Growing Restaurant Revenues: Revenue Management Series. Part 2

In last week’s Spotlight on Tourism column we began a 3-part series: Growing Restaurant Revenues: Revenue Management. In part one, we defined the concept of what restaurant revenue management is and in this week’s column we will begin to unpack two of three restaurant revenue management strategies that will help to grow even the busiest restaurant’s revenues: Managing the restaurant’s capacity and controlling the table turnover.

Next week, in part 3 of this series, we will take a deeper dive into the third strategy: Engineering your menu for sales and profits.

Manage Restaurant Capacity

Managing your restaurant’s capacity is crucial as it impacts your profits, sales, customer service, and the dining experience. If you're over capacity, you don't have enough seating to meet the demand, which means you must turn customers away. Overcapacity leads to: Deterioration of service as staff are overwhelmed, a tense atmosphere, unhappy customers because employees are likely making more mistakes than usual, and overall reduced revenue and profits.

If you're under capacity, demand is low with a lot of available seating. Being under capacity has its own set of challenges as well: Fluctuating service quality from one server to the next, boredom among staff because they have nothing to do, a poor atmosphere which is a turn off for many guests, and overall profit erosion as there are not enough sales to cover costs.

The goal then is to achieve optimum capacity-where roughly 80% of your seats are occupied. With optimum capacity, everything is balanced. There's some open seating, but not too much, and staff have a decent amount of work to maintain the quality of service without feeling swamped. The result? You're able to maximize your revenue and profits.

But how do you properly manage capacity during high demand periods to boost sales, particularly as restaurants have limited space?

The answer: Maintain flexibility in your restaurant floor plan.

Firstly, have a mix of table types to accommodate different group sizes. Having two and four-seater tables is an excellent place to start because two and four-person groups are common. The goal is to avoid where couples enter your restaurant and sit at a four-seater table. Your restaurant loses two seats that some other paying customers can use.

Secondly, review your customers and analyze what size groups typically arrive at certain times of the day. Then, arrange your layout to accommodate different group sizes at different times.

Finally, use the right tools to help you confidently optimize your restaurant's floor plan. For example, there are table management software that enables you to design a restaurant floor plan and change these plans in response to peak periods.

Manage Table Turnover

Average order value varies among customers, but you can generally expect to make more revenue if you turn over more tables. So, your goal should be to maintain a suitable table turnover.

We say suitable because your servers shouldn't rush service while compromising on the quality of customer service. Instead, servers should maintain high service quality while remaining efficient.

Maintaining quality service is especially important in fine dining establishments. Customers pay a premium for quality food, which takes time to prepare and expect a highly personalized experience.

To improve the table turnover rate without compromising on service quality you could:

Use music, lighting, and color strategically. Studies have found that fast-paced music decreased meal duration. The downside was that average spending also suffered.

Provide subtle clues to inform guests the service is over. You don't want to rush guests. However, your servers can deliver the check promptly or even engage guests in a closing conversation. For example, waitstaff can say something like "So what are your plans now that your meals finished?" This question encourages the diner to think about what they're doing next and accept that the meal is over.

Hire skilled kitchen staff and train them. Trained kitchen staff who communicate and work well together will deliver food promptly.

Ensure waitstaff are well-trained. The more efficient waitstaff are at their jobs, the smoother and faster the service will be. Staff need to clean tables quickly, attend to guests promptly, and maintain adequate service. They should also drop off the check before customers ask for it and work in tandem with another waiter if there's a large group to speed up service.

Strategies to cope with Campers. Regardless of what strategies you do implement to control table turnover, there will always be customers who outstay their welcome. Consider campers who use your restaurant for the free Wi-Fi. They order very little and occupy a seat that another paying patron can use. To manage these campers: Create a dedicated area for campers so that they're not sitting on large tables, build long, communal tables, or provide limited Wi-Fi access.

To be continued in part three next week…

Caymera International is offering a course in Restaurant Revenue Management. In this course, we will guide you through the restaurant revenue management process, providing real-world examples, strategies, and techniques that will help you apply these tools to your own restaurant. For more information, please contact info@caymeragroup.com.

Brooke Meyer is the managing partner of Caymera International, a Caymanian-owned hospitality and tourism consulting and advisory firm. Visit Caymera at www.caymeragroup.com or email info@caymeragroup.com for more information.