Why Do Restaurants Need Credit Card for Reservations?

Why Do Restaurants Need Credit Card for Reservations?

Booking a table at a venue should only be a few clicks away, but the simplicity of online bookings can lead to high volumes of late cancellations and no-shows. However, taking credit card deposits on booking is often a great solution. 

There are various reasons why adding credit card deposits to reservations can be an excellent tool for hospitality venues. ResDiary’s Head of Customer Support & Success ANZ, Stefan Overzier has been in the hospitality industry for decades. Stefan says they are a particularly good option for high-end restaurants, venues offering special events and for large group bookings. He adds that they are more likely to be effective when the terms, conditions and cancellation terms are made abundantly clear to diners.

These are the top five reasons why restaurant venues should consider including deposits as part of their booking service.

1. Deposits can prevent no-shows

It’s so easy to make a booking nowadays. A few clicks of the button and the diner have the perfect table. But with no stakes attached, it’s just as easy for diners to make other plans, book multiple tables at different venues or simply forget about their booking.

But nobody wants to put down their hard-earned money without a first-class experience to show for it. A deposit can help to ensure that people get true value for their money, and actually attend their booking.

It can’t be emphasised enough – nobody wants to pay for an experience that doesn’t materialise.

2. Deposits can add to a venue’s exclusivity and allure

After a long week or a bad day, this upcoming booking may be the bright spot that someone has been hanging out for. They may learn everything about the food, service and venue before they book so they have the best experience possible.

Putting money down can build anticipation. A table at this venue is not the result of a trivial click of a button. It’s an event to be valued, not wasted.   

“If I pay a $50 deposit for a high end restaurant, I know it’s serious,” Overzier says.

“The whole reservation process can become an experience, rather than just a super quick checkout procedure.”

3. They ensure the business has some cash-flow prior to service

At the best of times, a restaurant’s margins can be quite low. Deposits provide pre-service cash flow which may allow venues to get on top of their expenses. 

And in the event that a booking doesn’t show up, they will still recover a portion of their expected income.

4. Provides the venue with confidence that the tables will likely be occupied

Ease of booking means reservations can fill up quickly. But with no disincentive against no shows, venue owners may not have confidence that their bookings will reflect attendance. 

Deposits may provide venue-owners with more certainty that their seats are actually filled, which may also help in the planning of inventory purchases, food preparation and a myriad of other tasks. 

5. They cover costs for the front of house or host if a table no shows.

In the event of a no-show, the host or floor staff may be tasked with reorganizing their booking diary and filling what should have been an occupied table. In the midst of a busy afternoon or evening, this can add even more pressure on staff, and direct their attention away from service.

While 100% capacity may be unachievable, deposits can help pay for the work of the Front of House and/or hosts, who are juggling table occupancies.

“It’s a puzzle like Tetris to try and fill seats in a way that is as profitable as possible,” says Overzier.

“Deposits help to cover that cost.”

ResDiary helps venues deter no-shows by taking deposits or securely storing card details. Send us a message to find out more.

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Disclaimer: This guide is general in nature and does not take into account your individual circumstances. Before acting on any information, you should consider whether this is right for your business.