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Reevaluating the RevPASH formula: advancing analytical perspectives in restaurant revenue and yield management

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  • Melissa C Kalan

    (Australian Revenue Management Association
    Taylor’s University)

Abstract

This paper critically examines the RevPASH formula used in restaurant revenue management. It highlights limitations in the formula, which combines seat count and service hours, making it difficult to discern variations in revenue drivers. To address this, the paper proposes a revised formula that separates variables for focused analysis. The new formula enhances understanding of the metrics purpose as a baseline unit of measure and reflects capacity as physical seating capacity. It also suggests pairing seat utilization for additional context and deeper insights into demand patterns, capacity utilization, and operational efficiencies. These advancements enable analysts to make more informed decisions for optimizing restaurant revenue and profit performance.

Suggested Citation

  • Melissa C Kalan, 2024. "Reevaluating the RevPASH formula: advancing analytical perspectives in restaurant revenue and yield management," Journal of Revenue and Pricing Management, Palgrave Macmillan, vol. 23(3), pages 274-278, June.
    • Handle: RePEc:pal:jorapm:v:23:y:2024:i:3:d:10.1057_s41272-023-00446-6
    DOI: 10.1057/s41272-023-00446-6
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    References listed on IDEAS

    as
    1. Jeffrey I. McGill & Garrett J. van Ryzin, 1999. "Revenue Management: Research Overview and Prospects," Transportation Science, INFORMS, vol. 33(2), pages 233-256, May.
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