netherlands. Therefore, this research is fully focused on the Dutch restaurant industry. In this chapter the research questions and sub-question will be addressed. Furthermore, the different methods used for this research will be described. The main research question is: Would a decrease in mealtime duration lead to an increase of revenue? Since there is no concrete research in the Netherlands about restaurant revenue management, the following sub-questions are created in order to help obtain the answer for the main question: - What is the expected mealtime duration of guests in the Dutch restaurant industry? - Is there room to decrease the mealtime duration? - Can seat turnover be increased by decreasing mealtime duration? TSM TSM was used to examine guests desired and expected mealtime duration. Research on mealtime duration has already been done by Kimes, Wirtz and Noone in 2002 in the USA. To examine the expected mealtime duration in the Netherlands the same method was used. The adopted method for this research was TSM (time sensitivity measurement), where respondents are presented with a typical service encounter and asked the following questions: (1) How long would be a bit too long? (2) How long would be so long that you would consider not returning? (3) How short would be a bit fast? (4) How short would be so fast that you would feel rushed? The TSM method originates from the PSM (price sensitivity measurement) which is survey based and consist of analysis of the response to the four questions (Gabor and Granger, 1996). The Gabor-Granger technique is used for analyzing the data: The cumulative distributions of responses are graphed and used to determine the price indifference point, the optimal price point, the indifference point percentage and the range of acceptable prices (Kimes., et al,2002, P.225). When applying the TSM method the same calculation was made (i.e. using the indifference time point and the optimal time point to calculate the TSM) (Kimes.,et al,2002). 9

10 Study description The TSM method 1 was used for time preferences (Kimes, Wirtz and Noone, 2002) and was conducted by means of a survey. Respondents were asked online to evaluate their dining time for a dinner with friends or family in a casual restaurant. The survey included the four time sensitive measurements of TSM. Respondents were asked to specify a time between 30 and 200 minutes in 10 minute intervals. Statistical analysis using SPSS SPSS was used to describe the sample and the dissimilarities in mealtime duration due to differences in age, gender, employment in the hospitality industry, check, number of dishes and time of dinner. The following questions were added to the survey (appendix 2): 1. Minimum time between dishes 2. Maximum time between dishes 3. What time would you like to start with your dinner? 4. What is the average check price per person you spend for dinner? 5. Would you mind to receive the check after your meal without you asking? Sample The survey (appendix 2) was designed with an online survey tool namely; Then distributed via Linkedin, Facebook, Twitter, Google+, via a blog on and sent to friends and family and forwarded by them. From the 90 responses, outliers were taken out and 67 responses were used for this research. The sample consists of approximately 49 percent male and 51 percent female respondents. The majority of the respondents are in the age range of and From the respondents approximately 30 percent is employed in the hospitality industry (i.e restaurants, hotels) and 70 percent are not. 1 Operationalisation of TSM can be found in appendix 1 10

11 5. TSM results In this chapter the results of the TSM study are described. The optimal point, indifference point and the TSM are discussed in this chapter. Dining time expectation The dining time expectation is around 114 minutes which is a lot higher when looking at the time that is considered to be short, which is around 64 minutes. 58 minutes is considered to be too short, whereas 160 minutes is considered too long (figure 1). 200 Figure 1 Summary of dining time expectations 150 Minutes Too Short Short Expected Long Too Long Time sensitivity measurement results The time sensitivity measurement results are displayed in a graph (see figure 2) which included the four lines: 1. The cumulative percentage of respondents who thought the mealtime was short 2. The cumulative percentage of respondents who thought the mealtime was too short 3. The cumulative percentage of respondents who thought the mealtime was long 4. The cumulative percentage of respondents who thought the mealtime was too long 120,00% 100,00% 80,00% 60,00% 40,00% 20,00% 0,00% TSM Graph Minutes Long Too Long Short Figure 2 Too Short 11

12 The optimal point (percentage of respondents who thought it was too short was equal to the percentage of respondents who thought it was too long) was 88 minutes (figure 3). The optimal time point signifies the time where resistance due to time is at its lowest. 120,00% 100,00% Optimal point Figure 3 80,00% 60,00% 40,00% Too Long Too Short 20,00% 0,00% The indifference point (percentage of respondents who thought it was short was equal to the percentage who thought it was long) was 83 minutes (figure 4). 120,00% 100,00% Indifference point Figure 4 80,00% 60,00% 40,00% Long Short 20,00% 0,00%

