Reservation Deposits

Learn how reservation deposits reduce your reservation no-show rate, put butts in seats, and help you make more money.

Reservation Deposits: Frequently Asked Questions

Businesses like salons, restaurants, and doctors rely on reservations to keep their seats full. When guests don’t honor their reservations, businesses are left with costly unfilled seats, underutilized staff, wasted food, and slimmer margins.

Seatout is a reservation management system that solves this problem. Seatout enables business owners to optionally charge their guests a deposit in order to make a reservation. (The deposit is applied to the guest’s bill and is not an additional fee.)

In addition to allowing businesses to recognize revenue earlier, deposits drastically reduce reservation no-show rates. Our working prototype has been used in one restaurant since August 2014, and has reduced the reservation no-show rate from 42% to less than 1% without negatively affecting the rate of incoming reservations.

General

What are the benefits of enabling reservation deposits?

There are three primary benefits to enabling deposits:

  • Deposits will lower your reservation no-show rate and improve table utilization.
  • Deposits mitigate the financial risk of a party not showing up.
  • Businesses can recognize revenue when the reservation is made, not when the guest visits.
  • Prevent bots or other middlemen from creating reservations that they plan to resell

Due to our payments processor, only U.S.-based businesses may enabled reservation deposits. Businesses outside of the United States are welcome to use Seatout for free reservations.

How effective are reservation deposits?

In our beta testing, we’ve seen reservation no-show rates drop from 42% to under 1%, without impacting the rate of incoming legitimate reservations.

Every restaurant is different and your results will vary. We encourage you to evaluate whether deposits make sense for your business.

Do I have to use reservation deposits in Seatout?

No, deposits are an optional feature. By default, guests can create reservations for free. And Seatout is free to use by restaurants and businesses.

Financial

Are reservation deposits financially worthwhile?

Suppose a guest makes a reservation for two and you charge a $15 deposit per person ($30 total). Seatout takes a 7.4% fee of the deposit ($2.22) and transfers the remainder ($27.78) into your bank account. Now, one of two things can happen:

  • The party does not show up for their reservation. They forfeit their deposit and you keep the $27.78. The table is available for walk-in guests.
  • The party shows up and their check totals $100. You credit their bill $30 and the guest pays the remaining $70.

In comparing reservation deposits with conventional reservations, you must factor in the no-show rate. Anecdotally, no-show rates average 25% for free reservations, compared with <1% for restaurants who use reservation deposits. All that said, every business is different and your results will vary. We encourage you to evaluate whether deposits make sense for you.

If I enable reservation deposits, how much are the fees?

Seatout’s fees are generally around 6%, depending on the reservation deposit amount.

Won’t Seatout’s fees wipe out my profit margin?

Not really. Keep in mind that fees are based on the deposit amount, not the check total. In the above example, Seatout fees represent 2.2% of the check total.

Every restaurant is different and your results will vary. We encourage you to evaluate whether deposits make sense for your business.

How will I get paid?

Seatout will transfer reservation deposit revenue to your bank account about two business days after a reservation deposit is made. The deposits will have a descriptor starting with “BT *Seatout.”

Can I pass Seatout’s fee on to my guests?

As part of Seatout’s terms of service, you must credit the full deposit amount to the guest’s bill. From your guest’s perspective, deposits are framed as a prepayment, not an additional fee.

What should I set my deposit amount to?

This is a complex issue, and requires consideration of your guests’ price sensitivity, check averages, location, and concept. In general, there are three different strategies:

Strategy Good for…
Free
Traditional, no-cost reservations; Save hundreds or thousands of dollars every month over your legacy reservation system with no per-cover costs and no monthly fees.

Casual restaurants; Businesses in small markets; Business with low no-show rates
Partial Amount / Prepay
Set a deposit amount below your check average. Charge the difference at service time. Reduce your reservation no-show rate while keeping your Seatout fees to a minimum
Most restaurants; Businesses with high no-show rates
Full Amount
Charge your guests the full amount at the time the reservation is created. Get paid faster and reduce your dependence on your POS system.

Prix fixe meals, fixed-cost events, dinner theater

All that said, we encourage you experiment and change the deposit amount to see what works best for your business.

How are taxes reported?

If your business had more than 200 transactions, and generated at least $20,000 in gross revenue, Seatout will generate and send you a 1099-K. For more details, see Understanding Your Form 1099-K.

Guests

Will guests be upset or deterred from creating reservations?

In our experience, deposits only deter guests who may not be committed to arriving for their reservation. However, every restaurant is different and your results will vary. We encourage you to evaluate whether deposits make sense for your business.

What if a guest’s final check is less than the amount of the deposit?

Seatout does not offer refunds of the reservation deposit. In the event a guest does not spend the full deposit amount, restaurants and businesses may choose to refund the difference. However, this is at the discretion of the business and is entirely outside of Seatout.

Can guests transfer a reservation to another party?

Businesses may optionally allow a self-transfer of the reservation to another party for the same date, time, and party size. However, there is nothing in Seatout which prevents or facilitates the transfer. Businesses are encouraged to proactively communicate their transfer policy to their guests.

Are guests allowed to cancel or get a refund if they’ve made a deposit?

No. Reservation deposits help ensure that guests commit to their reservation. If cancellations were permitted, there would be no benefit to charging a deposit.

Logistics

During service, how do I credit my guest’s bill?

Seatout’s calendar view shows reservations by day, as well as the deposit amount. When seating a party, the manager, host, or server is responsible for crediting the deposit amount in your POS system.

How do I enable reservation deposits in Seatout?

Open the Reservation Deposits page for your business. Enter the address, contact info, and banking info for your business and submit. Your application will be reviewed, and you should expect a confirmation by email within 2 minutes.

How do I disable reservation deposits in Seatout?

Open the Reservation Deposits page for your business, click the Disable button.

How do I change the reservation deposits amount?

Open the Policies page for your business, and select a different amount in the Reservation Deposits dropdown box. You are free to change the deposit amount at any time, including reverting to free reservations.

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Reservation Deposit Fee Structure

What does Seatout charge to process reservation deposits?