The hospitality industry has had it particularly hard over the last 18 months.
Repeated lockdowns and strict rules around social distancing, though necessary to keep the virus under control, have meant that many restaurant businesses have not survived. Others have clung on, pinning their hopes on a surge of customers following the lifting of lockdowns.
As diners begin to return, many restaurateurs are finally breathing a sigh of relief. But at the same time, an all-too-familiar enemy has reared its ugly head, and is eating into profits at a time when every penny counts: customer no-shows.
Customer no-shows are a massive problem in the UK especially, wiping out roughly 20% of restaurant bookings during traditionally busy periods at some establishments.
Join us as we discuss ways to fight back and prevent restaurant no-shows happening in the first place.
No-shows have always been an issue for restaurants, but there is concern amongst restaurateurs that the problem is growing — particularly for occasions and at other peak times.
While a no-show rate of 10-15% is considered normal, anecdotal evidence from some restaurateurs suggests the average is climbing beyond 20%.
As other costs rise and margins are squeezed even tighter, high no-show rates are becoming unsustainable for many independent restaurants.
It's not entirely clear what's behind this rise in no-shows, but three related factors we've seen cropping up in our research could be to blame.
- A rise in synchronous bookings at different restaurants. Couples and groups are booking multiple restaurants for the same time slot and make their dining decision shortly before the booking is due. Any cancellations are last-minute, if they get in touch at all.
- Online booking removes the 'human' element of making a booking. The lack of interaction between guests and restaurant staff when booking means that guests aren't as likely to consider the impact their no-shows will have on the business.
- An increase in casual dining. Going out to eat is a regular, informal experience for many of us, rather than a rare special occasion in a formal setting. The perceived value of a reservation may therefore have diminished for many individuals.
If the rise in no-shows is down to a cultural shift, then it's bad news for restaurants — and we can expect the problem to worsen.
Instead of hoping that things improve, many restaurateurs are taking matters into their own hands to reduce no-shows at their restaurants.
Ways to prevent restaurant no-shows
Taking deposits from guests when placing reservations is always the first solution suggested to the no-show problem, but many in the industry are fundamentally opposed to asking for money up-front. After all, the restaurant experience is all about providing hospitality — taking deposits implies you don't trust your guests even to turn up.
But if no-shows are becoming a problem, you may wish to implement a tougher policy on deposits, perhaps by lowering the table size threshold or asking for deposits for bookings during peak times.
Pros: Deposits grant you up-front revenue from every booking, and the simple act of asking for a deposit dissuades chronic no-showers from booking with you. You won't put off many reliable customers who understand why a deposit is required and are happy to oblige.
Cons: If your establishment has the toughest deposit policy amongst your competitors, you may struggle to justify it — and lose custom to them. And, as we mentioned above, suggesting to potential guests that you don't trust them to turn up might not make the greatest first impression.
2: No-show and last-minute cancellation fees
Instead of taking money from guests at the point of booking, some restaurants instead ask guests for credit card details and charge no-show or late cancellation fees where applicable. Usually this is handled by software like ResDiary or OpenTable so that the details are stored securely.
Fees are usually charged per person based on the revenue you might expect to lose — say, £30-60 per head. Fees could also be applied to partial no-shows, where fewer guests than expected show up for a table.
As for cancellation fees, set a notice period of something like 24 or 48 hours and charge accordingly. You may wish to waive these charges if you manage to fill the table with another booking or walk-in.
Finally, a cancellation policy should allow some flexibility for when guests have emergencies or other similar reasons for needing to cancel. If in doubt, consider each incident on a case-by-case basis.
Pros: Holding credit card details gives you peace of mind. You don't need to worry about losing out on crucial revenue. The lack of an upfront payment often makes this the preferred option for many restaurants — for guests who turn up, their overall experience doesn't really change.
Cons: You'll face similar issues as you would with deposits, with some potential guests simply refusing to book because of fees — or worse, provide false credit card details or cancelling the card before the fees are charged. Communicating your cancellation policy over the phone or in-person can be awkward and time-consuming, too. Also, if you charge significant fees, some guests may turn to social media and TripAdvisor to vent their frustrations.
3: Compulsory confirmation
You might well already send out reminder emails or text messages for reservations through your booking system 24 or 48 hours prior to reservation times, but you could go a step further and require guests to actively confirm their booking at this time. The best way to do this is over the phone, but you could also email guests if you have their email addresses.
