The OpenTable website on a cellphone set up in Dobbs Ferry, New York, on May 1, 2021.
Tiffany Hagler Gear | Bloomberg | Getty Images
Pressured by rising costs and still feeling the hangover from pandemic-related losses, restaurants are embracing reservations that target higher-income diners as more consumers reserve tables in advance .
The pandemic has changed the number of people eating out, driving up food delivery sales and hampering buffet-style restaurants, a segment that was already struggling. But one of the lasting changes in dining habits has been the growing popularity of reservations, especially those made online.
When cities and states rolled back lockdown rules, many implemented new restaurant orders to make contact tracing easier, such as asking customers to reserve tables in advance. Even after vaccination requirements disappeared, the increased demand for reservations remained. Reservation of assets’ The reservation service OpenTable said in 2022 that it connects more than a billion people to restaurants each year. That number jumped to more than 1.5 billion consumers on Monday.
“We’re clearly seeing that the demand and restaurant love has gone wild,” said Hannah Kelly, chief marketing officer of Resy, OpenTable’s chief rival.
In the wake of these pandemic-fueled shifts, restaurants and the businesses that help them book tables are targeting big spenders with premium reservation options to boost sales. The strategy echoes the broader push across industries to encourage customers to pay more for better experiences, such as they can get by buying first-class airline tickets, Tide’s laundry detergent pods and Apple‘s AirPods Pro.
“It’s not just about getting bodies in the door anymore,” SevenRooms co-founder and chief product officer Allison Page told CNBC. “It’s about making sure the restaurant gets the right body in the doors, whether it’s customers who visit frequently or have a higher average spend per cover.”
With the support of Danny Meyer Informed hotel investmentsSevenRooms gives restaurants tools like online ordering, waitlists and reservations, then shares more customer data with them than Resy and OpenTable 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. Page said the shift toward high-end restaurant reservations may be part of why it seems like it’s so much more competitive to book a table in advance these days.
“A lot of those bookings are for top customers,” she said.
For example, booking a table at the celebrity-favorite Carbone in Las Vegas will be next to impossible for the average diner. 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 the most in-demand restaurants, such as Balthazar and Le Bernardin in New York. The booking company launched the program in 2021, two years after American Express purchased Resy to add more benefits to its cardholders. Exclusive reservations are reserved for customers with select AmEx cards, including the company’s platinum option, which incurs a hefty $695 annual fee.
Resy’s Kelly said the program now has more than 650 restaurants, mostly in the largest US cities.
Kirk Estopinal, partner at Cane & Table restaurant in New Orleans, said he was initially hesitant to reserve tables only for American Express cardholders.
“I don’t like the whole ‘Disney FastPass line’ of restaurant reservations at all,” he said. “I had some concerns about that, the simple fact that people are basically paying for access to what should be a democratized situation in my mind.”
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 extra wiggle room for appointments or allowed diners to linger. if places have not been reserved in advance.
“The goal is to catch a fish at the end, right? Whether that fish is a walk-in fish or from the Global Dining Access program,” he said.
Estopinal said he hadn’t seen any metrics showing Global Dining Access members spending more money than the typical restaurant, adding that many Cane & Table customers are on vacation and are already willing to spend more on their food and drink.
But reserving tables only for big spenders and loyalty program members isn’t the only way restaurants are seeking reservations for additional revenue.
The SevenRooms page said the company is helping restaurants brainstorm different ideas for charging reservation fees. But the key is to make sure the extra money comes with a better customer experience. For example, a rooftop bar might charge a fee for reservations made at sunset, or the Bellagio Resort in Las Vegas might charge for a table that faces its famous fountains.
Tailor has been asking customers to make reservations and pre-pay for meals when booking tables since it opened in December 2018. The Nashville restaurant bills itself as a “one-of-a-kind dining experience” with two seats each night. Thursday and Sunday reservations are $100 per person, while weekend reservations are $125 per person. Tailor also charges a service fee to override the tip template.
Vivek Surti, the chef and restaurateur behind the supper club, said the business model makes running a restaurant much easier. Knowing how many customers will show up each night leads to less variability in its cost of goods and reduces food waste, which improves its overall profit margins.
Since the pandemic, customers are more willing to prepay for their meals, even though restaurant prices have doubled from pre-Covid, Surti said.
“We want to make sure that we’re providing a great experience, that we’re buying the best possible product, that we’re giving our people a really good salary and living wage,” he said.