Yield management
Yield management is about maximising the total revenue which you can earn from your restaurant business by regularly adjusting your prices up or down, based on on your knowledge of what is happening on the ground and what your competitors are doing.
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Lowering your prices can attract more customers. Price reduction is an effective way of maximising the total sales of a perishable product.
Yield Management: Price Reduction Example
- A college restaurant normally sells a stew dish at €10 a serving.
- Business is slow on Monday and they have a lot of stew left towards closing time which they will need to throw out the next day.
- They distribute flyers offering the stew on special offer for €7.50.
- They sell all the stew and earn more total sales than they would have had they kept their price at €10.
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Yield Management: Price Increase Example
- A college restaurant normally sells a stew dish at €10 a serving.
- They are aware that the college is hosting a large conference on Tuesday.
- They decide to increase the stew dish price to €12 on Tuesday as demand is higher due to increased customer numbers.
- They sell all the stew at €12 and earn more total sales than they would have had they kept their price at €10.
Remember!
When you have decided your price, remember to add VAT.
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