A STUDY ON PRICING AND MEAL DURATION STRATEGIES IN RESTAURANT REVENUE MANAGEMENT

Lidya, Prof. Ir. Nur Aini Masruroh, S.T., M.Sc., Ph.D., IPU., ASEAN Eng

2015 | Skripsi | S1 TEKNIK INDUSTRI

Restaurants have two strategic revenue management levers to control: meal duration and price. Many restaurant managers control their revenue by offering promotions (e.g., happy hour, vouchers, discounts), adding surcharges for special treatments (e.g., earlier booking, seats with best views, special room) or by controlling its peak and off-peak prices. While another strategic lever, meal duration, is rather difficult to count on because restaurant managers do not know exactly to which extent duration should be reduced. Though many researches have been conducted on these issues, but they were still independently discussed. In order to understand and to generate a restaurant revenue model considering both strategic levers, this research made an adjustment in the pricing term. Since the model is built to see the overall relationship as well as the contribution of meal duration and price to revenue, the term “reference price” is used to replace the usual “demand-based price”. Reference price is used to learn the spending behavior of customers from average check per customer without focusing on particular menu. In this research, mathematical models for demand function and meal duration function are developed separately for peak and off-peak periods by using a simple linear regression while reference price function can be applied for both peak and off-peak. Demand functions were built using stochastic models whereas meal duration functions and reference price function were built using deterministic models. Through a thorough study, it was found that there is a direct effect of price to revenue, while meal duration’s effect is indirect. After validating these models using paired samples t-test, they are used to optimize. Meal duration function and reference price function are substituted to find meal duration function in term of reference price. By using first derivative of revenue function, the optimal reference price can be derived and the value of optimal reference price will be inserted into meal duration function (in term of price) to find the optimal meal duration as well as the optimal revenue during a specific peak or off-peak hour. As a result, revenue could be increased by 27% during peak periods and 68% during off-peak periods using these models.

Kata Kunci : restaurant revenue management, meal duration, reference price.