13 Figure 5 illustrates the series of acceptable time and defines the distance from the point of marginal shortness which is a junction of the short line with the not short line. And the point of marginal length which is a junction of the long line with the not long line. The time range from 54 to 116 minutes. Calculation of the TSM can be found in appendix 3. Percentage of respondents 100,00% 90,00% 80,00% 70,00% 60,00% 50,00% 40,00% 30,00% 20,00% 10,00% 0,00% Series of acceptable times Point of marginal shortness Point of marginal length Figure 5 Not Long Too Long Not Short Too Short Not Long Too Long Not Short Too Short 13

14 6. TSM analysis In this chapter the analysis of the Time Sensitivity Measurement will be described. The TSM method was used to find out what the expected mealtime duration of a guest is. The results of Kimes, Wirtz and Noone (2002) indicates that European people have a dining expectation of 77.3 minutes (p.228). However, as explained in the chapter literature review, Dutch guests have different dining habits than people from other European countries. The TSM analysis in this research illustrates that the expected mealtime duration of Dutch guests is around 114 minutes. Which is considerably higher than the outcome of the research from Kimes, Wirtz and Noone (2002). The outcome of the TSM indicates that restaurant managers could decrease the dining time with approximately 25% without upsetting their guests. In conclusion, if Dutch guests only have two hours to spend, restaurant managers would be wise to reduce the mealtime duration, to meet the guest s expectation. The optimal point is 88 minutes and the indifference point is at 83 minutes. The TSM is then approximately 85 minutes. The series of acceptable times range from 54 to 116 minutes. These findings indicate that restaurant managers have the possibility to decrease the mealtime duration without losing their guests. Consider a casual restaurant with 50 seats, with four busy hours a day. Theoretically when using the expected mealtime duration restaurant managers will have a revenue of (240 minutes / 114 minutes * 50 = 105guests * 20 average check = 2.100). When the mealtime duration will be decreased to 85 minutes managers will have a revenue of 2.823(240 minutes / 85 minutes * 50 = 141 guests * 20 average check= 2.823). This means that when decreasing the mealtime duration with 25% this could lead to an 34% increase in revenue. 14

15 7. SPSS results In this chapter the SPSS tests used are briefly explained. Furthermore, the SPSS results are described. The print-out of SPSS can be found in appendix 4. The following tests were used for the statistical analysis: - The cross tabulation which is used to examine frequencies of observations that belong to specific categories on more than one variable. By examining these frequencies, the relations between cross tabulated variables can be identified. - The T-Test for independent sample is used to evaluate the differences in means between two groups. - The Pearson Chi-square is used to see whether there is a relationship between two categorical variables. It is statistically based on the idea of comparing frequencies that is observed in certain categories. - Anova- one way is a technique for determining if differences exist between three or more groups. The respondents that filled out the survey consisted of 49.3% males and 50.7% females. Furthermore, a large amount of the respondents are in the age group of years (26.9%) and years (25.4%). 50,0% 40,0% 30,0% 20,0% 10,0% 0,0% Age As seen in the graph below, most of the respondents order two dishes (61.2%). 70,0% 60,0% 50,0% 40,0% 30,0% 20,0% 10,0% 0,0% # of dishes 1 dish 2 dishes 3 dishes > 15

16 The acceptable minimum time between dishes according to the majority of the respondents is 10 and 15 minutes. When looking at the expected maximum time between dishes the respondents are willing to wait between 15 and 30 minutes. Minimum time between dishes Maximum time between dishes 50,0% 40,0% 30,0% 20,0% 10,0% 0,0% ,0% 25,0% 20,0% 15,0% 10,0% 5,0% 0,0% When looking at the time that respondents would like to start with their dinner, the majority has indicated that 19:00hrs would be their preferred time. Time of dinner 35,0% 30,0% 25,0% 20,0% 15,0% 10,0% 5,0% 0,0% 18:00 18:15 18:30 18:45 19:00 19:15 19:30 19:45 20:00 In the USA it is common to receive the check after dinner without guests asking. However, the graph below indicates that 24 of the respondents in the Netherlands would not appreciate this. 40% of the respondents would not mind receiving the check without them asking. Would you mind receiving the check without asking? 70% 60% 50% 40% 30% 20% 10% 0% Yes No 16

