Reserved
Finances,  Analysis,  Marketing

The Real Cost of Online Reservation Systems

You are a restaurant and you want more customers. You want control over your booking system and a database of your customers. You want a simpler way for your customers to be able to book without needing to always have to speak to somebody, or for that same somebody to check emails constantly. And you want to be able to quickly and easily check the bookings you have.

Enter the online reservation (or online booking) system.

There are lots of companies that provide this system, including ResDiary, Open Table, Quandoo, Bookatable, Welcome Table, simpleERB, et al. Some offer fixed pricing, but the bigger players offer a per-cover model that is cleverly packaged to not sound so expensive until you get the invoices. This is one of the reasons Why we Left Quandoo (and Open Table before that).

This post is aimed more at the smaller independent restaurateur in the UK (wherever you are) but also applies to multi-site operators.

Follow the Money

The important thing to remember is that when you use a system that operates on a per-cover charge (plus a license fee), they may sell the service as a way to help the restaurant manage its bookings, fill seats on slow nights, etc., but the platform you use is also a business and it has its own goals about revenue generation and shareholder dividends.

Differentiated Pricing

A lot of the ‘big guys’ offer differentiated pricing depending on the source of the booking. For example, if the booking occurs from their own network (website or app) you will be charged the higher of the per-cover fees. If the booking occurs from a widget on your own website, or potentially through another partner site (such as TripAdvisor or Hardens), you will pay the lower of the per-cover fees (which can be zero in a few cases).

Their goal is to generate revenue from you, so they will (irrespective of how they package it) look to book all new and existing customers via their network to maximise their revenue. They will encourage your diners to download their app and use it to quickly and easily rebook. This is great, but it also costs you more.

Of course, the companies that offer fixed pricing make it very easy for you to budget here, but you also need to weigh up the other benefits of being part of the platform.

Differentiating Services

Entry Level

At one end of the spectrum, you have very vanilla (or simple) platforms which simply offer a facility to book diners into your restaurant. There are even WordPress plugins you can use for free that do this. Naturally, this is the most simplistic system and you might not benefit from something as elegant as an app for your tablet that lets you see and manage bookings in-house.

If an app is not available, you will need a computer to access the bookings online or require additional technical skills to use the website via your tablet. From my experience, having the simplest and easiest tool available for a mixed-skill team to use is essential, so spend a little more here if you need to unless you’re an owner-manager who does it all themselves (in which case email, a telephone and a physical reservation diary may be just the ticket).

Bookings & More Bookings

Almost all of the systems will deliver on this. You get an app to use in-house, making your team’s life easier and more enjoyable. You get a database of all your customers’ details which you can export and use in a mailing system (GDPR permitting). Some systems might have this built-in (or try to sell you an add-on fee) but I prefer to keep it separate since mailing list systems are built to do that perfectly, while reservation systems aren’t – it’s a second string to their bow.

You want to check out the app also and ensure it handles making and changing reservations easily. This is a regular task for your team to do, so the app needs to be simple and easy to use, as well as streamlined so your team spend as little time on the task as needed. Ask how often the app gets updated.

And, importantly, ask about support. Can you get support at 8.30 pm on a Saturday evening in the middle of a busy shift when the system appears to stop working? It happens.

Bells & Whistles

This is where you really need to think long and hard about every single additional feature or benefit the system may offer and determine if you really need it (and hence really need to pay for it).

Diner Acquisition (reservations to you and me)

Many platforms try to sell you on the benefit of having a large pool of customers who will discover you in their extensive directory of restaurants. This may be good if you are in a densely populated area and competition is fierce, but you should also ask how they rank your restaurant and how often you’ll appear in searches. There may be a catch here which requires additional fees or for you to run special platform-specific offers. The latter usually requires you to offer a discounted menu but comes with an even higher per-cover acquisition fee. If you are in a more provincial area, or there are fewer restaurants around, it is unlikely the local community will need an app in order to discover you, so the power of the aggregated network may be of little benefit.

Ask how they treat repeat customers. Are they charged at the standard rate as a new customer (they usually are), or are they discounted or free?

How do they market you?

Ask how they market your restaurant. What are you getting for your fees? It will usually be in the form of targetted traffic to bring prospective diners to their website or app in order to book.

What other features do they offer?

The list here can be very extensive and include things like EPOS integration, mailing list capability, offering funnels for group bookings, offering a credit card security facility so you can reduce no-shows, allowing you to create special offers, how they handle multi-site restaurants (so you need to share customer details and history cross-site?), etc.

Some of these other features may benefit you if you have a very large restaurant or a very busy one where you need a system that can handle a dynamic volume of bookings (and cancellations) so it is always up-to-date. EPOS integration is nice if you want your customer database to help you more easily manage diner expectations and more seamlessly help your team give each guest the best service, even if it is the first time your team member has seen them. The EPOS integration tracks what they order so you have a more detailed customer history and can suggest or recommend things they usually have, or something different. You can also use this to better segment your database on targetted email campaigns.

Think about what you would like the system to do, and ask the company what they can do. Make a list of pros and cons for each of the bells and whistles and decide if their fees are worth it.

Once you truly profile your restaurant and know the type of establishment you are, you can more easily determine if the platform you are being sold is a good fit.

The Shortlist

I look at restaurants in two primary categories:

  • A local business with a majority of regular guests in a more provincial area, or
  • A central business in a busy area which may have lots of regulars but is also surrounded by lots of competition

In the latter case, an aggregated platform which has the potential to bring in new customers – new client acquisition – is beneficial. In the former case, even this directory service may be overkill.

I had a company call me today offering a new restaurant directory platform (not even a booking system). The man started his pitch with “we are out to revolutionise the restaurant business” shortly followed by “would you like a new way to win new customers?” expecting an automatic yes (having carefully worked out his script and his “Archimedes’ arm full of yesses”) was quite surprised with a “no, thanks, we’re fine”. After my experience with Quandoo claiming to intend to do that same, only to pivot and do the same as everybody else I now take anything the sales guy claims with a pinch of salt.

Thanks for reading this article about the restaurant business. I hope you liked it! If there is anything you'd like me to discuss or write about just let me know in the comments or via the contact form.

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