Restaurant Yield Management

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Within the restaurant, airline & hotel industries the characteristics that feature most prominently are Intangibility, perishability & variability. All these industries use these characteristics to their own advantage to enable them to attract new customers & also retain their current customers.

Intangibility is a characteristic that all the industries have & play a part in the service that they create.

The building & premises help to make the customers feel welcome, comfortable & help to bring energy to the service.

As with all the industries they have a high involvement so there is such an importance for the companies to get it right with location, the properties d�cor for which the service the place in.

The staff being polite, friendly & approachable is a characteristic they all would like to share; majority would endorse that ethic but at times may not always be practiced.

Within certain hotels the languages that an employee speaks is on their name badge, this helps the customers feel at ease.

Perishabilty

Websites & the internet can provide the customer with an idea & an incite for what they can expect & enhance the image before the customer attends.

Perishability characteristics feature in the three industries but in different ways, perishabilty is described by Palmer (2005) as “services that can’t be stored”.

In restaurants once the product are passed a sell by date or perished then they can’t be used again, similarly within the other industries they involve perishable goods that can’t be used once a certain time has passed.

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With hotels once a time has past that room within that time cant be used, like once a plane has taken off you cant sell another ticket on that plane because of the fixed seating. Ways in which they will overcome this problem is that they will attempt to deploy a yield management strategy to make sure that capacity is at its maximum.

Variability has been important in these service industries as it can mean the whether their service is standardised, whether the customer can be an influential part of the services through customisation & choose the service. With more demand for customisation Venkat (2007) describes the reason for this as

“In this age of product diversity, mass markets are progressively fragmented with different segments of customers demanding ‘customised’ products.”

As every customer is different their expectation of the service that’s provided is going to be different, a way in which organisation have overcome this through standardising practices & letting customers choose the service.

In restaurants many standardizations take place including scripting, settings & menu’s, this way the are able they try and meet more of the whole customers expectancies, rather than tailor it to one certain person.

Airlines & hotels have used the opportunity to allow the customer to individualise their experience before the partake, allow them to choose seating, check in before they get there & offering services like a morning paper in hotel that the read. This use helps to make the customer feel welcome & gains customer loyalty.

Although inseparability is not as common as the other characteristics it has become more of a key role with the introduction of certain technologies through web checking, online reservations & online & digital food delivery it enables them to produce the service.

Lack of ownership effect all three industries as the service they provide can’t be owned, this said in some instances the customers feel as though they do own a part of the service. With this problem all three industries have attempted to overcome it by putting features in place that give the consumer that feeling of ownership, this has been by creating customer loyalty & relationship marketing.

The hotel market has introduced regular offer, savings on certain timings & potential upgrades to get customers interest. They’ve also looked at selling their own merchandise by selling their own towels & dressing gowns.

The internet has been used by all three with the inclusion of e-newsletters to its customers on a regular basis with updates.

Restaurants have created the ownership through loyalty cards and trying to create an experience within the restaurants like TGI’S & Hard Rock Caf� where you can get souvenirs like photos. Airlines through the use of air miles which encourage customers to re use the airline & also create a relationship with them.

Characteristics at Coyote Loco Restaurant

In regards to the Coyote Loco restaurant & the service characteristics that are most important, it can be seen that intangibility, perish ability & variability are the key characteristics to enable quality service.

Perishability – With the restaurant having reservations & tables available throughout the day it is vital they make the most of each potential yield, as once time has past the opportunity is gone which means that that money is lost. With this in mind it’s key that they look at ways in which they can make the most out what they have available & spread the demand.

Intangibility – Several intangible aspects affect the service quality of Coyote Loco, from the atmosphere, staff & the experience the restaurant creates.

The atmosphere can invite custom as it comes across as a friendly, lively & exciting place to eat & that using this to create an experience for the customers could help to create loyalty & attract segments not previously targeted.

The customer service of staff & how they treat the customers is a massive part of creating service quality, staff being polite, courteous & going the extra mile can have an imprint on customers minds & even mean they remember the service more than the product they’ve product. Internal marketing is important as the staff can have such an effect on so many other areas of the service & almost act as part time marketers.

In regards to variability the fact that certain standardisations in seating and the time at which customers take is something that isn’t deployed enough and means that they are missing out on potential yields.

The use of a revenue management strategy can be vital for Coyote Loco in making sure that the restaurant makes the most of each yield. The meaning of revenue management can be seen by Kimes (2001) as

“An umbrella term for a set of strategies that enable capacity-constrained service industries to realize optimum revenue from operations.”

This illustrates the importance of the strategy which is why many organisations use these types of strategies including industries where they share the characteristic of perishable products such as restaurants.

By using the 4c’s of yield management within the strategy & looking to incorporate parts of each c into the strategy they identify weaknesses & opportunities in their service for revenue management.

As Coyote Loco has larger demand during months when student are there the use of Calendar strategy will help to forecast future demand by tracking historical demand patterns.

This process will involve a forecasting procedure to allow for overbooking & the probability that some customer may not show up. Having a system that could forecast demand will give an advantage & they could include using a threshold curve to do this.

Clock strategy will enable Coyote Loco to dictate the amount of time each service cycle last. This approach will be imperative to the restaurant and be the main tool used during busy periods as it could reduce certain times in the process & potentially allow them to take more customers at those times, this also needs to done carefully as although in other strategies some customers may be sensitive to the price this also could have the adverse effect on customers who are time sensitive.

To attract the price sensitive customer the restaurant could use a cost strategy of lowering the price & restricting the menu at slower periods to try and bring those customers in, the use of a simply menu would also mean they could potentially reduce some of there running cost during these times like lunch time. This said the restaurant need to make sure that the customer who eat at peak times feel like there getting the better service and possibility of upgrading there meal or using something else to improve the service like loyalty cards, preferential booking features, dinners club & even special seating to keep that customer loyalty.

A strategy that many companies have used to make sure they make the most of each potential yield they have available is changing the prices charged for certain slow periods. This way they can lower the prices when less busy to make sure they get as many customers through the doors.

In the case of Coyote Loco with the mid week & lunch time troughs the use of special deals at these times like two courses for a reduced price or early bird specials to reward customers who eat earlier in the day.

At lunchtimes the use of buffet or set menus could not only attract customers but could also mean they could reduce their costs. Many restaurants have buffet lunches at a set price where its all you can eat, this gives the incentive that they are being given the opportunity at a reasonable cost, although setting a time limit or a set allocation would be beneficial. This way they could also attract other target segments; with the lunchtime buffet they could try to attract the local businesses on their lunch & to further develop the connection with students.

The implementation of further developing customer loyalty, as the restaurant has some loyal customers its important to make sure they are rewarded for coming back & that new customers they can create that loyalty.

Capacity management is key as with the restaurant they will have a good idea of how long customer duration will roughly be, they need to use this information along with the reservations they have to forecast the amount of patrons to avoid overcrowding, turning away of custom & customer displeasure. They could do this by deploying a table management system to make sure the change over time between customer’s runs smoothly, training the hostess in regards to this will help & to use standardisation in regards to the table layout at busy periods will potentially increase capacity.

The use of the whole restaurant will also enable the to gain more capacity as many customers staying at tables to drink they could encourage the use of the bar & also take advantage of the outside area during summer months. A tactic that many restaurants also use for customer while waiting to be seated is having a drink at the bar, this could also be used within the restaurant and could be encouraged by staff for before & after meals.

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Restaurant Yield Management. (2019, Dec 07). Retrieved from http://paperap.com/paper-on-evaluating-opportunities-revenue-management/

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