Revpash: The unknown but most effective restaurant KPI

Author: Carmen Mallo (Revenue Management specialist and Founder of REMS Hospitality)  

RevPASH in Restaurants: Maximizing Revenue and Efficiency

In the restaurant industry, RevPASH (Revenue Per Available Seat Hour) is a crucial metric that helps determine how effectively a restaurant uses its seating capacity to generate revenue. A higher RevPASH indicates better performance and resource utilization.

Calculating RevPASH

To calculate RevPASH, use the following formula:

{RevPASH} = {Total Revenue}/{Available Seat Hours}

- Total Revenue: The total sales generated during a specific period, including revenue from food, beverages, and other services.
- Available Seat Hours: The number of seats multiplied by the number of hours the restaurant is open.

For example, if a restaurant generates 15,000 in a day, has 50 seats, and operates for 8 hours, the RevPASH would be:

{RevPASH} = {15000}/{50*8} = 37.50 

Improving Restaurant RevPASH

Knowing your RevPASH allows you to identify areas for improvement. Here are some strategies to enhance your restaurant's revenue:

High RevPASH: What It Means for Restaurants

A high RevPASH means that a restaurant is successfully utilising its seating capacity to generate more revenue. Here’s what it typically indicates:

- Optimal Space Utilisation: High seat occupancy and efficient table turnover.
- Increased Revenue: Effective strategies in pricing, menu offerings, and customer service.
- Operational Efficiency: Well-managed staff schedules, inventory, and promotional activities.
- Customer Satisfaction: Guests are satisfied with the dining experience, leading to frequent visits and higher spending.

 Low RevPASH: Areas of Concern

A low RevPASH suggests inefficiencies and potential issues that need addressing:

- Underutilised Space: Empty seats for prolonged periods, indicating missed revenue opportunities.
- Reduced Revenue: Potential issues with pricing, menu appeal, or lack of promotions.
- Operational Challenges: Problems with inventory management or staff scheduling.
- Customer Dissatisfaction: Guests are less likely to dine at the restaurant or spend less when they do, possibly due to poor food quality, service, or ambience.
- External Competition: Nearby restaurants might be attracting potential customers away.
- Lack of Marketing: Insufficient promotion and visibility of the restaurant’s offerings.

Conclusion

RevPASH is a vital metric for restaurant owners to gauge and improve the efficiency and profitability of their operations. By regularly monitoring and strategising around RevPASH, restaurants can ensure they are making the most of their seating capacity and providing a satisfying dining experience that encourages repeat business and higher revenue.