The goal of every franchisee is to maximize profits, and no entrepreneur wants to leave money on the table. Revenue management is where business owners analyze and apply the data to customer habits to improve margins. Many refer to it as the art of selling the right product to the right customer at the right time and price.
Revenue management has traditionally been applied by businesses like airlines and hotels that see regular demand fluctuation. These industries rely heavily on dynamic pricing to improve low demand and maximize profits when demand is high. Daily price changes are unlikely to be popular among quick-serve restaurant customers, but revenue management doesn’t end at dynamic pricing. Quick serve restaurants can also employ menu engineering, upselling, promotions, and channel management.
For example, your menu should use eye grabbing tactics to influence customer choice toward your most profitable items. Your bestsellers present other opportunities; franchisees can optimize menu offerings and boost revenue per ticket by creating combos or offering tailored add-on options. And while dynamic pricing may not be a good fit for your restaurant, strategic pricing is essential to every business. Let the data guide how cuts and increases affect your bottom line.
A revenue management strategy can also assist your business in balancing the channels through which you receive business. Third-party delivery platforms help drive sales but also eat into profits. Experts recommend leveraging your loyalty program to drive traffic to direct ordering. Exclusive menu items or discounts can sway customers to your preferred ordering method without losing out on the visibility third-party apps provide.
Every business also has slow periods. While you probably won’t create consistent demand, revenue management tactics can help you maximize profitability when you have fewer customers. For example, if business lags on Wednesdays, that’s the perfect day of the week to offer an exclusive discount or meal. You can also employ targeted discounting among segments most likely to drop off, which will help drive their repeat business.
The key to revenue management is using your data to make the most of your inventory, demand, and pricing. Only through adapting to constantly changing circumstances can businesses maximize their profits.