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

What is a reservation deposit?

A deposit is an amount of money a guest puts down to make a reservation. Reservation deposits are a prepayment against their total bill. However, the deposit will be lost if the guest does not honor his or her reservation.

What are the benefits of enabling reservation deposits?

There are four 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.
  • Deposits will 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 restaurants (and other businesses) can use Seatout to manage their reservation book for free.

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 within two business days. 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 remains 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.

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

Keep in mind that fees are based on the deposit amount, not the check total. In the above example, Seatout fees represent 2.22% of the check total. For some restaurants, this is a good tradeoff because it mitigates against risk of the table sitting empty.

To help minimize fees, you can set the deposit amount to $5 per guest. Applied to the above example, Seatout fees would represent 1.14% of the hypothetical $100 check.

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

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

Seatout’s fees are generally around 6% - 7% of the deposit amount. For context, this is roughly the same rate that concert and event ticketing providers charge… that aren’t Ticketmaster.

How will I get paid?

Seatout will transfer reservation deposit revenue to your bank account around two business days after a reservation deposit is made. The deposits will have a descriptor starting which contains “SEATOUT - FUNDING.”

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

Currently, Seatout’s terms of service requires that you 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.

That said, we are considering an option which would allow restaurants to have guests pay the fee. (Have an opinion? Let us know.)

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 to experiment and 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

Which credit cards does Seatout support?

Seatout supports Visa, Mastercard, American Express, Discover, and JCB.

Will guests be upset or deterred from creating reservations?

In our experience, deposits only deter guests who may not be committed to 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 check total is less than the amount of the deposit?

Seatout does not offer guests 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.

Are businesses allowed to refund a guest’s deposit?

Yes, businesses are permitted to refund a guests’s deposit at their descretion. This is appropriate for emergencies and errors (e.g. duplicate reservations), but businesses are discouraged from issuing refunds under normal circumstances.

From the reservation calendar, click on a specific reservation. The blue “Refund Deposit” button will refund the deposit and keep the reservation. (You may optionally cancel the reservation as well, using the red “Cancel Reservation” button.)

Setup and Logistics

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 10 minutes.

How do I disable reservation deposits in Seatout?

On the Policies page, set the reservation deposit amount to $0.

You may optionally disable deposits on the Reservation Deposits page. However, you will permanently lose your list of past transactions.

If I enable reservation deposits, can I change the deposit amount?

Yes, you are free to change the deposit amount at any time (including reverting to free reservations). Note that the change is not retroactive, and previously made reservations will retain their deposit value.

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.

Once approved for reservation deposits, how do I change the bank account number, contact info, tax ID or address?

You must disable reservation deposits and reapply. This is required because identity and bank account information needs to be revalidated. Fortunately, the setup and approval process generally takes less than 5 minutes.

When setting up reservation deposits, how do I find my routing number and account number?

Your bank routing number is a nine-digit number that uniquely identifies your bank. You can locate your bank’s routing number as the first 9 digits on the lower left of one of your checks. Alternately, you can find your bank’s routing number on their website.

Your account number uniquely identifies your account at your bank. It’s usually a 7-12 digit number, and is located on your bank statements, checks, and online banking site.

How do I review my reservation deposit revenue?

The Transactions page lists reservation deposits made in the last 60 days, including party, reservation date, revenue, fees, and status.

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 (where applicable).