Simple Math: How Small Restaurants Could Earn More By Using Online Reservations
4 Min Read By Paulius Šuksteris
It’s rare for a restaurant to have no trouble keeping up in the market, where the competition is so intense. Caring for customers has never been so important, especially for small restaurants that rely mainly on loyal repeat-clients. Every lost customer can be calculated into the restaurant’s losses.
Some deciding factors in if a customer returns or if a new customer tries your business can vary, but it’s widely agreed: ease and convenience are important. If a potential customer could not get in contact with your administration, or if they forget about their reservation – this is a loss to you. After 20 or 30 similar cases, the loss can impact the restaurant owner’s salary. So, how can you use simple math to boost revenues by using an online reservation system?
Let’s rely on the true story of one Italian food trattoria, Piccola Italia, a 12-table restaurant, which has a great chef, cozy Italian interior, and is conveniently placed in the city center. The small restaurant was popular among local businessmen and Italian food fans. Despite its growing success, it experienced many empty time slots and problems related with customer attraction. That is, until it started to use an online reservation system.
The restaurant owner, Alan, sought to find new information on how to attract more customers. He understood that the restaurant should be more desirable for the busy locals, as well as tourists from other cities and countries. An online booking system might be an answer, so Alan decided to try a system designed specifically for small restaurants.
This 12-table restaurant is now filled more efficiently and, as a result, earns more. How much? Here are the simple calculations of this trattoria:
No-Show Customers Convert Into Losses
The first big problem this restaurant faced was “no-show clients.” As this was a routine issue, the calculations are simple: If there are 10 no-shows a day, and the average value of each missed table is 20-50 euros, this costs the restaurant 4,800-12,000 euros a month in lost revenue. That is an extreme amount for a small restaurant! Integrating the Tableinreservation system helped them to save a part of these losses.
Using an online reservation system, now the restaurant can send emails and text messages to clients with links to cancel or change a booking. Also, Alan explains that his restaurant sends an SMS to those who did not arrive with a shameful text. Asking for deposits from clients during holidays or events resulted in a further decrease of no-shows. Overall, the restaurant decreased their no-shows by 23 percent, which is converted into approximately 2,500 euros per month in revenue.
Maximize Space During Lunch and Dinner Times
Everyone who manages restaurant reservations knows that most of the clients want to come at 19.00 o’clock, so the restaurant mostly has 1 or a maximum of 1.5 turns per evening. A small kitchen has a huge load when most of their clients arrive at once and orders begin to flow. While using paper books, you accept most bookings in an advance of one hour, so you form a lot of time gaps – resulting in empty tables. A digital reservation system lets you use time templatesand then schedule reservation times to get 2 and 2.5 turns per evening.
So, Alan’s restaurant capacity at busy times increased by about 50 percent. Getting rid of gaps saved about 20 covers per day, meaning about 400-800 euros a day. Finally, the kitchen load decreased, as clients came at split times thanks to a better scheduling system. It was no need for extra staff at busy times.
Save Time and Money in Administration
In our example, the small Italian trattoria, they would receive a large amount of phone calls and e-mails with booking requests during the week. It is joyful news – until you understand that you will lose many reservations when the staff is busy answering calls or emails, or when they’re unavailable because the restaurant is closed.
After beginning to use a restaurant booking system, the “Piccola Italia” added an online widget to Facebook, as well as their website, and started to promote online reservations, asking people to book online in every single message. Now the restaurant has approximately 63 percent of their bookings online. The greatest benefit is the restaurant no longer needs to keep administrators, because the waiting staff is fully responsible for the bookings. Everyone can book. Everyone can check in from any location, even when the business is closed. The restaurant can save one or two salaries for the employees per month.
Filling Your Slow Hours Can Add Extra Revenue
Even if you solve the major problems, one issue remains: your restaurant probably has slow hours between dinner time and the evening. Accordingly, the restaurant owner Alan started to offer discounts and some freebies for clients who came in during these slow hours. It is very easy to set up and schedule, because, each day, the database of restaurant customers is growing. Alan, for example, proposed 30 percent off pizzas as well as free dessert and coffee for later orders. Promotional offers increased reservations on an average of 47 percent.
Also, the client database provides a visit history, list of cancellation numbers, a calculation of no-show clients, and a name database to help restaurant owners recognize loyal clients. Alan integrated a small loyalty program with a discount for loyal clients – giving five percent off after five visits, 10 percent after 10, and 15 percent after 15 – automatically. Clients do not need to have one more loyalty card in their wallets; this system does it for them.
The “price per client” of an online reservation system, on average, is five cents. However, decreased no–shows, maximized covers, and filled gaps during slow hours allow restaurants to increase their income by about 27 percent per year. Even if they have only 12 tables. Furthermore, what’s great is that system integration takes little time and know-how to use, because the program has functions which take off the pressure. It has never been so easy to optimize your restaurant reservation process and to earn more.