Restaurant Revenue Management Strategies to Maximize Every Shift

As a restaurant operator, your ultimate goal is to keep your restaurant full, your staff busy and your guests happy. But today, inflation coupled with fluctuating demand means simply filling seats is no longer enough.

To thrive in this turbulent economy, you need adaptable strategies that go beyond a one-size-fits-all approach to making money.

That’s why forward-thinking operators are implementing a data-driven methodology known as revenue management, just as the hotel and airline industries have for years. Revenue management helps you maximize profit as demand for your restaurant ebbs and flows.

In this article, we’ll explore four fundamental revenue management strategies designed to optimize both busy and slow shifts to help you get the most out of every seat.

Restaurant revenue management (RRM) is defined as selling the right seat to the right customer at the right price and for the right duration. Align all of these “rights” in one sitting, and you’ll have earned the most revenue possible for your restaurant while also delivering the greatest value to the customer.

But the definition of “right” can vary from shift to shift. According to Sherri Kimes, a revenue management expert and professor at Cornell University, “every dining shift has its own ‘beat’, and RRM is the art of dancing to it. From the lively tempos of weekend nights to the mellow rhythms of weekday mornings, it’s about choreographing your strategies to match the mood and maximize returns.”

To help you find your restaurant’s rhythm, we’ve applied some of Sherri’s revenue strategies to four common challenges during high and low demand periods: filling tables, optimizing turn times, reducing guest attrition and maximizing booking channels.  

Whether your restaurant accepts reservations, runs a waitlist or uses some combination of the two, you want your seats occupied all day, every day. But in reality, your demand may ebb and flow for different shifts and days of the week.

To better capitalize on demand, review your historical booking trends to determine your slowest and busiest shifts. Once you have a sense of your high demand and low demand times, the next step is to implement strategies to help you generate the most revenue for each shift. 

At peak times such as holidays and weekends, demand is high — but not all reservations are created equal. Employ strategies that ensure you fill your seats with your most valuable guests.

On the other hand, if the upcoming Saturday’s book is looking light, you’ll want to switch tactics and make it easier for customers to book.

FYI: Investing in a reservation and table management system like SevenRooms allows you to automate the above tactics. In fact, our automated seating algorithm reviews over 10,000 combinations per second to find the best seat for every guest at any moment.

Savvy operators continually look at their capacity utilization — that is, the percentage of seats in the restaurant that are full at any given time. Since optimizing dining durations is key to determining how many reservations you can offer, it’s important to look at the factors that influence it.

For busier shifts, you’ll want to ensure you’re not leaving money on the table. Let’s say your average turn time for a two-top is 90 minutes on a busy Thursday night, but your online reservation slots are for 4 p.m., 6 p.m., and 8 p.m. That thirty-minute gap costs you dearly, as you could likely fit another full turn on that table before the kitchen closes if you adjust your reservation pacing.

Conversely, for slower nights, offering limited seating times is likely not as problematic. So, you could adjust your reservation inventory to reflect more flexible reservation and capacity durations.

Use an advanced table management system that can accurately report average turn times to optimize your dining durations, the number of reservations and the reservation times offered. (SevenRooms has a tool for this, and it also suggests more accurate configurations based on your dining data each month so your venue always operates at its highest capacity.)

In addition to boosting revenue, optimizing turn times also helps improve guest sentiment. After all, who doesn’t enjoy the buzz of a busy restaurant or feel frustrated when rushed to leave while other tables sit open?

Guest attrition is a restaurant operator’s worst enemy. That’s why it’s important to make every effort to reduce no-shows and late cancellations — or strategically overbook to account for them.

Restaurants that have last-minute demand and high walk-in rates can generally offset the costly impact of reservation no-shows and cancellations by simply accommodating walk-ins. This is a win-win because you satisfy guests you weren’t expecting and oblige guests that have last-minute changes (increasing the likelihood they’ll dine with you in the future).

Pro Tip: If you prefer not to enforce these types of policies, consider creating ghost tables within your reservation inventory, allowing extra reservations to be booked during primetime. This strategically offsets the estimated no-shows which helps maximize table occupancy without adding friction to the booking process.

Operators of reservation-only restaurants and small venues like omakase-only counters should offset the cost of no-shows with a cancellation penalty. This allows them to recoup the cost of inventory and the opportunity cost of turning others away as they don’t have the last-minute demand to counterbalance. 

No-show and cancellation reports can help you understand how many guests dip out of their reservations at the last minute. Similarly, for restaurants that accept walk-ins, waitlist management reports provide insights into quote accuracy, average wait times and abandonment rates. (Obviously, you want to keep the latter as low as possible!)

With so many different ways for guests to find you — Reserve with Google, your website and Instagram, just to name a few — it’s important to look at your booking channel mix to understand where your reservations are coming from and how to optimize them for the most value.

For example, restaurants using a third-party reservation marketplace like OpenTable and Resy should consider optimizing their reservation inventory based on demand.  

Let’s say the majority of your prime-time bookings are coming directly from Google. One best practice is to restrict your reservation availability on third-party channels to your “shoulder times” like 5 p.m. and after 9 p.m. to maximize direct bookings during peak times. This way, you’re not paying for covers that would otherwise be free.

FYI: Discover how Nobu London Old Park saved £317,000 on third-party commission fees in 8 months by switching to direct channels using SevenRooms. 

For slower periods or for newer restaurants trying to build exposure and demand, you can open up your reservation availability on these marketplaces during peak times to drive business when you need it most. 

Revenue management is a multi-faceted strategy that business owners in multiple sectors employ to build healthier businesses. But what works for airlines won’t necessarily work for hospitality venues.

Luckily, SevenRooms is simplifying this process with a first-of-its-kind Revenue Management product custom-built for restaurant operators. Its features help you unlock hidden growth opportunities with recommendations tailored for your business, empowering you to optimize your reservation book, increase covers and drive more revenue.

Leave mathematical analysis to us and get back to delivering human hospitality. With fresh insights provided to you each month, SevenRooms Revenue Management gives you clear, concise recommendations that can be actioned with a single click. Implement changes quickly and with confidence as you use data to support adjustments to your operating model.  

To learn more about how SevenRooms provides the actionable insights you need to grow your business effectively, download our revenue management guide below or book a demo today.

Dive Deeper: Revenue Management: How to Make More Money From the Same Seats