(Mythical) Revenue Benefits of Reducing Dining Duration in Restaurants
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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.
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restaurants; revenue management; capacity management; simulation
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