The restaurants and cloud kitchens sector is witnessing a radical shift toward data-driven growth. Success isn’t just about quality and service, it’s also about the ability to analyze data and make smart pricing and operational decisions.
Boosting revenues is completely different from increasing sales. Sales may go up when you reduce prices, but that may cut into your restaurant’s profit margin.
On the other hand, revenue management focuses on selling the right product to the right customer at the right time and for the right price. This ensures achieving the highest profit possible from every order.
With operations in restaurant chains and cloud kitchens getting complex, the role of revenue management, or the position of a restaurant revenue manager, has emerged as a new strategic pillar in dining concepts.
In this article, we explore the role of the restaurant Revenue Manager and how it supports different functions in restaurants.
What Does Revenue Management Mean in the Restaurants and Cloud Kitchens Sector?
Restaurant revenue management relies on data analysis, product pricing, and demand management to maximize the return on every aspect of the restaurant. This kind of management focuses on raising total revenues through several channels, such as increasing bookings and visitors, improving menu pricing, raising average customer spend, speeding up table turnover, and benefiting from the restaurant’s capacity.
It also pays attention to managing different sales channels like food courts, delivery apps, reservations, and external platforms. A restaurant revenue manager usually works within a group or chain of restaurants rather than a single-branch restaurant.
What are the differences between a revenue manager and a restaurant manager?
Traditional restaurant manager: Restaurant managers primarily focus on ensuring smooth daily restaurant operations.
Their main goals are customer satisfaction, service quality, and staff supervision. Managing with a daily operational mindset, they’re concerned with training staff and follow-up, discipline, and the customer experience inside the restaurant.
Revenue Manager: Revenue managers are responsible for maximizing the restaurant’s returns. Their focus isn’t on daily operations but on numbers like pricing, analysis, and demand forecasting.
They use modern analytics tools such as point-of-sale (POS) reports as well as reservations and sales data. They work with a long-term strategic mindset to serve senior management.
Why Restaurant Chains and Cloud Kitchens Need a Revenue Manager?
The logistical and financial complexities of managing restaurant chains and cloud kitchens require a dedicated expert focused on continuously enhancing the restaurant’s financial performance.
Here’s why hiring a revenue manager is a necessity for a chain of restaurants or cloud kitchens:
Managing challenges in scalable operations
Managing several locations or brands from a single kitchen requires unified and controlled operations. Without a restaurant revenue manager, it’s difficult to ensure that all branches follow the same pricing strategy, recommendations, and higher-profit generation. Their role is to automate scalable strategic decisions, instead of letting each branch operate in isolation.
Monitoring pricing, profitability, and growth
A revenue manager designs dynamic pricing strategies tailored to different locations, peak hours, and customer behavior. The goal is to raise prices at the right time without losing demand, activating sales during quiet times, and improving the sales mix so that every transaction becomes profitable.
Further reading: Marketing Strategies for Restaurants to Adopt during Rush Hour
Organizing multiple ordering channels
Revenue managers track orders through food courts, delivery apps, and the restaurant’s website or app. Each channel has a different cost and commission to ensure highly profitable channels receive stronger marketing support and that commission doesn’t eat into the profit margin.
Enhancing menu profitability and cost control
This mission is linked to menu engineering, where dishes are financial assets, not just items on the menu.
Restaurant revenue managers analyze sales data and ingredient costs to identify high-margin dishes so they can be supported with marketing campaigns and highlighted on menus.
This is in addition to training staff on recommending these dishes to increase their sales.
As for underperforming dishes, revenue managers decided whether to adjust the recipe, change the price, replace the dish, or remove it.
They also work on managing food costs by accurately predicting demand, reducing waste using inventory management software, and improving wholesale purchasing to guarantee profitability while maintaining quality.
What Are the Main Duties of a Restaurant Revenue Manager?
A revenue manager is the analytical brain directing pricing and operational strategies. Their main responsibilities include:
- Menu engineering and pricing optimization
Through menu engineering, revenue managers analyze the performance of each dish on the menu based on its popularity and profit margin.
The goal is to promote high-margin dishes, reprice them, or remove underperforming ones. One of the revenue managers’ tasks is optimizing pricing to determine the ideal selling price. This means that applying dynamic pricing varies by sales channel, such as higher prices on delivery platforms than ordering from the restaurant.
- Demand forecasting and capacity management
Revenue managers predict demand using POS system data to accurately predict demand levels in coming days.
Accurate forecasting also helps in managing staff by improving their scheduling and planning inventory. This ensures the use of every space and minute to generate the highest profitable sales possible.
- Reducing waste and theft
Ingredient and raw material waste is a key factor in profit erosion. That’s why the revenue manager works with the restaurant manager to analyze the reasons behind waste to reduce food spoilage and improve preparation efficiency.
- Offers management
Offers and promotional campaigns are used to boost demand during slow periods and to introduce new products, but they must be calculated.
The revenue manager collaborates with the marketing team to design targeted promotions to enhance revenue and profit margin.
- Monitoring profitability across branches
In restaurant chains, the revenue manager ensures that each branch contributes positively to the chain’s profitability. They analyze the performance of each branch separately to identify the ones needing operational improvements or menu adjustments to match local preferences and achieve the highest profits possible.
What are the KPIs for a Revenue Manager?
