With Christmas right around the corner (less than 3 months….but who’s counting) and mince pies already stocked on shop shelves, customers are on the hunt for booking the festive season.

Trying to run a smooth restaurant service can often resemble a plate spinning circus act, of trying to get the right balance with staffing, food costs and overheads. Then add to the mix the busy festive season, the dreaded no shows and the last minute cancellations and you could be one plate smash away from a significant hit to the bottom line and turning into the Christmas grinch.

According to an article from Big Hospitality at the beginning of the year, an online booking platform found that “over a third of UK diners say they have failed to turn up for a reservation”. You may ask, is it worth enforcing deposits on larger bookings over Christmas to protect your revenue?

Costs of a No Show / Late Cancellations

So let’s look at the actual cost of a no show. If the no show was for example a Christmas party of 10 and we say your festive 2 course set menu spend is £/$/€25 per person, and your gross profit before staff and fixed costs is 70%  – then this no show costs you £/$/€175 and your profit (or rather contribution to costs) would be £/$/€175 if they had turned up. That’s a big figure along with the extra cost of a few merry sherries to lose, plus the loss of 15-20 min service time to confirm if the customers are actually going to turn up. 

Even if the table was to turn up but only 5 showed due to last minute drop outs, you will still be down £/$/€87.50 and the possibility of another booking of 5 that you might have earlier turned away due to no availability! So you might be thinking from crunching the numbers….if only you had taken a deposit of £10 per head to cover the basic costs for that party booking so that you wouldn’t be out of pocket.

If you are not entirely sure if deposits are right for you, we have another great post looking at the pro/cons of deposits vs. holding credit card details.

Benefits of Enforcing Deposits

So obviously the main reason for deposits is to secure and protect your valuable restaurant revenue but there are also a few other benefits. 

  • Reduce and possibly eradicate the number of no shows

By having clear deposit and booking T&C’s, it will deter parties that book for 3 or 4 restaurants at the same time before finalising their plans. This way you know these larger parties are 90% going to attend – 10% unforeseen circumstances.

  • Efficiently budget for staff and keep team morale

By knowing you are covered financially for larger bookings, you will have a better control on staff rota and not over staff. This can boost team morale by not having to let casual staff leave early due to a quiet restaurant that wasn’t anticipated.

  • Your in control of the deposit

Rather than taking full payment upfront which could discourage bookings, deposits allow you to control and decide if given certain circumstances the customers should have it returned. With simpleERB deposits, you control the booking type that require deposits along with the ability to monitor overdue payments easily with reports.

simpleERB deposits are quick and secure to set up

Deposits are easy to set up within simpleERB with Stripe integration and you can rest easy knowing customers details are safe and secure and not being left around scribbled on paper notes.

You can find below some FAQ articles with information;

If you have any further questions about deposits or would like a copy of our payment set up guide, please get in touch via help@simpleERB.com

Image source – Pixabay



 

We read this interesting article about Amazon creating a ” Bank of Amazon “.

Here is our take on it.

Amazon has 80m+ Prime members, rising.

Amazon gets 50% of revenue from 3rd party resellers.

Amazon and the  3rd party resellers all pay the Visa/MC interchange fee “tax”

Visa/MC can only keep charging this tax because of their lock on the marketplace, “all” the credit and debit cards run on their rails.

Who is big enough to take the short term hit to break that lock? – Amazon.

“Buy with the Amazon card and get a 2% cash back on all your Prime purchases”  – or this averaged up to 5% or more with Amazon giveaways, e.g. Discount on Prime, cheaper Echo, Dot, discounts on Amazon own label.

Amazon will take the hit for as long as it needs. It works on 7 year ROI terms. (“If you’re willing to invest on a seven-year time horizon, you’re now competing against a fraction of those people, because very few companies are willing to do that.” Bezos.)

And  Amazon  will have an army of 3rd party resellers working for them as foot soldiers , “Pay me with the Amazon card for all my other stuff I don’t sell via Amazon and get a 2% discount , (partly funded by Amazon), because I won’t have to pay the hated Visa/MC interchange tax.”

A bank of Amazon could wage a war of attrition on Visa/MC for 7 years. The markets won’t mind, they funded Amazon for a decade when it wasn’t making money.

The rough size of the prize would be at least the market caps of Visa and MC.  ($460bn). And this isn’t even thinking about emerging markets that Visa/MC do not serve. And where “interchange free” payments are gigantic.

For restaurants this will mean cheaper credit card processing, but it will also mean the arrival of the Amazon. Whether this means swapping the frying pan of Visa/MC for the fire of a very, very smart player remains to be seen.



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