Cherry-Picking Customers by Party Size in Restaurants

Abstract

This paper examines the phenomenon of cherry-picking customers—serving the high value customers and denying service to low value customers. These actions are fundamental to revenue management, but have received essentially no attention in the context of restaurants. Two common characteristics of restaurants make them a logical environment in which to implement cherry-picking—compared to smaller parties, larger parties typically take longer to dine and spend less per person. A short example provides motivation and the author reports on an international survey of restaurant managers, which indicates that cherry-picking actions are not uncommon. The author also reports on a simulation study to explore the factors affecting the level of excess demand necessary to justify cherry-picking. Important factors are customers’ willingness to wait for tables, the length of the peak-demand window, and the proportionality of space required by different size tables. The author also evaluates two heuristics for predicting the viability of cherry-picking. The author believes that the most important finding for managers is that the viability of cherry-picking is very dependent on restaurant size, being generally impractical for larger restaurants. From an academic perspective, since this is underinvestigated topic, the author identifies nine research extensions of this work, ranging from empirical to analytical investigations.