Pros and Cons of Offering Food Delivery Service

From cars appearing at your doorstep to finding a significant other, there really is an app for everything now.

And the restaurant industry is turning to this app trend as well. Diners want food and restaurant experiences right at their fingertips, and that includes having access to a restaurant reservation system.

With reservations, people want to find a table at the click of a button. Having a reservation system as part of your restaurant tech is also a smart move for business owners. The benefits apply to everybody that interacts with these apps – from restaurant owners, to staff, and diners!

One thing that may have crossed your mind at this point – how much is the reservation system going to cost?

We’ll go over all things related to pricing out your reservation system, including:

  1. The cost of reservations at your restaurant, thanks to our reservation cost calculator
  2. Why you need a digital reservations app (versus a traditional or manual one)
  3. Common reservation fees
  4. Some different pricing models for reservations software
  5. How these costs add up, using a sample restaurant

The simplest way to find out the cost of a reservation system? Use a calculator!

Don’t worry – we’ll do the complicated math. With a few simple questions, you’ll get a full breakdown of the cost of the different reservation price models, which we’ll dive into later.

Try Our Reservations Cost Calculator

About Digital Reservation Systems

Believe it or not, it may cost you more long term if you don’t invest in reservations software. With their growing popularity, this type of app will keep you ahead of the curve.

But it’s more than just looking ahead at restaurant technology. A reservation system can help your business in numerous ways:

  1. Serve up a dining experience that’s personalized to your customers. When guests fill out a profile for their reservation, you collect notes about allergies, dining preferences, or special occasions like birthdays. This makes it easier to make any dining experience with you special. These customized guests profiles can even grow over time – make notes about your customers and wow them every time!
  2. Fill your tables at any time. An app allows your diners to book reservations at any time, not just during your hours of operation. When you have a reservation system, guests can book directly through the app or your website the second they’re thinking of eating with you. This also allows your reservations list to update in real time – you see the reservation in your system as soon as they make it! And with a reservation system that lets you communicate with guests instantly through text messages or email, you can reduce no-shows with email reminders going out to guests who book. In fact, nearly a quarter of reservations are made within 90 minutes of dining. When guests can find tables at anytime, you reach even more potential diners!
  3. Get better insights on dining habits and customer preferences that you can use to make decisions about your business. When your reservations app integrates with your POS, you get end-to-end reporting of the customer experience, helping you see trends and areas of improvement in the overall experience – from reservation to payment and every part in between!

All these perks are great for business, of course, but it still boils down to one question: What is this going to cost?

Cost of a Reservations App: Common Fees

When you understand what fees are going into your reservation system costs, you’re better equipped to go into discussions with different providers and ensure you know what you’re paying for. Typically, you’ll see three major types of fees when looking at reservation system providers:

  1. Subscription fees
  2. Transaction or Per Cover fees
  3. Integration fees

To help break down the different types of fees, let’s step into The Tower, our sample restaurant that will help demonstrate each cost.

The Tower is a fine dining restaurant in the heart of downtown. They have around 10 reservations during an average week, but have up to 30 on busy weekends. Because their reservations keep growing, they’re looking at different systems to help with the demand

We’ll go through each fee, and break down the different price ranges through The Tower’s experience pricing out new systems!

Subscription Fees

Just like you pay a monthly fee for music streaming or a cell phone plan, there’s a similar monthly fee for your reservation system. This is your subscription fee. This fee doesn’t change if you’re taking one reservation or 100 reservations a month.

Subscription fees vary hugely from provider to provider. Some providers even skip a subscription fee altogether. While it seems like an easy choice to jump at a provider that doesn’t have a subscription fee, you want to price out your options before you do. If they don’t charge subscription fees, other fees may be higher, such as per transaction fees.

When The Tower looks at different providers, they quickly notice that there is a huge range in subscription fees across providers. While some are free, others are as low as $229 a month and as high as $899 a month.

Transaction Fees and Per Cover Fee

The transaction fee, which is also known as a per cover fee, is the price that a reservation system charges your restaurant for any reservations booked through said system. For example, if your reservation system includes a website widget that integrates with your system, any bookings through that widget will cost you money.

When you start shopping for systems, you’ll want to know the exact number of reservations you’re getting each month to properly budget for your transaction fees. If you guess that you’re taking 25 reservations a month but it’s closer to 50, you’re going to find transaction fees add up more quickly than expected.

While there are reservation systems that don’t have a per transaction fee, you’ll want to be able to get the full picture if you end up talking to systems that do.

The Tower knows they do 10 reservations a week, plus 30 a night on weekend nights. This means they have roughly 70 reservations a week, or 280 a month. When they’re looking at reservation systems that have transaction fees, they calculate how much they would be paying a month.

