Are customers ready to accept revenue management practices in the restaurant industry?

Abstract

Purpose

The purpose of this paper is to investigate the application of revenue management practices to the restaurant industry. The author wants to observe customers’ readiness to accept revenue management practices based on price variation, booking policy, table management, and control duration. The author also wants to measure the impact of these four practices on customer patronage intention.

Design/methodology/approach

A survey was conducted with 251 respondents. As the author had several latent variables, partial least squares, a variance-based structural equation modeling method, was used.

Findings

The author found that the majority of these practices are perceived unfair. The only two practices that are considered as fair are price variation between lunch/dinner, and cancellation in case of late. The most unfairly felt practice is the policy-related time spent at the table. The results also showed that the perceived fairness of these practices influences customer patronage intention. The author observed that price variation according to the lunch/dinner period, weekday/weekend period, and time of the day will influence the desire to frequent the restaurant. Booking policy will also impact customer patronage intention. The table management and control duration policies do not impact customer patronage intention, even if these practices are perceived unfair.

Practical implications

Restaurant managers, desiring to apply revenue management practices, should be aware of the fact that practices linked to price variation will have a stronger influence on the customer intention to revisit the company than control duration practices. Moreover, restaurant managers must “educate” their clients by clearly communicating the advantages of these practices for the customers.

Originality/value

Even if several studies focused on the fairness perceived of revenue management practices in hospitality industry, there is a lack of research about the impact of price variation and control duration on patronage intention, especially for the restaurant industry. This is the first time the author measured the concrete impact of price variation, booking policy, table management, and control duration on patronage intention. Moreover, the author integrated several new practices that have never been studied in the past such as the date of booking (e.g. 5 percent reduction if the booking was done four days in advance) or the fact of changing tables for dessert and coffee.

Citation

Etemad-Sajadi, R. (2018), "Are customers ready to accept revenue management practices in the restaurant industry?", International Journal of Quality & Reliability Management, Vol. 35 No. 4, pp. 846-856. https://doi.org/10.1108/IJQRM-01-2017-0007