All you need is revenue

Revenue management is all we need now. Revenue managers and tools are here to mostly help businesses with a perishable inventory grow sales. This is done by adjusting pricing and inventory, and ultimately selling the right product or service, at the right price and at the right time.

This obvious task requires good practise and an in-depth understanding of the market.

From a historical perspective, the airlines are the pioneers for developing the secret behind revenue management. They soon realised there was more they could be doing to make more money. They soon started to overbook some seats to compensate for the passengers who did not show up. They started to offer discounts to fill as many seats as possible on every flight. With time all these techniques have evolved and expanded to other industries such as hotels, theatres or car rental companies.

In most of these businesses, there is now a separate department in charge of revenue management. They analyse the competition in-depth, set up prices, define the most optimal business mix to maximise revenue and forecast accordingly. They also advise other departments to where resources should be invested and are a fundamental role in defining the overall commercial strategy of the company.

The appetite for revenue management is growing in restaurants at a fast pace. This is because restaurants should not only aim to fill in each seat available but also understand how much money they can generate and how they can do it. Is it by changing the layout of the restaurant and encouraging other party sizes? Is it by managing the flow of reservations differently? Is it by changing how people book your restaurant? Is it by targeting the most profitable audience of all?

The benefit of applying revenue management into restaurants is undeniably a reality yet to come, and it is only a matter of time until every restaurant is fully aware of how to maximise revenues by applying yield techniques.

While every business works hard to achieve good results, it is fundamental to have a set of KPIs that will help you navigate better.

 Examples of these terminologies are RevPash, Occupancy, Turn, Average Spend per Head or Cash Impact. Some of the words might be in your day-to-day vocabulary, while others might be pretty new to you.

So, if you would like to learn more about revenue, we are the right people to talk to!