Abstract: To improve restaurant service quality and increase revenue, the issue of restaurant queue management is discussed in an integrated perspective of both capacity management and the psychology of waiting in line. Two cases are considered: 1) there is no waiting room, leading to loss of customers; and 2) there is a waiting room, but some customers may renege because of the waiting time. With customer perception in waiting considered, queuing theory models are developed for both cases. To maximize profit, revenue functions for the models are derived. Then, simulation analysis is done by using Matlab. It shows that there is a strategy of setting waiting room such that maximum profit can be achieved, which indicates that the traditional view of conflict between service quality and cost can be overcome by integrating perspective from both customers and the company. In addition, the number of dinner tables is negatively related to the reneging parameter, whereas the number of waiting tables is positively related to the reneging parameter.

Key words: queue management, reneging parameter, service quality, restaurant management