Choosing the Right Reservation System for your Restaurant

December 10, 2018

Love ’em or hate ’em, reservations are a critical facet of the restaurant business.

With new advances in industry technology, pen-and-paper reservation systems are looking rather old-school. New trends in data tracking and customer service have made automated restaurant systems more customizable and cost-effective for restaurants of all sizes.

Reserving Peace of Mind

Reservations provide customers with a guaranteed table and peace of mind. Many customers prefer to plan their dining experience, whether for special celebrations and business meetings or for casual date nights.

This is especially important for destination restaurants in cities that are geographically spread out. Krissy Lefebvre, a partner in the reservations-only LA restaurant Trois Mec, explains that in a city where people commute in their cars rather than walk, a reservation system is a necessity. “People [in LA] won’t drive an hour just to hope they get a table.”

Reservation systems can also direct overflow customers from peak dining hours into early and late dining slots, maximizing the amount of business a restaurant can do in a night. Staggered seating and ordering times can help smooth out operational bottlenecks in both front and back of house, easing customer service logistics.

When Reservations Are a Headache

Reservation systems also come with challenges for restaurateurs

Taking reservations the old-fashioned way can be extremely time and labor intensive, requiring someone to answer the phone and interface with customers every day.

Most restaurants spend time confirming existing reservations as well, in an effort to ensure diners will show up. Mark Holley, executive chef and owner of the former Holley’s in Houston, points out the main difficulty in accepting reservations.

“If a restaurant is consistently full, there is a high risk of losing earnings by holding a table for someone who may no-show,” he told Food & Wine.

According to the Wall Street Journal, up to 20 percent of diners with reservations in New York do not show up on any given night. These empty tables are significant “in an industry where average profit margins run as low as 3 percent to 5 percent.”

Automating the Tedious Reservation Process

While many customers expect restaurants to take reservations, many restaurant owners find the task logistically difficult and risky. Enter online reservation systems, designed to streamline the intake and confirmation of reservations.

Most platforms require customers to create an account or download an app to browse tables by time or party size. Most services automatically send reminders before the reservation time, and many offer reward points or other perks to incentivize customers to make reservations in the future.

For decades, OpenTable has dominated the automated reservation industry. OpenTable’s model relies on annual and monthly fees, plus charges applied per reservation, whether that reservation was made through their platform or through the restaurant.

Unintentionally, however, this model affected the reservations restaurants offered. According to the NYT, many restaurants avoided paying some reservation fees by limiting their listed reservations for “peak time” tables and instead relying on walk-in foot traffic for the prime seats.

Although OpenTable is still the largest automated reservation system, in recent years, a number of smaller, customizable systems have popped up. Most new systems use a flat monthly fee model, abandoning a per-reservation charge.

Yelp Reservations, for example, charges a flat monthly rate to add a reservations option to a restaurant’s Yelp page. For restaurants who rely heavily on Yelp reviews, this button translates searches and ratings into more visits to the restaurant.

Vishwas Prabhakara, general manager of Yelp Reservations, claims, “There’s no incentive to hold tables back because you’re not having to pay for each reservation.”

Yelp Reservations and other small companies are offering automated platforms with more flexible pricing structures. Still, for many small restaurateurs, automated reservation systems can be seen as a negotiable service.

Michael Kaplan of The Grill on the Alley in Beverly Hills explains to Food & Wine, “Those reservation systems are wonderful marketing tools, but also add up from a cost perspective — so you may see smaller, independent businesses not want to splurge.”

Dealing with “No-Shows”

For restaurants unconvinced about the benefits of automated reservation systems, newcomer companies focus on a valuable feature: minimizing the number of no-show diners and cancellations.

New companies like Resy, started in 2014 by Eater co-founder Ben Leventhal, allow chefs to personalize how they will enforce their reservation policy on the platform. As Leventhal explains, restaurant owners “have to make sure every table is working for you, and restaurants are finally embracing technology that can help them do that.”

With Resy, restaurant owners can choose to require a credit card number for a reservation, discouraging no-shows. A small percentage of restaurants choose to also require a down payment that is later applied to a diner’s final bill. Some even offer a ticketed-only dinner paid in advance.

A few Atlanta restaurants have adopted Tock, created by Chicago restaurateur Nick Kokonas. Atlanta’s Staplehouse was the first restaurant in the city to adopt the platform, originally using it to sell prepaid, fixed-price dinner tickets. When the restaurant switched to an a-la-carte menu, they continued to use Tock for their reservation system and now charge small deposits for bookings. Other restaurants in Atlanta, such as 9 Mile Station, also use Tock’s customization features to encourage diners to make good on their reservations.

The difference with these new reservation systems is the level of flexibility restaurateurs have in deciding their policy. As Daniel Patterson, the owner of Coi in San Francisco, put it to the WSJ, “It’s really not about charging people. It’s really more about making sure they’re serious about the reservation.”

Many of these restaurants still hold at least some tables for walk-in seating or for patrons who prefer not to pay in advance.

Waiting Lists and Allergy Databases

In addition to discouraging no-shows, some reservation systems help restaurants fill tables when someone does cancel.

Resy allows users to put themselves on a waiting list, making it easier for restaurateurs to fill unexpectedly-empty seats.

Another app, Reserve, uses an “open-data model” to allow restaurants to see what diners are searching for and customize their offerings based on the data. Based on customer search trends, restaurants can add or subtract options on their Reserve page to attract the booking.

Most platforms also offer some sort of diner data-tracking feature, allowing restaurants to keep notes about customers’ allergy information, seating and beverage preferences, and other information. OpenTable offers a “Guest Share” feature that can be used across multiple restaurants in a restaurant group, and Tock allows restaurants to customize their data entry.

How to Get Started

The online reservation system scene is particularly dynamic at this moment in time. New companies are entering local and national markets and mergers are happening at light speed, so up-to-date research is necessary. As you consider moving to an automated reservation system, some questions to keep in mind:

  • Is the reservation platform user-friendly for your target customers?
  • Does the platform let you customize what reservations you offer, when?
  • How much time do you currently spend intaking and confirming reservations? What percentage of your tables are no-shows?
  • Would the platform allow you to customize your cancellation policy? Would it benefit you to charge a fee for cancellations or require a credit card?
  • Is the system a subscription model or by-reservation payment, and is it cost-effective for your business model?
  • What systems are your local competitors using? Some platforms offer points or rewards for use at any restaurant within their network or provide searchable databases, incentivizing neighboring restaurants to use the same systems.

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