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OpenTable on a mobile phone staged in Dobbs Ferry, New York, May 1, 2021.
Tiffany Hagler Gerd | bloomberg | Getty Images
Under pressure from rising costs and still feeling the effects of pandemic losses, restaurants are embracing reservations targeting high-income diners as more consumers book their tables early.
The pandemic changed how many people ate out, driving food delivery sales up and more buffet-style restaurants, a segment that was already struggling. But one of the lasting changes in dining behavior is the increasing popularity of reservations, particularly those made online.
As cities and states rolled back lockdown rules, many implemented new requests for restaurants to help with contact tracing, such as asking customers to book tables in advance. Even after vaccination requirements disappeared, the increased demand for bookings stuck. Holdings reservation OpenTable’s reservation service said in 2022 it has connected more than 1 billion people to restaurants each year. That number rose to more than 1.5 billion consumers as of Monday.
“We’re definitely seeing demand and love for restaurants unleashed,” said Hannah Kelly, chief marketing officer of Resy, OpenTable’s main competitor.
“Major customers”
As a result of those changes fueled by the pandemic, restaurants and the companies that help them book their tables are targeting big spenders with premium reservation options to boost sales. The strategy echoes a broader push across industries to encourage customers to pay more for better experiences, such as getting them by purchasing first-class airline tickets, bags of laundry detergent from Tide’s and appleAirPods Pro.
“It’s no longer about just getting bodies in the door,” SevenRooms co-founder and chief product officer Alison Page told CNBC. “It’s making sure the restaurant gets the right body in the doors, whether that’s customers who visit frequently or have a higher average spend per cap.”
Powered by Danny Meyer Informed Hospitality InvestmentsSevenRooms offers restaurant tools like online ordering, waitlists, and reservations — and then shares more customer data with them than Resy and OpenTable do to help them target specific diners.
About two-thirds of SevenRooms restaurant customers use its software to promote special experiences or sell upgrades when customers book reservations. Page said the move toward premium restaurant reservations could partly explain why booking a table in advance feels more competitive these days.
“A lot of these are reserved for high-value customers,” she said.
For example, reserving a table at celebrity-favorite Carbone in Las Vegas would be near impossible for the average diner. But MGM Rewards members with at least Gold status will see more coveted reservations available, thanks to SevenRooms.
Similarly, Resy’s Global Dining Access program offers exclusive reservations at some of the most sought-after restaurants, like Balthazar and Le Bernardin in New York City. The booking company launched the program in 2021, after two years American Express Resy bought to add more benefits to its cardholders. Exclusive reservations are only for customers with select AmEx cards, including the company’s Platinum option, which carries a whopping $695 annual fee.
The program now includes more than 650 restaurants, primarily in the largest US cities, Rizzy Kelly said.
Kirk Estupinal, a partner at Cane & Table restaurant in New Orleans, said he was initially hesitant about setting aside tables only for American Express cardholders.
“I kind of don’t like the whole ‘Disney FastPass line’ for restaurant reservations,” he said. “I had some concerns about that, just having people basically pay to get to what should be a democratic situation in my mind.”
But about nine months ago, Cane & Table took the plunge and joined the program. Estopinal said that assigning a small number of tables to these reservations gave the restaurant some extra wiggle room to walk in or allowed diners to stay. If seats are not pre-booked.
“The whole point is to catch a fish in the end, right? Whether that fish is open or from Global Dining Access,” he said.
Estopinal said he hasn’t seen any metrics that show Global Dining Access members are spending more money than typical diners, adding that many Cane & Table customers are on vacation and are already willing to spend more on their food and drinks.
Think creatively
But reserving tables only for big spenders and loyalty program members isn’t the only way restaurants look for reservations to generate additional revenue.
The SevenRooms page said the company is helping restaurants come up with different ideas for charging reservation fees. But the key is making sure the extra money comes with a better customer experience. For example, a rooftop bar might charge for reservations made at sunset or the Bellagio Resort in Las Vegas might charge for a table facing its famous fountains.
Tailor has required customers to make reservations and prepay for their meals when they reserve tables since it opened, in December 2018. The Nashville restaurant bills itself as a “one-of-a-kind dining experience” with two seats every night. Thursday and Sunday reservations are $100 per person, and weekend reservations are $125 per person. Tailor also charges a service fee to replace the tip form.
The business model makes running a restaurant much easier, said Vivek Surti, the chef and restaurateur behind The Supper Club. Knowing how many customers will show up each night results in less cost-of-merchandise variance and reduces food waste, which helps with his overall profit margins.
Since the pandemic, Surti said, customers have been more willing to pay in advance for their meals, even as restaurant prices have doubled compared to before Covid.
“We want to make sure that we deliver a great experience, that we buy the best possible product that we can, and that we give our employees a very good pay and salary,” he said.
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