Revenue Per Available Seat Hour

Definition:

Revenue Per Available Seat Hour (RevPASH) is a performance metric used in the restaurant industry to measure the revenue generated for each available seat during a specific hour of operation.

It is calculated by dividing the total revenue by the number of available seat hours (i.e., the number of seats multiplied by the number of hours they are available for service).

RevPASH helps restaurant operators assess how effectively they are utilizing their seating capacity and can guide strategies for optimizing table turnover, pricing, and overall efficiency.

Why It Matters:

1. Maximizing Revenue:RevPASH provides insights into how well a restaurant is converting its seating capacity into revenue.

   By focusing on increasing RevPASH, restaurants can improve profitability without necessarily increasing prices or adding more seats.

2. Operational Efficiency:
   
   Understanding RevPASH helps identify peak times and periods of low occupancy, enabling better management of resources such as staffing and inventory.This can lead to more efficient operations and reduced waste.
3. Table Turnover Optimization:RevPASH highlights the importance of table turnover in driving revenue.

   By analyzing this metric, restaurants can implement strategies to improve turnover rates, such as streamlining service or optimizing reservation systems.

4. Pricing Strategies:RevPASH can inform pricing decisions by showing the impact of different pricing models on revenue generation.

   For example, restaurants may experiment with dynamic pricing during peak hours to maximize revenue per seat.

Calculation:

RevPASH is calculated using the following formula:

For example, if a restaurant generates $5,000 in revenue during a five-hour dinner service and has 100 seats available, the RevPASH would be:

This means the restaurant earned $10 for each available seat per hour during the dinner service.

Example in Action:

A popular downtown bistro calculates its RevPASH and finds that it is significantly higher during weekend brunch hours compared to weekday lunches.

To capitalize on this, the restaurant decides to introduce a special brunch menu and increase seating availability during these peak hours.

They also implement a reservation system to manage table turnover more efficiently.

As a result, the restaurant increases its overall RevPASH, leading to higher profitability during peak times without needing to expand its seating capacity.

Additional Resources & Related Terms

• Table Turn Time:Table Turn Time, also known as table turnover time, is a key metric in the restaurant industry that measures the average amount of time it takes for a table to be occupied by one group of customers, cleared, and then reset for the next group.
• Average Check Size:The average amount spent by customers per transaction, which can influence RevPASH depending on how effectively the restaurant can turn over tables.

Conclusion:

Revenue Per Available Seat Hour (RevPASH) is a crucial metric for restaurant operators looking to maximize the profitability of their seating capacity.

By understanding and optimizing RevPASH, restaurants can improve operational efficiency, increase table turnover, and enhance overall revenue without necessarily increasing prices or expanding seating.

Regularly analyzing this metric allows for strategic decision-making that drives both immediate and long-term financial success in the competitive restaurant industry.