Restaurant no-shows are a MASSIVE problem for pubs and restaurants. In an industry where profit margins can sometimes be quite low, once a few bookings fail to materialise, you are probably looking at a loss for the evening.
One restaurateur explains how no-shows can decimate the bottom line:
“…we don’t make any profit for the night. We only have 60-65 seats, so if 10-12 people don’t show up, the profit gets thrown out the window”
Joel Best, Sydney Morning Herald
These figures show just how big the issue is, and how some restaurants and pubs are beginning to fight back.
1 in 5: The average no-show rate in big cities
On average, 20% of diners fail to turn up for their reservations in big cities, according to an in-depth study on restaurant no-shows.
This may be down to many factors, including the high level of competition and consumer choice, and a casual attitude towards booking commitments.
Most shocking of all are anecdotal reports of people routinely booking multiple venues in advance to avoid disappointment, before making a last-minute decision on the night.
£16 billion: What no-shows are costing the UK restaurant industry
A 2015 survey by a restaurant booking system put at £16bn the amount British restaurants are losing out on annually due to no-shows.
As every manager knows, the pub or restaurant incurs costs whether the customer shows up or not, with staffing and overheads biting into the bottom line.
15 minutes: Time to wait before declaring a no-show
So says the National Restaurant Association of America, which has published a brief guide to combatting no-shows.
The organisation (sorry, organization) advises clear communication of your reservations policy, as well as dropping a courtesy call reminder to the customer the day before.
They also recommend email confirmations, as a written reminder. These should be sent automatically to the customer as part of any online or tech-based restaurant booking system.
42%: Restaurants taking pre-paid deposits
In a recent poll of UK restaurants it was found that 42% were already taking and holding pre-paid deposits, to help insulate them against the cost of no-shows. Christmas Day and Mother’s Day are prime examples, but the operational challenges this tactic presents can’t be ignored.
Even so, restaurants requiring credit card details for reservations has become relatively widespread at the higher end of the market, and casual dining restaurants and pubs are starting to consider the idea.
1 in 3: Venues feel guests are open to late cancellation charge
The same survey asked pub and restaurant managers about late cancellation, less of a bugbear than no-shows but still a significant cause of loss.
32% of the business representatives agreed that ‘most guests would understand the need to hold a deposit or credit card details,’ to compensate the venue against late cancellation.
£150: Cancellation fee at Restaurant Gordon Ramsay
Cancelling on Gordon Ramsay might leave you spluttering The F-word. Unless diners give a full 48 hours notice they lose £100 when cancelling lunch, and a whopping £150 on dinner bookings.
Another extreme example is the trend of naming, shaming and even banning customers who fail to turn up for bookings. Restaurants around the world, from Australia to America, have been known to resort to this tactic.
While probably cathartic, this approach has the obvious effect of undermining customer goodwill. Instead, taking credit card details and implementing a reasonable late cancellation fee may be a better way to go.
£13.7 million: Value of prepaid tickets sold by pioneering restaurants
Here’s a revolutionary solution to the restaurant no-show problem: take payment up-front.
A number of restaurants in the USA started doing just that, redefining the dining out experience as a ticketed event – like a trip to the theatre or a sporting fixture.
Alinea and Next are the Chicago restaurants credited with pioneering the concept. Since 2011 the two venues have racked up $20 million (£13.7 mn) in prepaid bookings.
Now UK restaurants like London’s The Clove Club are rolling out a similar system. Cancellations mean the customer loses their fee, but the venue isn’t left out of pocket.
It’s yet to be seen whether similar no-show “fines” will catch on over here (our hunch is the UK dining public won’t have the stomach for such measures in the long run).
But what is clear is that pubs and restaurants do need all the ideas and tools they can get to protect their investment in each service.
Key points to remember
- If up to 1 in 5 diners fail to honour reservations, overbooking tables on key trading days may not be such a radical idea after all
- The total cost of no-shows to UK pubs and restaurants is estimated at £16 billion
- Communication can help to reduce no-shows: your restaurant booking system should send automatic email confirmation, and courtesy calls act as a reminder
- 42% of restaurants are taking pre-paid deposits, while late cancellation fees are another way to recoup the costs
- Restaurant ticketing is a more proactive trend, putting the onus on customers to book and prepay for their dining experience.
- Cancellations are not refunded, insulating the venue against loss.