April 28 2016,
Dreaded no-shows aren’t just inconvenient. They can be fatal, leaving British restaurants and pubs severely out of pocket. These figures show how serious the issue is, and what steps the industry is now taking to tackle it.
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.
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.
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.
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.
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.
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.
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.
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.