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Opinion Article Food & Beverage

Revenue Management in Restaurants: Unbundling Pricing for Reservations from the Core Service

A substantial minority of restaurant guests would be willing to pay separately for a restaurant reservation, while a much larger group is not supportive of this approach, according to an online survey of 297 U.S. residents. Those respondents who are most likely to accept the idea of paying for a reservation represent customers who are also relatively familiar with this practice.

Sheryl KimesJochen Wirtz
By Sheryl Kimes and Jochen Wirtz

A substantial minority of restaurant guests would be willing to pay separately for a restaurant reservation, while a much larger group is not supportive of this approach, according to an online survey of 297 U.S. residents. Those respondents who are most likely to accept the idea of paying for a reservation represent customers who are also relatively familiar with this practice. The survey respondents were reacting to three possible scenarios for unbundling the value of the reservation from that of the meal itself. Based in part on actual industry practice, the three scenarios are (1) a reservations company charges for a reservation but does not share the proceeds with the restaurant; (2) a reservations company charges for a reservation and shares the revenue with the restaurant; and (3) the restaurant charges a reservation fee without involving a third party. For revenue management purposes, familiarity with the unbundling practice is related to guest acceptance of that practice. Since numerous companies now sell prime restaurant reservations as a separate product, it seems likely that over time the guests' familiarity with paying for at least some reservations will grow, along with their acceptance of the practice.

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Food & Beverage
Sheryl Kimes
Sheryl Kimes
Revenue Management Expert, Cornell

Sheryl E. Kimes is an Emeritus Professor of Operations Management at Cornell’s Nolan School of Hotel Administration and a Visiting Professor of Analytics and Operations at the Business School at the National University of Singapore. Her area of specialization is revenue management.

Jochen Wirtz
Jochen Wirtz
Professor of Marketing, CHR

Jochen Wirtz is Professor of Marketing at the National University of Singapore. He holds a Ph.D. in services marketing from the London Business School. Dr Wirtz has published over 200 academic articles, book chapters and industry reports.

CHR
School-University

The Cornell Institute for Hospitality Labor and Employment Relations was established in 2013 as a platform for students, employers, employees, unions, and their advocates involved in the hospitality industry. The institute's mission is to support educational programs, sponsor and disseminate research, and hold conferences and roundtables dedicated to modernizing labor and employment relations, analyzing labor and employment law, and improving...

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