Title: Revenue management, hedonic pricing models and the effects of operational attributes

Authors: Donald R. Bacon; Ali Besharat; H.G. Parsa; Scott J. Smith

Addresses: Department of Marketing, Daniels College of Business, University of Denver, Room 495, 2101 S. University Blvd., Denver, CO 80208, USA ' Department of Marketing, Daniels College of Business, University of Denver, Room 489, 2101 S. University Blvd, Denver, CO 80208, USA ' Fritz Knoebel School of Hospitality, Daniels College of Business, University of Denver, 344 Joy Burns Center, 2044 E. Evans Ave., Denver, CO – 80208, USA ' School of Hotel, Restaurant & Tourism Management, University of South Carolina, 701 Assembly St., Columbia, SC 29208, USA

Abstract: Utilising secondary data, the present study investigated the effect of operational attributes and product type (cuisine) on the price that consumers paid in restaurants. Contrary to the commonly held belief, food quality generally had the lowest impact on price. High-end restaurants differed significantly from low-end restaurants on the effect of food, service and ambiance quality on the price that consumers paid. Study results clearly indicated that high-end restaurants displayed a concave curve in all three operational attributes in relation to increasing price points. For low-end restaurants, the curves of operational attributes were either horizontal or convex in relation to increasing price points.

Keywords: hedonic pricing; operational attributes; small businesses; small firms; restaurants; revenue management; pricing models; product type; cuisine; restaurant industry; restaurant prices; food quality; service quality; ambiance quality.

DOI: 10.1504/IJRM.2016.077031

International Journal of Revenue Management, 2016 Vol.9 No.2/3, pp.147 - 164

Available online: 17 Jun 2016 *

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