Case Study Coyote Loco

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1. Introduction

There are many restaurants tries to increase their revenue nowadays. Restaurants struggled to find the appropriate way to reduce their cost and increase their profit. The restaurant business can be considered similar with the hotel or airline industry, therefore the use of revenue management can be implemented also in the restaurant business. In fact, many restaurants have used various types of revenue management practices, in order to achieve higher profit. However, the application of those strategies seems to be too tactical. Therefore, it is suggested for restaurants to reconsider the use of a broad theory from revenue management which might help the restaurant operators to gain more profit and to successfully implement restaurant revenue management.

Furthermore, before we go into deep in the process of restaurant revenue management it is wise to understand what is the meaning of revenue management it self. According to Kimes et al. (1998, pp.33) Revenue Management is the “application of information systems and pricing strategies to allocate the right capacity to the right customer at the right time and place.” This system can help the restaurant to determine the right price for the right time and the right customer. However, the application of revenue management system can only be applicable for the restaurant that has the characteristic of relatively fixed capacity, predictable demand, perishable inventory, appropriate cost and pricing structure and also demand that is variable and uncertainty (Kimes et al., 1998). This paper will discuss and critically analyze the use of restaurant revenue management system within Coyote Loco Restaurant which is located in Ithaca. The purpose of this paper is to develop a set of framework to help Coyote Loco Restaurant to increase their revenue as well as to reduce the turn away guest. Before we go into deep analyses it is wise to examine several characteristics that Coyote Loco restaurant has and need to be improved.

1.1 Relatively Fixed Capacity
Restaurant capacity can be measured in terms of the capability of the kitchen, seating, type of menus and the capability of the restaurant server. According to Kimes et al. (1998), there are options available to extend capacity by adding seats to tables a number of times during that meal period. Kitchen capacity might be effectively increased by changing menu items or production system or even by increasing staffing levels.

Coyote Loco is located on the portal of Ithaca, approximately one mile from the Cornell University campus, their targeting on local residents and also students from Cornell University. In order to get a higher RevPASH Coyote Loco restaurant need to add more seats or create a system which might boost the turnover rate of the table.

According to the Coyote Loco case study the capacity of this restaurant is fixed. The restaurant is divided into two closely separate places (bar and restaurant) which have 68 fixed seats in the restaurant area, which consist of two tables for six person, fourteen tables for four person and eleven tables for two people. In addition, there are nine bar stools in the bar area which was used to all intents and purposes such as waiting area for guest who has not get their seats yet or even for dinning place during the busy hour. However, the number of seating can be varied depending on the mixture of party sizes. In addition, Coyote Loco can also increase their capacity by adding tables in the outdoor dinning area. In fact, coyote Loco is very famous in their open air patio seats during summer season, this area can help the restaurant to increase their seats capacity into sixty six more customer. Therefore, is it recommended to maximizing the use of each area within the restaurant for example the restaurant can use the outdoor area of the restaurant for all season, by adding removable glass window and additional heater for winter season. By doing that it can...
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