Eating places use premium reservations to focus on massive spend

The OpenTable website on a mobile phone, set up in Dobbs Ferry, New York, May 1, 2021.

Tiffany Hagler Gear | Bloomberg | Getty Images

Under the pressure of rising costs and still hungover from pandemic losses, restaurants are taking reservations that target higher-income diners as more consumers book their tables in advance.

The pandemic transformed the number of people eating out, boosted food delivery sales and hobbled buffet restaurants, a segment that was already struggling. But one of the lasting changes in eating habits has been the rise in popularity of reservations, particularly online reservations.

As cities and states rolled back lockdown rules, many introduced new orders for restaurants to help with contact tracing, such as: B. Requiring customers to reserve tables in advance. Even after the elimination of vaccination requirements, demand for reservations has increased. posting balances Reservation service OpenTable said in 2022 it will connect more than 1 billion people to restaurants each year. That number has risen to more than 1.5 billion consumers as of Monday.

“We’re definitely seeing the demand and love for restaurants unleashed,” said Hannah Kelly, chief marketing officer for Resy, OpenTable’s main competitor.

“Top Customers”

As a result of these pandemic-driven changes, restaurants and the companies that help them reserve tables are targeting high-volume consumers with premium reservation options to drive higher sales. The strategy reflects the broader push across industries to encourage customers to pay more for better experiences, such as those they can get by purchasing airline first class tickets, Tide detergent pods and more Applethe AirPods Pro.

“It’s not just about getting bodies through the door anymore,” Allison Page, co-founder and chief product officer of SevenRooms, told CNBC. “It ensures the restaurant gets the right crowd in the doors, whether it’s customers who visit frequently or have a higher average amount per cover.”

With the backing of Danny Meyer’s Enlightened Hospitality Investments, SevenRooms provides restaurants with tools like online ordering, waitlisting, and reservations — and then shares more customer data with them than Resy and OpenTable to help them target specific guests.

Approximately two-thirds of SevenRooms restaurant customers use SevenRooms software to promote special experiences or sell upgrades when customers make reservations. Page said the trend toward premium restaurant reservations may partially explain why booking a table in advance feels so much more competitive these days.

“A lot of these reservations are saved for top customers,” she said.

For example, it will be nearly impossible for the average diner to reserve a table at Las Vegas’ popular Carbone. But MGM Rewards members who have at least Gold status will see more desirable reservations available thanks to SevenRooms.

Similarly, Resy’s Global Dining Access program offers exclusive reservations at some of New York City’s most in-demand restaurants, such as Balthazar and Le Bernardin. The booking company launched the program in 2021, two years later American Express bought Resy to offer more benefits to its cardholders. The exclusive reservations are only available to customers with select AmEx cards, including the company’s Platinum option, which carries a whopping $695 annual fee.

Resy’s Kelly said the program now has more than 650 restaurants, mostly in the largest U.S. cities.

Kirk Estopinal, a partner at Cane & Table restaurant in New Orleans, said he was initially reluctant to reserve tables exclusively for American Express cardholders.

“I kind of don’t like the whole ‘Disney FastPass’ line of restaurant reservations,” he said. “I had some concerns that people are basically paying to have access to what I think should be a democratized situation.”

But about nine months ago, Cane & Table took the plunge and joined the program. Estopinal said reserving a few tables for those reservations gave the restaurant additional leeway for walk-in customers or allowed diners to linger if the places have not been booked in advance.

“The whole point is to end up catching a fish, right? It doesn’t matter if that fish is open access or from the Global Dining Access program,” he said.

Estopinal said he hasn’t seen any metrics showing Global Dining Access members spend more than the typical diner, adding that many Cane & Table customers are on vacation and already willing to pay more for their food and dispensing drinks.

Think creatively

But reserving tables just for big spenders and loyalty program members isn’t the only way restaurants are looking to generate bookings for extra revenue.

SevenRooms’ Page said the company is helping restaurants brainstorm ideas for collecting reservation fees. But the key is to ensure that extra cash comes with a better customer experience. For example, a rooftop bar might charge for bookings made at sunset, or the Bellagio Resort in Las Vegas might charge for a table overlooking its famous fountains.

Since opening in December 2018, Tailor has required customers to reserve and prepay for their meals when booking tables. Thursday and Sunday reservations are $100 per person, while weekend bookings are $125 per person. Tailor also charges a service fee to replace the tilting model.

Vivek Surti, the chef and restaurateur behind Supper Club, said the business model makes running a restaurant much easier. Knowing how many customers come in each night results in less variation in the cost of goods and less food waste, improving its overall profit margins.

Since the pandemic, customers have been more willing to pay for their meals in advance, even though the restaurant’s prices have doubled compared to pre-Covid levels, Surti said.

“We want to make sure that we offer a great experience, that we buy the best possible product and that we offer our employees a very good, livable wage and salary,” he said.

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