Restaurant managers constantly look for ways to take business to the next level. One crucial metric to focus on is RevPASH, or Revenue Per Available Seat Hour.
In this article, we'll break down the importance of RevPASH, how it's calculated, and provide actionable tips to help you increase your restaurant's RevPASH.
What is RevPASH?
RevPASH is a key performance indicator (KPI) used to measure the revenue generated per available seat hour in a restaurant. It's an essential metric for restaurants to track, as it provides insight into how effectively they're utilizing their seating capacity to generate revenue.
Why is RevPASH Important?
RevPASH is essential for restaurants to track because it helps identify peak and off-peak hours. By analyzing RevPASH, you can pinpoint when your restaurant is generating the most revenue and adjust your operations accordingly.
It also:
Enables data-driven decision-making: With RevPASH, you can make informed decisions about staffing, menu offerings, and marketing strategies to optimize revenue.
Provides a competitive edge: By tracking RevPASH, you can compare your restaurant's performance to industry benchmarks and make adjustments to stay ahead of the competition.
How is RevPASH Calculated?
Determine the total revenue generated by your restaurant over a specific period (e.g., a month).
Calculate the total available seat hours for the same period. This includes the number of seats in your restaurant multiplied by the number of hours it was open during that period. Then, divide the total revenue by the total available seat hours to get the RevPASH.
Example:
Let's say your restaurant generated $10,000 in revenue over a month, and you had 100 seats available for 120 hours (assuming 10 hours of operation per day, 7 days a week).
To calculate RevPASH:
Total revenue: $10,000
Total available seat hours: 100 seats x 120 hours = 12,000 seat hours
RevPASH: 10,000 ÷ 12,000 seat hours = 0.83 per available seat hour
Actionable Tips to Increase RevPASH
Now that you understand the importance and calculation of RevPASH, here are some actionable tips to help you increase your restaurant's RevPASH:
Optimize seating capacity: Ensure you're not over or under-seating. Analyze your RevPASH data to identify peak and off-peak hours and adjust your seating capacity accordingly.
Streamline operations: Identify bottlenecks in your service and eliminate them to increase table turns and reduce wait times.
Enhance the customer experience: Focus on providing exceptional service, and consider implementing loyalty programs or rewards to incentivize repeat business.
Analyze menu offerings: Review your menu and eliminate or modify items that aren't driving revenue. Consider offering seasonal specials or limited-time offers to keep the menu fresh and exciting.
Leverage technology: Implement table management software to streamline seating and reduce wait times. Consider using online ordering or delivery services to increase revenue.
Monitor and adjust: Continuously monitor your RevPASH and adjust your strategies as needed. Analyze your data to identify areas for improvement and make data-driven decisions.
To illustrate the impact of RevPASH on restaurant operations, let's look at two hypothetical examples:
Example 1: The Busy Bistro
The Busy Bistro is a popular restaurant in a bustling downtown area. With a seating capacity of 50, they typically operate at 100% capacity during peak hours. By analyzing their RevPASH, they discovered that their highest-revenue-generating hours were between 6 pm and 8 pm.
To capitalize on this, they adjusted their staffing and menu offerings to cater to this peak period. They also implemented a table management system to streamline seating and service. As a result, their RevPASH increased by 15%, resulting in a significant increase in revenue.
Example 2: The Seaside Grill
The Seaside Grill is a popular seafood restaurant located in a prime beachfront location. With a seating capacity of 80, they experience varying levels of occupancy throughout the day, with peak hours during lunch and dinner. By analyzing their RevPASH, they discovered that their highest revenue was generated during the dinner hours, particularly between 7 pm and 9 pm.
To capitalize on this insight, the restaurant made several strategic changes:
- They revamped their dinner menu, introducing more premium seafood options and pairing them with curated wine selections, appealing to the upscale evening crowd.
- They invested in enhancing the ambiance by incorporating live music and dimmed lighting, creating a more intimate and upscale dining experience during peak revenue hours.
- They implemented a dynamic pricing strategy, adjusting their menu prices slightly higher during peak dinner hours to maximize revenue per available seat.
By leveraging the RevPASH data and implementing these targeted changes, The Seaside Grill saw a remarkable 25% increase in their RevPASH during the dinner period. This not only boosted their overall revenue but also improved their operational efficiency by optimizing staffing and resource allocation during their most profitable hours.
Common Challenges and Solutions
As restaurant managers strive to increase their RevPASH, they may face several common challenges that can hinder their progress. Here are some common challenges and solutions to help you overcome them:
Challenge 1: Limited Seating Capacity
Solution: Analyze your restaurant's seating capacity and adjust it according to peak and off-peak hours. Consider adding or removing seating areas to optimize your space.
Challenge 2: Inefficient Service
Solution: Identify bottlenecks in your service and eliminate them to increase table turns and reduce wait times. Implement a table management system to streamline seating and service.
Challenge 3: Unprofitable Menu Items
Solution: Review your menu and eliminate or modify items that aren't driving revenue. Consider offering seasonal specials or limited-time offers to keep the menu fresh and exciting.
Challenge 4: Staffing Issues
Solution: Analyze your staffing needs and adjust your scheduling. Consider implementing a flexible scheduling system to ensure adequate staffing during peak hours.
Challenge 5: Limited Technology Integration
Solution: Implement technology integrations, such as table management software or online ordering platforms, to streamline operations and increase revenue.
If any of the above challenges apply to your restaurant, Booking Ninjas’ property management system is the breakthrough app you need. Request a demo to see how our reservation management tools can help you easily identify the strengths and weaknesses of your restaurant.