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Reservation Systems: Who's Holding All Your Eggs?

With all the reservation systems on the market, how do you determine the best approach for your business?

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With the explosion of apps and online reservation systems on the market, deciding on the right one can be overwhelming for restaurant owners and managers. How do you determine the best approach for your business? Here’s what you need to know.

Understanding whether your prospective provider is focused on your restaurant or the diner is paramount. Those ‘in the know’ will tell you that most reservation systems focus on the diner since they are the main source of revenue. However, this is not the ideal situation for most restaurants.

There are fundamentally two camps: Advertisers and Technology Partners. The main difference is that an advertiser has a promotional website or App that can generate bookings in exchange for a cover fee and also offers an advertiser-branded reservation system to receive and view bookings. A technology partner charges a fixed license fee to provide a customized platform with abilities to manage reservations from multiple advertisers linked to tables and a customer database designed to help you to profile customers.

The key thing to know is that each service is not mutually exclusive. Many restaurants use both. Why?
Advertisers are good at getting bookings but are not necessarily a great idea when it comes to putting their booking widget on your website. As the line between the two can become blurred, for a general rule, if they charge cover fees, you’re talking to an advertiser. There are merits for each and it really comes down to what suits your business.

Here’s what I call the Eight Pillars to help when deciding what is best for you.

Reservations

Examine your current reservation process and determine its user-friendliness on a computer and mobile phone. Nine out of ten diners use their mobile phone to make a booking and the fewer clicks, the better.

Top Tip: Make it easy for diners by only showing the available times. This avoids frustration and makes a huge difference to the user experience. The option to book a special area such as a terrace or to select a menu or special package can also have a big impact on revenues.

Brand Consistency

Ideally, you don’t want your guests booking on a system that advertises another brand. This makes it obvious that you are sharing their personal details with a third party, and restaurants tell me their customers often complain about this. My advice is to keep your reservation vanilla and promote your brand only. Some advertiser platforms can offer this, but additional charges may apply. For technology partners, this feature is generally included in the package.

More importantly, you want to avoid tempting your diner into making a booking via someone else when they take the time to visit your website. You could lose them in the process, and most consumers like to know they are booking directly with the restaurant and not through a third party.

No Shows

From what I have witnessed from many many restaurant reports, is the rate of No Shows averages across most apps and advertisers at between 25-40%. This reduces dramatically when customers book directly with the restaurant online or over the phone - to less than 5%. From a psychological perspective, this difference indicates that people care less about cancelling with an advertiser (even when it’s the restaurant) because the cognitive link is broken. In other words, the direct association between the diner and restaurant has been removed.

While using advertisers for acquisition can be beneficial, it is important to consider the operational impact on the restaurant. My advice is to have a mix of advertisers and to manage them in a way that ensures that no-shows do not negatively impact service.

Operational Performance

Making life easy for staff is paramount and some systems are good in that respect. I have used The Fork, Quandoo, Chope, Open Table, Respac, Weeloy and TableSolution. The first four providers are advertisers that offer technology. The last three, are technology partners that may also offer free promotional services (I did say the lines were blurred!).

The most important consideration for smaller restaurants (not requiring a table management system) is an easy booking system and a handy tool called booking consolidation. This allows for bookings from multiple sources and advertisers to be gathered into one single list. The result is more bookings and less time spent - and no over-bookings. Imagine that.

For larger restaurants, the new kids on the block are Weeloy and TableSolution. These tech-savvy providers are leading the way in the Asia-Pacific region ahead of names such as Res Diary, Eat2Eat, and Respac (OpenTable). Restaurants are demanding more progressive systems and greater support. Local support is important. Take your time to consider the best option for your environment and the ease in which it can be customized. Onsite training is a MUST.

Hotel restaurants with more specialized requirements will need to partner with a provider that offers extras such as corporate-level security, PCI compliance, secure data management, and POS integration. Established players like TableSolution are becoming the new corporate standard in APAC.

Acquisition

As a general rule, advertisers own this space. Technology partners are capable of bringing in free reservations but this happens mainly in their home countries i.e. in Singapore for Weeloy and Japan for TableCheck (TableSolution). In contrast, advertisers offer a dedicated approach to restaurant marketing but there is one thing to be acutely aware of. Advertisers are skilled at knowing how to take a restaurant’s website traffic and you can get the lowdown on how to STOP that in my next article. The more advertisers you use, the more bookings you will receive. That also means you will need a different and more automated approach to managing multiple sources.

Data Management

This is a big subject to be covered in my next article. However, there remains one big question when choosing a provider. *Who owns the customer data? *

Your reservation system is your biggest data acquisition tool and typically manages 30-50% of all restaurant bookings. Consider whether you are happy to share information about your diners with an advertiser. It is also worth noting that if the booking takes place through an advertiser widget, this web environment belongs to the advertiser and all diner info that is collected, legally belongs to them. Some advertisers will exercise this right to its fullest extent, while others are willing to share. Either way, it’s important to understand the privacy policy and how it affects your use of customer data.

Technology partners have no interest in client data except to manage it. This is perhaps the most important difference between advertisers and technology partners.

Revenue Uplift

There are many simple ways that a restaurant can enhance its online experience in order to become more successful. Technology partners are becoming smarter and more dominant in this area by offering some nice customization features out of the box. Here's how to stand out from the crowd.

  1. *Service Access * No two restaurants are alike. Some offer happy hours, afternoon teas, private dining, and exclusive events such as the Chef’s Table. Being able to book for a particular service can make a huge difference to diners. Any improvement in usability is likely to make people come back to your website.

  2. Promotions It is important to advertise your promotions and to make them obvious to restaurant staff via the booking process. There is nothing worse than running out of the daily special or having staff with no clue what the booking is about. Customize the look and feel of the booking confirmation and ensure that promotions are obvious to all staff in the reservation or table management system.

  3. Email Confirmations These provide a great opportunity to advertise other specials and events and to promote additional venues for Restaurant & Hotel Groups. Technology partners are able to assist in customizing confirmation emails - with surprising results!

Price

To calculate true cost and value offering, you first need to separate cover fees from platform license fees for managing reservations. Ideally, you want to apportion the technology costs to the IT budget while assigning cover fees to your marketing budget. Advertisers typically charge lower for the platform license but make that up in cover fees from advertising revenues. More critically, advertisers take ownership of your customer data. Some also require you to purchase iPads or tablets.

As a rule, expect technology partners to charge slightly higher licensing fees which typically include a decent CRM (customer database and reporting system) as part of the package. Some have advanced automated marketing and online payment features, and they do not charge cover fees. They typically charge a fixed service fee per quarter that is based on the level of technology provided. Technology partners are all about efficient operations and getting to know your best diners.

Summary

I hope this enables you to make a more informed decision about the best option for your business. Enlisting the services of an advertiser for promotion is a good idea. Whether or not to engage this service on your own website, is the bigger question. Using advertiser technology can work well for smaller restaurants with a limited budget and little time for promotion. However, larger and more established restaurants or those with multiple venues would do well to adopt a combined approach with separate advertisers and technology partners. In all of this, it is important to consider the ongoing cost of acquisition. Customer loyalty is the aim of the game as it is much easier and costs less to reach out to existing customers, but you need to know who you are talking too. Technology partners have the tools to do this.

In conclusion, a combined approach makes it easier to ask for exactly what you want from each provider and means more client data. By using one partner for everything you will become beholden to them. Keep client acquisition separate from your operations and you’ll never have all your eggs in one basket.

About the Author

TableSolution Australia Country Manager

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