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Revenue Management at Prego Italian Restaurant

RAGHVENDRA SINGH

MBA (ALRI)

3rd

SEM

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Pregos restaurant manager, was looking at the half-

empty restaurant, feeling that it was in total contrast to

the lunch and dinner hours,especially during theweakends. when they had to turn away customer.

During the peak period, when customer demand exceed

the supply of tabel and diners were unwilling to wait forlong, prego was losing revenue and perhape even future

business.

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Pregos planning to develop a revenuesmanagement strategy that would increase

revenue without jeopardizing diner satisfaction.

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COMPANY BACKGROUND AND MARKET

ENVIRONMENTpergo is an upscale, trendy and popular

Italian restaurant in singapore. It has

repeatedly been rated as one of singaporesbest restaurant by the Singapore Tatler an

authoritative review guide to the local

restaurant scene.

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The restaurant industry in Singapore is fiercely competitive, with

restaurants opening and closing on a regular basis.

Prego has been successful for over ten year and maintained its

reputation as a high-quality,authentic Italian restaurant.

Pergo upscale positioning has contributed to its continuing

success. Prego serves Lunch (11.30am-2.30p.m), Snack (2.30 p.m-

6.30p.m), Dinner(6.30p.m-10.30p.m) and Supper(10.30 p.m-

12.30a.m).The dining area consists of the Bar, Antipasto,Restaurante,pizzaria and Alfresco dining sections,with a total

capacity of 340 seat.

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The standard menu comprise approximately eight

appetizers and salads, three soups,27 entreesincluding pasta, pizza fish, and meat and seven

desserts. Prego also offers a wide selection of

wines from Italy, France, Australia,C

alifornia,and New zealand.A manager is always is on duty.

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REVENUEMANAGEMENT IN A RESTAURANTCONTEX

Revenue management has been successfully

applied to the airline and hotel industries for many

year, but has only recently been applied to the

restaurant industry.

Its primary focus is managing customer demand

through the use of variable pricing and capacitymanagement to maximize profitability.

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The four strategic level for yield

management.

1.Calendar(reservations, booking)2.Clock(duration controls, turnover rates)

3.capacity(demand smoothing)

4.pricing(price fences,discounts)

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Revenue management is particularly suited for

the restaurant industry, with its relatively finitecapacity of available tabels, perishable inventory,

microsegmented market of restaurant guests,

fluctuating demand, relatively low variable to

fixed cost ratios, and reservations.

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PREGOS SERVICE BLUEPRINT

A service blueprint for prego was developed.Itshows the individual steps of the whole dining

process,starting from making reservations to

customer departure.

1.Advance Reservations

phone reservation were taken as long as tabel

were still available,at the exact time requested by

the customer. No credit card guarantees wereasked except for special occasion like valentines

Day,christmas Eve,New years Eve and chinese

New year.

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2.Customer Arrival

Reservation generally accounted for about 50 to60 percent of all arrivals, with an even higher

proportion on peak day. when a table was held

even when other guests were waiting to beseated. If a customer other guest were waiting to

be seated.

If a customer with reservation was late or did not

show up, the reserved table might have been

sitting empty for some time even though other

guests were waiting.

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3.Customer Greeting

This was handled by two three hosts stationed atthe entrance. These hosts were responsible for

the flow of tables and must track when tables

become available. However, prego had no table

management system and the large size of the

restaurant .

Often made it difficult for the hosts to know

which one were available.

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4.Customer seating

once a table became available, the host was

notified and tried to find the next party on the

waiting list. There were often lags between thetime when the table was ready and when the

host was notified, and until the waiting party was

identified.

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5.Customer order

Drink order were taken first. once the drinks were

delivered food order were then taken. With thewide variety of wines and food available,

customer may spend some time making their

choices.

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6.Dessert and coffee

The restaurant tried to use suggestive selling to

increase the average check and guests were

encouraged to order dessert and coffee,even

during peak hours.

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7.Payment and Departure

Most payment were done via credit card,which

took longer to process than other payment

methods. Delays could occur when customerscould occur when customers could not aatract the

servers attention;when staff prepared the check

and during payment processing.