Revenue Management at Prego Italian Restaurant

Abstract

After the busy lunch hours on a weekday afternoon, John, Prego's restaurant manager, was looking at the half-empty restaurant. He felt that it was in total contrast to the lunch and dinner hours, especially during the weekends, when they had to turn away customers. If seats were occupied during the off-peak hours, more revenue could be generated. During the peak periods, when customer demand exceeded the supply of tables and diners were unwilling to wait for long, Prego was losing revenue and, perhaps, even future business. John thought that there should be better strategies in which the revenue could be increased. John hired a consultant to help develop a revenue management strategy that would increase revenues without jeopardizing diner satisfaction. The case deals with the typical challenges in demand and supply in capacity management in the restaurant business and services management.