17 The first test was a T-test and conducted to examine whether guests that are employed in the hospitality industry have longer dining expectations than guests working in other industries. Participants working in the hospitality industry ( M = 10.10, SE =.557) have no dining difference in comparison with participants working in other industries ( M = 10.28, SE =.365). The difference is not significant t(64) = -.275, p =.771, r =.09. In order to find out whether there is a difference between men and women in dining time an independent t-test was conducted. On average the dining time of men ( M = 10.36, SE =.474) was slightly different than that of women ( M = 10.09, SE =.371). The difference was not significant t(65) =.459, p =.089, r =.05. Next was to see whether there was a different in age groups and their mealtime duration. There was a small difference in the age groups in comparison with mealtime duration, the first group was 38 and younger ( M = 10.10, SE =.450) the second group was 39 and older ( M = 10.33, SE =.402). The difference was not significant t(65) = -.393, p =.682, r =.11 There was a small difference in the age groups in comparison with mealtime duration, the first group was 44 and younger ( M = 10.10, SE =.450) the second group was 45 and older ( M = 10.33, SE =.402). The difference was not significant t(65) = -.198, p =.865, r =.07. There was a small difference in the age group in comparison with mealtime duration, the first group was 60 and younger ( M = 10.23, SE =.311) the second groups was 61 and older ( M = 10.20, SE =.975). The difference was not significant t(65) =.033, p =.116, r =.04 One extra test was done to find out whether there could be a signification between age and their mealtime duration. This test was done with the Pearson correlation. There was no significant relationship between age and time, r =.02, p =.849. The next test that was done was correlations, to see if there would be a correlation between the average check and the duration of the meal. There was a positive correlation between the average check and the desired duration, p =.098. Furthermore, there was a positive correlation between the average check and the long duration, p =.273. Also there was a marginal correlation between the average check and the duration too short, p =.215. These correlations were significant. There was no correlation between the minimum and maximum time between dishes and the desired duration. Minimum time, p =.000. Maximum time, p =.000. These correlations were not significant. There was a positive correlation between age and the frequency of dining, p =

18 8. SPSS analysis In this chapter the analysis of the result are described. Furthermore, an explanation of significant results are given. As well as the results that were of no significance. There was no signification between gender and the mealtime duration, which means that there was no difference between the dining habits of men and women. Furthermore, the results showed that guests that are employed in the service industry do not dine longer than those that work in other industries. The majority of the respondents have indicated that on average they order two dishes for dinner. There was no correlation between the amount of dishes in comparison with time. Which means that it does not matter for duration whether guests order one or several dishes. Time between dishes In order to find out whether mealtime duration could be decreased, respondents were asked what the minimum time and maximum time should be between their dishes. Time is counted from the moment that the previous dish is cleared away and the next dish is served. The majority of the respondents would like to have a minimum time between their dishes of 10 till 15 minutes. They are willing to wait a maximum of 15 to 30 minutes for their next dish. Average check price per person There was a positive correlation between the average check price per person and the mealtime duration. Results have indicated that guests who spend more money for their dinner expect to dine longer and are less impatient. Whereas, guests that have a shorter mealtime duration are less patient. Frequency of dining versus age There is a positive correlation between the frequency of dining and age. The older the respondents the more often they dine. However, the number of respondents is too low to describe it as significant. Nevertheless, this could be very interesting for future research, as it may be indicative of a shift in the target group for restaurants. Receiving the paycheck Respondents were asked the following: Would you mind to receive the check after your meal without you asking for it? 60% of the respondents indicated that they would mind receiving the check without asking. This question was included to see whether time could be reduced at the end of the meal. This type of service is already common in the USA, but perhaps not yet ready to implement in the Netherlands. Age groups versus time The different age groups (older than 39, older than 45 and older than 61) showed no dissimilarity in their mealtime duration. 18

