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  5. (Mythical) Revenue Benefits of Reducing Dining Duration in Restaurants

(Mythical) Revenue Benefits of Reducing Dining Duration in Restaurants

File(s)
Thompson10_Mythical_revenue.pdf (283.14 KB)
Permanent Link(s)
https://hdl.handle.net/1813/71863
Collections
SHA Articles and Chapters
Author
Thompson, Gary
Abstract

This article tests and calibrates an often repeated assumption about the revenue benefits of reducing dining duration. This assumption is that a reduction in dining duration yields a proportional increase in revenue, so that, for example, a 20 percent reduction in dining duration would yield a 25 percent increase in revenue. This article's simulation-based study of over twelve hundred restaurant scenarios finds that, on average, the revenue bump experienced by reducing the dining duration is less than one-quarter of the amount predicted by the common assumption. Even in the most favorable circumstances, the revenue bump is less than one-half that predicted by the assumption. Thus, while reducing dining duration might result in a marginal increase in revenues, managers should not count on a substantial revenue bump.

Date Issued
2009-02-01
Keywords
restaurants
•
revenue management
•
capacity management
•
simulation
Rights
Required Publisher Statement: © Cornell University. Reprinted with permission. All rights reserved.
Type
article

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