Posts Tagged: Transportation Supply



A Thought Experiment: Turning Tables

A thought experiment:

Do we have a transportation supply problem?

I’d say no. We’ve got plenty of roads, plenty of transit and plenty of freeways. We do not have a transportation supply problem.

Image by flickr user joiseyshowaa.

(I’m well aware, of course, that there are certain large American and developing world cities that have slim to no transit, but for the sake of simplicity, let’s leave those out of the discussion for the time being.)

What we do have is a transportation demand allocation problem. We have too many people demanding transportation services at a single time. Too many people want to get from Point A to Point B during the hours of 7am – 9am and 4pm – 6pm.

Generally speaking, about 1/3 to 1/2 of all motorized transportation trips occur during those four hours. Basically, 33 – 50% of all travel occurs during a window of time that accounts for only 16.6% of the day.

That is a demand allocation problem. Not a supply problem.

North American restaurants face this problem constantly, but successful ones handle it with ease.

The dilemma restaurants face is this: Most diners like to eat at 7:30pm. That presents an enormous problem.

Restaurants have a limited supply of space. They only have so many seats, so many tables, so many burners, so many dinner plates, etc. And there is virtually no way to expand that supply. For a restaurant to make money, they have to reuse that supply over-and-over-and-over again throughout the course of a day. There is simply no way a restaurant to accommodate all the demand during one two hour period that begins at 7:30.

Because most restaurants assume a table will be used by a given party for around 2 hours, a 7:30 reservation means the table in question is basically booked for the night. For most people a dinner out at 5:30 is too early and 9:30 too late. (In fact, for the after-movie, after-theatre crowd, 9:30 is also too early.) If a 7:30 reservation is granted, the restaurant cannot “turn” the table.

If the restaurant is slow, this doesn’t present a problem. If the restaurant is busy, however, every “turn” that’s missed hurts the bottom line hard. Restaurants operate on extremely slim profit margins. Even high-priced, fine dining establishments are used to walking that fine line. For a restaurant to make money, they need to “turn” a table as many times as possible to maximize revenues.

Therefore, not everyone can eat at 7:30. That’s the rule.

That’s why when you call a restaurant asking for a 7:30 reservation, the Maitre d’ is likely to tell you he can take you at 6:00 or 8:00. Still want to show up at 7:30, just in case? Great! There’s space at the bar while we prepare your table! He’s not saying he doesn’t have room for your party at 7:30, he’s telling you he has room for your party as well as someone else’s.

He’s not doing it to annoy or irritate you, he’s merely shifting and reallocating demand to meet supply.

So the thought experiment is this: Do we need a Maitre d’ of Roads & Transportation?

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