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.
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This practice paper does not rely on any external or real-world data sources. All scenarios and calculations presented in this paper are hypothetical and for illustrative purposes. No specific datasets or data sources were used in the research. The content is entirely based on fictional scenarios created for the purpose of demonstrating revenue management concepts and calculations.
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11 December 2023
A Correction to this paper has been published: https://doi.org/10.1057/s41272-023-00463-5
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Kalan, M.C. Reevaluating the RevPASH formula: advancing analytical perspectives in restaurant revenue and yield management. J Revenue Pricing Manag (2023). https://doi.org/10.1057/s41272-023-00446-6
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DOI: https://doi.org/10.1057/s41272-023-00446-6