Although private dining is growing in popularity nationwide, many consumers still have the perception that it’s an indulgence, or only reserved for special occasions. This couldn’t be further from the truth, with many restaurant owners reporting that small parties (those with groups of 10 to 15 people) actually put less strain on a restaurant’s space and existing operations. As a result, private dining isn’t nearly as expensive as some diners might think.
The demand for more private dining options is clearly there. A recent survey from Gather found that consumers overwhelmingly prefer smaller (fewer than 10 is ideal, according to 84 percent of respondents), more casual gatherings (81 percent prefer casual clothing to fancy dress)—making restaurants with intimate private dining options an ideal venue. However, while private events can provide a highly lucrative revenue stream and restaurant owners want to book more of them, consumers still view them as exclusive and expensive. To truly take off as a reliable source of income for restaurants, private events need to be seen as more approachable and attainable by consumers.
Here’s why restaurants should take advantage of this moment to change the consumer perception of private dining and increase their bottom line:
The average party size for a full-service restaurant is 3.7 guests. Depending on the average ticket, restaurants could be raking in $50 to a couple hundred dollars per table, perhaps even higher for big spenders. While there is a lot of variance, the average large group or private event spends around $2,500, which is 5 to 20 times the amount of revenue of an average table.
Events provide an opportunity to actively sell. No longer will restaurants have to rely on customers making reservations, which are typically driven by marketing. They can drive repeat business with one-on-one sales relationships. A sales process for large parties and relationships with returning customers can generate predictable revenue for the business. Private dining revenue is also predictable because it’s booked in advance. One of the biggest values of creating a private events business is guaranteed revenue for weeks, months, or even years ahead of time. The majority of private events are booked 30-60 days out from their actual date. Finally, it’s standard practice to collect a deposit of 10% to 50% of the estimated total cost when private events customers book an event. This helps partially or fully guarantee the estimated cost of the event ahead of time.
This one is pretty simple. The margins on a typical party are 3.5–8 percent, and the margins on a group or small event are 15–25 percent. Even better, everything is more predictable for a typical party—including food ordering and service scheduling. Plus, higher-margin items like liquor and dessert comprise a larger portion of the check.
While stats like these may have restaurant owners’ mouths watering, making the most of private event capabilities will require some re-positioning with patrons. A few tips:
Encourage outside-the-box events
Restaurants should create some event packages around activities that go beyond birthday parties and anniversary dinners, such as a wine tasting or private brunch. Consumers need ideas to inspire their next event, especially since 50 percent of consumers think they don’t have a reason for private dining. Restaurants should consider getting creative and promoting their venue for things like book club meetups, fantasy football leagues, or business meetings, and creating packages to encourage them.
Leverage holidays to make it a family affair
The majority of Gather’s survey respondents (almost 46 percent) said they would book a private event for their significant other. After that came parents or family members, themselves, and their best friend. Restaurants should consider leveraging national “holidays” like Grandparents Day (September 9), Siblings Day (April 10) or Best Friends Day (June 8) by offering deals—like complimentary dessert—as a creative tactic to boost events. Bonus: often, these holidays are on a weekday, freeing up weekends for bigger events if need be.
Get in face time with diners and make sure all staff members are informed
Having a sales manager breeze by tables to ask how a diners’ meal is going isn’t uncommon. In fact, most view it favorably as an extra touch of customer service. This is also a great opportunity to briefly mention that the restaurant hosts private events. Or leverage a check presenter by slipping in a postcard with private event information. But, the most important aspect is making sure that all staff members are informed of the restaurant’s private dining and event offerings. The event manager (or the person responsible for managing events) should ensure each customer-facing employee has a boilerplate response to a question about private events, even if it’s just directing them to another person or an online lead form.
Every restaurant is different, so results will vary, but developing a private dining program is worth considering. It’s prime time to take advantage of what consumers are really looking for and get them on board with more private dining.
Holly Edwards is Gather's content marketing specialist. She works on blog posts, social media content and thought leadership pieces that help restaurants and other venues streamline their planning process and host successful events.