Deposits - Burden or boon?

Henri Jooste, Strategic Product Manager at Zonal, discusses customer sentiment towards deposits based on findings from our recent GO Technology research.

No-shows will unfortunately always occur to some degree, and whilst our recent #ShowUpForHospitality campaign has been working hard to raise awareness of the issue amongst consumers, there are specific tactics operators can consider to minimise the impact.

Whilst deposits certainly aren’t a flawless solution and should never be implemented as a blanket approach, the findings from our recent research certainly provide food for thought.

Asking customers for a deposit ahead of their visit is often considered to go against the casual nature of visits to pubs, bars, and restaurants. However, it seems that consumer attitudes to deposits are changing. 51% of UK pub and restaurant goers say that they would be happy to pay a deposit to book a table, and even more (55%) would be willing to pay a no-show fee.

We know from the research that 28% of 18–34-year-olds are likely to be a no-show. These guests are also some of the more-frequent visitors to hospitality venues – around 64% eat out weekly; far higher than 29% of the general population who do so. The impact, therefore, of their no-show habits has a much greater impact on an operator’s bottom line.

However, it’s this younger generation that are more resistant to paying deposits and no-show fees – around 2 in 7 (28%), so operators should absolutely tread carefully when considering implementing a deposit policy for this demographic and think about alternative preventative measures.

More commonplace over the years has been taking deposits for specific events or days, Christmas or Valentine’s Day for example, with customers recognising that increased demand for hospitality services on these days means a more concrete sign of commitment may be in order. But asking customers about their willingness to lay down a deposit for other outings, whilst lower, yielded some surprising results.

Deposits for special occasions

Our GO Technology research shows that around two-thirds (65%) of guests are willing to pay a deposit when booking a special occasion or a special event, compared to 41% for more casual occasions. Again, this is another option worth considering for operators for occasion-led and/or event-led offerings, such as party packages, themed events or optional extras.

Deposits for large groups

A large group booking failing to materialise is particularly damaging to both team morale and an operator’s bottom line, and customers appear to recognise this. Over half of consumers are willing to pay a deposit when booking for a larger group (over 6 people), with 58% reporting that they’re comfortable doing so, compared to only 16% who stated that they would not be comfortable with this.

But the successful implementation of deposits looks different for every venue, meaning operators must strike a balance so as to not deter potential customers whilst still remaining beneficial from an operational standpoint. The ins-and-outs of choosing to implement a deposits policy or not is entirely dependent on what’s right for your business, there is no right or wrong answer. After all, nobody knows your customers like you do!

About the author

Strategic Product Manager at Zonal, Henri has over 20 years’ experience in the hospitality industry with skills in stock management, procurement, supplier management, finance & cost control and business process improvement. Henri works closely with Zonal’s R&D teams to help deliver solutions that will not only meet operators needs now but in the future.

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