Restaurant Revenue Per Available Seat Hour (sometimes called RevPASH) is a key metric used in yield optimisation. When compared with metrics like hourly labour rate
About RevPASH (RPASH)
RevPASH originated in the airline industry and look at how much revenue was generated by each flight. It is a combination of the number of seats available, how long the flight was and how much revenue was generated. Airlines use it to optimise the number of flights between destinations, the type of aircraft (number of seats) and in calculating dynamic pricing for each of the seats.
The formula for RevPASH is
Revenue / Seats / Time
Ways to increase RevPASH
- Seating flexibility – a 4 top
The manipulation of RevPASH needs to be done in conjunction with other metrics, eg Rent PASH. Increasing the number of hours that a Restaurant is open decreases Rent PASH, but will, in general decrease RevPASH so a balance needs to be struck between the 2, or a plan to augment demand in the new times. A classic example is a Restaurant that has only done dinner adding a lunchtime service. Until it becomes stable with regular customers, RevPASH for that service can be very low.
How to make sense of the Revenue per available seat hour metric
This metric can be used to measure the overall efficiency of a Restaurant and determine trends. It is simple to determine on a monthly basis, which is what some Restaurant operators do, but this only reflects the change in revenue. The secret to getting the most understanding is to calculate it for a more granular time period. This will clearly show daily variations, but is best when it reflects hourly (or less) time frames. This can highlight the peaks. One difficulty in calculating the KPI is to determine the checking opening and closing time. This gives insights into the average dwell time of party. Decreasing dwell time can increase the number of turns. If there is unserviced demand, this can be a great way to increase the KPI.
Thompson and Sohn wrote an excellent paper that goes into depth on how to accurately measure this metric.
Difference between the airline and restaurant KPI
The RevPASH calculation for airlines differs with Restaurants in a number of key ways, but these highlights some of the opportunities that Restaurant operators have to increase revenue.
- The number of seats is generally fixed for a restaurant. There is no option to swap in a bigger plane with more capacity.
- There is no option to run concurrent flights to deal with increased demand.
The options for Restaurants are to open new locations, open for longer hours (or shorter), potentially increase the number of tables.
This is one of our Restaurant Profitability Calculators.