Avoiding the Lost Revenue From No-Shows – Some Reservations on Reservations.

It probably goes without saying that most restaurants choose to offer reservations. Although there are certain downsides to offering pre-arranged times and tables, in the long run, many restaurateurs feel that the gains outweigh the disadvantages. A well managed reservation schedule, especially on busier nights, helps move customers from peak to off-peak periods so as to better match the flow of customers with that restaurant’s staff and capacity. This means that your team has enough time and space to offer the best service to every patron: only one of reservations’ multiple benefits. 

Sadly, many diners take advantage of this practice to guarantee tables at several different restaurants, ultimately abandoning all but one depending on their mood, while some just plain abuse the system by failing to show for no reason at all. No-show rates can be as high as 10 to 20 percent for typical evenings. Two commonly applied solutions for no-shows in the past have been to overbook and/or to call each diner to confirm. Unfortunately, both of these still offer negative consequences. Overbooking risks a foyer full of annoyed guests waiting for their tables while confirmations require manpower yet can carry similar fail rates.

As I’ve written previously, I really believe that the restaurant industry should take more cues from the other hospitality fields. Hotels, airlines, doctors…all of these have penalties for the no-show. Assuming that the charge is not astronomical, most diners find it very acceptable for a smaller scale business to charge a no-show fee. Although, don’t make your charge too negligible as restaurants in San Francisco found that patrons ignored everything until they raised the fee to 100$. Several years ago, as the direct result of negotiations with the hospitality industry, American Express began to accept dining credit charges without signatures, precisely to support this type of fee. A year after the strategy was implemented; restaurants actually reported a significant decrease in no-call no-shows! To this day, AmEx cardholders are subject to this policy.

Obviously, as a concerned proprietor, you’ll still want to be sensitive to extreme circumstances, most likely waiving the fee if a guest calls to inform you of their absence and especially if you end up filling the table. Check out the National Restaurant Association’s great series on how to handle the situation once you’re actually faced with a no-show.

Of course, you could also choose to completely chuck the old ways, and invent something new! Like Grant Achtaz’s stadium-style ticket seating or Bram Cohen’s variation on dutch auctions.