A revenue manager relies on a defined set of key performance indicators (KPIs) that measure resource efficiency and profitability.
The most important KPIs are:
- Revenue per available seat hour (RevPASH)
This indicator measures the effectiveness of a restaurant in generating revenue per available seat per hour. It’s calculated by dividing total revenue by the number of available seats multiplied by operating hours.
RevPASH is the most important indicator to measure the efficiency of using space and time. It helps identify peak hours, when seats are being used to their highest capacity.
- Average order value (AOV)
This is the average amount a customer spends per transaction. It’s calculated by dividing total revenue by the number of orders. This indicator focuses on the strength of added sales and the effectiveness of the menu.
- Actual food cost percentage
The actual food cost percentage is the real cost of ingredients used divided by sales revenue, while the ideal cost percentage is what the cost should be based on standard recipes and sales, without waste or errors.
This gap is a key KPI for restaurant revenue managers because it highlights the amount of waste, poor inventory management, or inaccurate pricing. The manager aims to minimize this gap to maximize profitability.
- Gross profit margin
This is the percentage of revenue remaining after deducting the direct cost of the dish sold, and before excluding other operating expenses.
The gross profit margin indicator defines the main profitability of each dish on the menu. A revenue manager monitors this indicator constantly to make sure pricing decisions and menu engineering keep the profit margin among the required targets.
- Delivery platform profitability
It’s the net profit resulting from sales made through external delivery platforms or the restaurant’s website after deducting all costs, including food costs, platform commission, delivery cost, and packaging.
This indicator allows revenue managers to identify the most cost-effective channels and decide whether to adjust pricing, promote higher-profit channels, or even discontinue a platform if it fully consumes profit margins.
What Is Foodics’ Role in Supporting and Empowering Revenue Managers?
Foodics POS system serves as a technical assistant that enables revenue managers to perform their duties accurately and efficiently.
Foodics offers the necessary tools to turn data into profitable decisions:
- Unified real-time reporting across branches
Foodics offers unified, consolidated reports for all restaurant branches or a cloud kitchen chain in real time.
This ensures monitoring sales, offers’ performance, and the impact of pricing changes. This is in addition to controlling food costs across all locations and determining which branch needs immediate intervention.
- Menu engineering reports
Foodics provides detailed menu engineering reports that include dish analysis, categorizing them based on their popularity. This helps revenue managers identify which dishes need improvement, promotion, or removal.
- Category performance and top-seller insights
Menu category performance analytics help identify the highest and lowest categories contributing to revenues. They also reveal the top-selling dishes in terms of quantity and profit, directing marketing efforts towards products that maximize returns.
- Cost analysis and inventory reports
Foodics includes an inventory management system that links sales directly to ingredient costs and stock levels. This assists revenue managers in accurately comparing actual food cost to ideal cost.
This analysis also helps reduce waste, prevent theft, and determine when to renegotiate with suppliers based on price fluctuations.
- Peak-time analysis
Foodics offers tools to forecast sales based on historical data and seasonal trends, enabling analysis of peak hours and quiet times.
Further reading: How to Grow Your Restaurant with a Cloud Restaurant
Real Impact: Turning Data into Action
The importance of restaurant revenue managers lies in their ability to transform complicated data into practical steps that boost efficiency and profitability.
Below are realistic examples and use cases of the impact of revenue analytics:
- Increasing AOV with smart offers
- The issue: POS reports showed a fixed average order value, with customers focusing on one main dish.
- Action: The revenue manager designed bundle offers (combos) combining the popular main dish with high-margin appetizers or drinks.
- Result: The restaurant’s AOV increased, and total revenue improved without directly raising prices.
- Identifying and fixing margin leaks across branches
- The Issue: A big difference in gross profit margin across branches, with an unjustified hike in food costs at a specific branch.
- Action: The issue detected is poor inventory management and waste. A training program was launched to unify ingredient weights in the kitchen and ensure adherence to the standard specifications.
- Result: Waste stopped, and the branch’s profitability returned to match the chain’s average, which boosted overall profit.
- Reducing food waste using inventory data
- The Issue: Inventory reports showed the expiry of large quantities of certain ingredients before use.
- Action: The revenue manager used demand forecasting data to adjust purchasing schedules, shifting from large weekly orders to smaller, more accurate daily orders that match sales expectations.
- Result: Notable decline in food waste and lower actual cost of raw materials, which improved profit margin.
- Boosting delivery profits by shifting to direct ordering
- The Issue: Rising commissions from third-party delivery apps consume a large share of profits, despite increased profits, while direct orders achieve higher profit margins.
- Action: Directing a portion of the marketing budget to offer exclusive incentives to customers who order directly via the restaurant’s app.
- Result: A substantial share of customers turned to the restaurant’s app, which boosted net profit from delivery.
Conclusion
A revenue manager isn’t just an addition to big restaurants, but a necessity to ensure the growth of these chains and cloud kitchens in a highly competitive environment amid rising operational costs. Operational efficiency alone isn’t enough, it must be directed toward maximizing financial return.
This is where Foodics’ advanced solutions stand out, as they help restaurant chains expand operations and enhance profits through unified dashboards, several restaurant reports, accurate analytics, integration with delivery platforms, and more.
Discover Foodics’ solutions today to empower the restaurant revenue manager and turn data into actual, sustainable profits.
