RevPASH: Revenue per Available Seat Hour

Uploaded by RestaurantProfits on 20.03.2008

bjbj Hi, Ken Burgin here from Profitable Hospitality with another video tip of the week this week
looking at Revenue per Available Seat Hour. s an interesting way to measure the efficiency
and performance of a restaurant or caf . Of course, airlines have always measured their
revenue per available seat mile and hotels measure their revenue per available room nights.
So, doing something similar with a restaurant with the seating and the profit performance
makes sense. How do we do it? I put the figures together for a restaurant seating, sales and
profit performance. ve got 150 seats and we re open, for this stage for 4 hours, and 4
hours not being used. Per head spend averaging between $10 and $11, here s our sales revenue
for each hour. re working on food and beverage cost of 30% so there s our total gross profit
at the end and that of course is the figure that we re going to keep watching on how that
changes as we make improvements. Our seating efficiency is fairly low. We ve got 750 seats
available through that entire time and assuming people are being served just for 1 hour. 420
divided by 750 gives us a seating efficiency of 56%. Here s the figure we re talking about
in this calculation; Revenue per Available Seat Hour. How do we work that out? $4,500
worth of sales divided by 750 seats and that gives us the Revenue per Seat Hour of $6.
s make some improvement to this business particularly that first and last hour when there s a lot
of unused capacity. There s a row down the bottom here of the figures so as we make changes,
you can compare the improvements. ll introduce our Happy Hour special here. Even if people
are only spending $8 per head, if we can get 40 people in, we re starting to build up momentum.
And, once that first hour gets a little bit busier, the second hour there could/will be
improvements there as well. So, increase those numbers and, the last hour what if we had
some drink specials, some supper specials and dessert specials at that time? It may
involve a slight fall in per head spend but could we get that up from 20 people to 50
people. How are our figures looking now? Our gross profit is going from $3,150 and increased
by more than $500 to $3,689. Our sales have obviously increased considerably as well.
Our seating efficiency, 510 people being seated in a 750 seats is going up from 56% to 68%.
Our Revenue per Available Seat has gone from $6 to $7.03. We arrived at the figure by dividing
our total sales $5,270 by the 750 seat hours that we have available. The only figure that
s gone down is the Per Head spend. Usually, that s something that you want to see improving
but our strategy for increasing the overall profitability was to get more people along
in that first and last hour and that was done with some Happy Hour specials and supper specials
so it s reduced our Per Head spend but it s our overall gross profit that we re most
interested in and then a god improvement is being achieved there. If you re going to use
a spreadsheet like this to check your own figures, it s available from the download
center at Profitable Hospitality. You can make any changes you want to and see how you
can improve the ___________ of your business. m Ken Burgin from Profitable Hospitality with
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