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Revenue Management and Restaurants

Motivation: Revenue Management (RM), a pricing structure that has gained traction in multiple business sectors, including the airline industry, hotels, and entertainment, is centered around the idea that prices should fluctuate depending on supply and demand for a product. Restaurants operate with a similar dynamic to hotels. Restaurant revenue is dependent upon consumer demand, which is highly variable and constantly changing. Therefore, restaurants may be able to maximize their revenue through RM. However, restaurants have yet to fully embrace RM.

Problem Statement:My study tested the impact of how a restaurant explains it use of revenue management on customer satisfaction and return intentions to see how a restaurant could implement RM in a way that satisfies customers and encourages them to return.

Results:Our study found that a customer's suspicion towards the restaurant as well as a customer's prior familiarity with RM were significant in predicting satisfaction and return intentions.

Implications: Restaurants should work to lower customer suspicion and activate customer familiarity with RM if it chooses to implement RM in the future.

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