19 9. Conclusion This chapter gives a description of the overall conclusion. The main research question was to find out whether a decrease in mealtime duration could lead to an increase of revenue. Three sub-questions were created to obtain the main result. The first sub-question was to see what the expected mealtime duration of the Dutch guest is. For this a survey was conducted and respondents were asked several questions about their service encounters. The TSM method was then used to discover the expected mealtime duration. It showed that the optimal time point was 88 minutes and the indifference point was 83 minutes, on average this would be 85 minutes. The expected mealtime duration of the guests was on average around 114 minutes. The second sub-question was used to find out if there was room to decrease the mealtime duration. The difference between the expected mealtime duration and the TSM is 29 minutes. Which means that the mealtime duration could be decreased with 25%. However, even with the knowledge of the dining time expectations, managers should be careful as to how they reduce the mealtime duration. Kimes, Wirtz and Noone (2002) suggested that guests do not understand or do not notice when the decrease in time is at the beginning or end of the meal. Yet, decreasing the mealtime duration at the end of the meal has to be done carefully, the majority of the respondents have indicated that they would not appreciate to receive their check without them asking. And guest satisfaction may drop when they are rushed during the main part of the meal. Study in SPSS has showed that guests that pay a higher check expected to dine longer and are more patient. Whereas guests that pay a lower check expected to dine shorter and are more impatient. However, guests that dine longer do not automatically order more dishes. Furthermore, the statistical method was used to find out where the mealtime duration could be decreased. There was no significance between the variables that were used. Nonetheless, it did show that the older the guests are the more frequent they will dine. Thus, restaurant operators could change their strategy in order to increase their seat turnover. The last sub-question was to see whether decreasing mealtime duration could lead to more seat turnover. Theoretically this is possible depending on the restaurants capacity. Consider a restaurant with 50 seats and four busy hours (240 minutes / 85 minutes * 50 = 141 guests). The restaurant would have 141 guests in one evening which means that the seat turnover has doubled. The main question was if a decrease in mealtime duration could lead to an increase in revenue. Seeing that the mealtime duration can be decreased with 25% and therefore increasing the seat turnover, calculation shows that the revenue can be increased with 34% per evening. These results give restaurant managers the opportunity to implement restaurant revenue management and thereby increasing their revenue. 19

20 10. Limitations of the research There are some limitations in this research which are important to mention. The first limitation is the type of restaurant. In this research the only restaurants that were included are causal/informal restaurants. Thus, the result may not be applicable for formal restaurants. Furthermore, the type of dining experience was casual dinner with friends or family, not including business dinner which may have a shorter mealtime duration. The sample used in this research was a convenience sample which means that the means to obtain respondents was via easy tools, for example facebook and relatives of friends. In an ideal situation the entire population would be tested, unfortunately it is impossible to include every individual in the country. Nevertheless, there were enough respondents to conduct a representative research, albeit not enough to be called a national opinion. On the other hand this research could be the beginning of many studies to come concerning restaurant revenue management. e

21 11. Recommendations In this chapter recommendations are given, note that these recommendations are derived from the results of this research. Results have shown that decreasing the mealtime duration will lead to an increase in seat turnover and in revenue. In order to decrease the mealtime duration there are several ways to do so without reducing the guests service. First of all restaurant managers could train their staff in order to speed up the service procedure. In appendix 5 a process map is displayed with a detailed service procedure of an ideal experience from the guest s perspective and includes factors as service quality standards and production goals. This process map is a helpful tool for employees, it identifies each interaction of each staff position. Thus, to know who does what, when and where. Furthermore, managers could use it to evaluate staffing performance and to redesign delivery methods when necessary. In addition, managers could evaluate the menu process and remove dishes that need too much time to prepare. Besides the process map, employees need a formal training program on service procedures and revenue management tactics. In the figure below you find an example that could help employees to know what to do during low and high demand. Revenue management strategy: What to do during low demand and high demand Strategy Low demand High demand Up selling: Do Don t Reservations: Accept Decline Host: Dedicated Host Multiple tasks Menu variety: Wide Narrow Menu preparation: Wide Fast Prices: Regular Increased (premium price) Promotions: Available None Bread: Brought by server On table Training staff in revenue-management strategies could also lead to changing the reservation policies. So that employees could increase the seat turnover, for example by spreading guests over the evening and selling seats more than once. Although, respondents have indicated that they prefer to start dinner at 19:00, a difference was found in age groups. Even thought the sample was small it showed that older guests would prefer to dine later than younger guests. Managers could change their marketing strategy to attract this group at later time and therefore encourage seat turnover. Moreover, results have shown that in general, guests order two dishes. Most restaurants offer a three course menu, this could be changed into two course with coffee or tea in times of high demand. In order to meet the guest s expectation, staff should make a distinguish between high demand (maximizing revenue by selling most high margin foods) and low demand (were staff should use up selling to increase revenue) 21

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