Some reservation systems cost as little as $0.25 per diner, or cover. Assuming most tables are seating two people, that means The Tower would be paying $35 monthly in transaction fees. Not too expensive.

But some reservation systems cost as much as $2.50 per diner. Assuming again that most tables at The Tower are seating two people, this now jumps to $350 a month on transaction fees.

Another concern with these payment methods is the dreaded no show. When you’re being charged a per-head fee, losing these diners to no shows adds up even quicker. You’ve already paid for their reservation, and then you’re left with an empty table. Some providers allow you to indicate a no-show to avoid the fee, but the window to indicate this is extremely small. If you miss the window to report a no show – because your restaurant is busy, for example – you have to take the cost.

Some restaurants have started charging guests a fee when they make a reservation to offset these costs and minimize the risk of no-shows. You’ll have to consider your demographic before deciding if this is the right method for you. While tacking on a fee may be effective for fine dining establishments where people are paying for that experience, it may deter diners making reservations at more casual establishments, especially if they know they can get a reservation at a similar venue for no money up front. Do your homework before deciding one way or another. 

Integration Fees

One of the major conveniences of a reservation system lies in its ability to sync directly with your POS, helping you and your team manage incoming reservations with ease.

An integration fee is essentially paying for your reservation system and POS to communicate with each other. If you’re looking for options that integrate, make sure to ask about integration fees. Are they one time or every month? Do you lose data if you switch systems? These are all especially important to ask if your integration doesn’t come for free.

The Tower talks to two different reservation system providers – while one doesn’t have a charge for integrating, the other one charges $100 a month. Yikes.

Other Fees

If only it was as easy as only three fees! But unfortunately, it’s not that easy.

Other fees can cover a variety of things that the transaction, subscription, or integration fees don’t cover. When you’re investigating reservation management systems, make sure you ask about all possible charges on a monthly, yearly, and per cover basis. You don’t want to be surprised on your first bill with other fees coming out of nowhere.

Because there are so many options out there, come prepared with detailed questions on cost and each of these fees. How much are other restaurants your size paying for their system? Are there any one-time costs? These are all questions you’ll want answers to before signing on the dotted line.

Reservations Pricing Models

Now that you know what fees will be included, it’s important to consider the pricing models. Because you know the fees, it’s easier to understand the pricing models – and how some can add up quickly. 

Here are the most common pricing models you’ll find when shopping for a restaurant reservation system.

1. Cover Only

Cover only is a pricing model where you only pay transaction fees for reservations made through the platform. This often provides you with basic online reservations and little to no additional functions within the platform (e.g. reporting, guest profiles, etc.). Sometimes there is a higher transaction fee for reservations made directly on the platform’s website or app, and a lower transaction fee for reservations made through the platform’s integration on your restaurant’s website.

The idea here is that you’re paying a higher rate for reservations from diners who just discovered you because of an ad or a search function on the platform’s website, rather than diners who were searching specifically for you and your website.

However, beware that these platforms may have big advertising budgets, which means they could be competing against you on search engines or other advertising platforms. Essentially, this means they’re competing with you for the booking because they make more money when diners book on their site instead of yours.

2. Subscription Only with Full Features

This subscription-only pricing model means you’re paying an all-inclusive flat rate, regardless of how many reservations you book and which platforms they book on. There are no extra fees for additional features and functionality, and no surprises. TouchBistro Reservations offers this type of pricing model, so you have all the features you need for the same price every month.

3. Subscription Only (Optional Add-On Features)

This is a similar pricing model, but begins with a more basic management platform with minimal features. Then, you can build on the platform by adding (and paying for) certain features you need for your business. This includes guest messaging, surveys, web booking, security, and more.

So, while the initial price may look less expensive, these additional features required to optimize the reservations side of your business can quickly double or triple the cost.

4. Subscription Plus Cover

This pricing model means you’re paying both a base price and a per transaction fee (either a dollar amount or percentage of the total check). The per transaction fee here might be lower than with a cover only pricing model, but it can still add up. Also, since you’re probably paying less for this platform, you may also get fewer features, like reporting, waitlist management, or even integrations. Make sure you get a full list of what’s included – and what’s not – for the platform and the plan you choose for your venue.

Calculate Your Reservation System Cost NOW

Let us do that math for you! Fill in our reservations calculator with numbers that are true to your restaurant to get a breakdown of the cost of a reservation system.

From UberEats to Lyft, we’re living in a world that is becoming more and more dominated by apps. With all of this app success, it’s no shock that restaurant reservations are following suit. It’s your responsibility to look into the costs of a reservation system to make sure you’re getting a bang for your buck.

While any new technology costs money, isn’t it more costly to fall behind on the new norms your customers are expecting?

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