You can also use this confirmation to double-check any dietary requirements.
This approach requires a lot of work even for small restaurants, so you may wish to limit its use to bigger events and occasions. That, or consider making use of booking software like OpenTable and ResDiary to help you streamline the process.
A reservation reminder one of our team recently received via email
Pros: This process gives guests an easy way to cancel, prompting cancellations earlier than you might otherwise have received them. You don't need to ask for any credit card details or a deposit, and, if you're tactful about it, guests may view the confirmation call as a thoughtful reminder of their booking.
Cons: Some guests may give you false email addresses or fail to pick up the phone when you call to confirm. More significantly, even if a guest confirms their intention to show up, there's no guarantee they actually will. There's no financial deterrent in place to prevent no-shows.
4: Just stop taking reservations
If you don't take bookings, then no-shows are immaterial. Switching to a walk-ins-only model is a bold move, and it's not right for every business — but it'll certainly eliminate no-shows!
Pros: There's no need to take money upfront, manage credit card details or process fees. You don't need to handle the admin associated with reservations, and there's no need to pay the commission you might otherwise way pay to your booking software provider. There are also more opportunities to sell drinks and nibbles at the bar while customers wait for a table.
Cons: This system doesn't really work for restaurants that are still establishing themselves or are located off the beaten track, plus it's more difficult to schedule staff when you're not sure how many guests to expect. Also, some guests will be unable or unwilling to queue for a table, and you could alienate many of your regulars. You might also struggle on special occasions, with the biggest spenders preferring to book somewhere to secure a table.
Theatres and other event venues all require customers to pay in advance for the full price of the experience. If you decide not to attend, you can either hope that the venue will let you return your ticket, try to sell it on yourself, or just lose your money.
Select restaurants are starting to sell tickets instead of offering reservations. Tickets are sometimes called 'prepaid reservations' on booking software like Tock. Typically you'd charge for a set menu or other experience with a set cost, usually at a specific date and time.
Ticketing is best suited to events, or for destination restaurants where it's easier to justify the upfront cost.
Pros: Boost you cash flow by receiving all or most of your revenue for a certain night or event in advance. No-shows are likely to be cut significantly, while still giving you the chance to cater for walk-ins or last-minute reservations where appropriate.
Cons: If you don't have a set menu, it can be tricky to price tickets, given the significant variance in overall price. Events aside, restaurateurs may struggle to justify ticketing to guests — it's still something of a novelty in the UK, and consumers may not be open to restaurant ticketing as a concept.
6: Blacklist repeat offenders
You might already have an informal setup for blacklisting guests who don't show up several times in quick succession, but this can be difficult to police if you don't ask for anything more than a surname and phone number. You could try to make this a more formal process by adding details of when a customer will be barred from making reservations to your restaurant's policies.
Some restaurant booking systems will automatically ban the accounts of users who haven't shown up several times within a given period. Of course, there are ways for determined guests to circumvent this restriction, however.
Many restaurateurs have expressed interest in rating restaurant guests in the same way that Uber drivers and Airbnb hosts can rate their riders and guests. An industry-wide solution would be required for such a system to be effective, however, and at this stage there's not really anything out there that's working on any kind of scale. Watch this space.
Pros: If assembled and maintained correctly, a blacklist can significantly restrict the number of no-shows you receive from repeat offenders. It can also work alongside any other no-show prevention measures you want to try.
Cons: It can be very difficult to block certain guests from making bookings, particularly online, if you're targeting chronic no-showers. They can just create new accounts using a different email address, or ask another member of their party to book for them.
Put it in writing
However you decide to tackle no-shows, you must amend or create a policy detailing the measures you're taking.
This will help clarify things for employees and guests alike, and help you fight your corner should a dispute ever arise.
No-shows are, sadly, part and parcel of the restaurant trade, and you'll never be able to eliminate them entirely. But losing around a third of your revenue on some of the busiest nights of the year is not sustainable — and it can servely impact morale.
By all means, try out a few of these methods to reduce no-shows. Data provided by your booking software should make it easy for you to tweak deposit thresholds, hold credit card details, and even sell tickets.
Compare your trial period with the same timeframe last year, and see how no-shows, late cancellations, and average spend per guest are all affected. Work out the total savings made, and decide if it's worth continuing.