The impact of no-shows on restaurants
Industry insiders in a number of countries report a worrying trend of diners making multiple restaurant bookings then choosing which one they will honor at the last moment, without even notifying the other restaurants that they won’t be dining with them. For them, it's a "no-strings-attached" situation where they can book a table at multiple restaurants and just show up for one without canceling the others. It's not causing them any ramifications, and canceling reservations is a hassle, so why would they bother?
What's worst is that most diners are completely unaware of the consequences restaurants face when they don't show up for a booking. In their minds, it's just a table - if they have left it empty, someone else will surely fill it.
Unfortunately, that's not how it works. Restaurants cannot release a reserved table to another diner for at least 15-20 minutes after the reservation time, which means that they're turning away walk-in customers. If that turns into a no-show, then they end up losing a table's worth of revenue, which for a restaurant is a lot.
For fine-dining restaurants especially, empty tables are a revenue black hole. In Chef Grant Achatz Michelin-starred restaurant Alinea, for example, just two no-shows can lead up to a 100 percent loss of profit.
No-shows also completely throw off the amount of food that's been ordered and prepared by the staff based on the number of upcoming reservations, once again leading to increased costs.
All in all, no-shows are an expensive and frustrating restaurant management problem. The battle to reduce them is not a new one, but the issue has escalated to new heights in recent years as restaurants face a rising tide of absent diners. In Australia for instance it's predicted that restaurants lose $75 Million annually due to no-shows.
If the situation wasn't already bad enough, the COVID era has worsened the no-show issue, causing a pain-staking impact on an industry that's already suffering the consequences of space restrictions and social distancing laws. With limited capacity in place, even a single no-show results in a significant impact on a restaurant's revenue.
No-shows affect all restaurants differently. Below is a breakdown of actual restaurant no-show rates of Eat App's customers. Though majority of restaurants fall in the low range, even a seemingly small 5% of no-shows can make or break a business.
How restaurants can reduce no-shows
If you're looking to bring down your restaurant's no-show rate, there are a few things you can do. Remember, however, that not all strategies will be practical for eateries of differing sizes or service styles. You may find that you need to adopt an approach that’s completely different to the restaurant next door or that a mix of methods will work best for you.
At the heart of the no-show problem lies a lack of understanding among customers of how their actions impact on restaurants and their staff. In the aftermath of a swathe of no-shows surrounding recent events such as Valentine's Day and Mothering Sunday in the UK, the thorny issue of elusive diners has really come to the fore.
After losing £3,000 in just one weekend, Damian Wawrzniak, a restaurant owner from Peterborough, England, took to Twitter to launch the #StopNoShow campaign. Many chefs and restaurant owners have since shared their own frustrations and experiences using the hashtag.
Education undoubtedly has an important part to play in reducing the no-show problem and it remains to be seen whether the #StopNoShow campaign on social media will prove a partial remedy to the problem. Some chefs and owners have even gone as far as to name and shame diners on social media or to share aliases and other fake details individuals have used to book.
This sharing of data could potentially pose problems, though it’s easy to understand the frustrations that have led some to adopt this approach.
While the public-shaming may work momentarily, it's not a long-term solution. A better practice would be to be more open and educate diners about the impact they're missing a booking has on the restaurant, through platforms like social media and blogs, to instill a sense of responsibility in diners.
Charge a reservation fee
One of the methods of reducing no-shows at a restaurant is to create liability on a diner for missing a reservation, by charging a booking deposit or holding credit card details in case of no-shows.
This is a widely used technique, especially in high-end, popular restaurants like the three-Michelin starred Restaurant Gordon Ramsay in London, which charges $225 per person in case of a no-show or cancellation, or NYC's Eleven Madison Park that charges $75 for the same.
However, these high charges are not applicable to every restaurant. Diners may be ready to put down a heavy deposit for such exclusive fine dining venues, but for smaller establishments, enforcing such a high no-show policy is likely to stop people from making reservations altogether. A better approach for smaller restaurants would be to charge a small booking deposit like $10-20 that can be deducted from their final bill.
However, such a small charge won’t make up for the revenue loss by a no-show. Plus, for those still taking telephone-only bookings, collecting credit card details for each one can prove time-consuming for staff. Many restaurants use online reservation systems like Eat App to enable automated payment deposits while making reservations, which can help make the process efficient.
Such policies are unlikely to be popular with the customers asked to pay a penalty, but owners do recognize that some flexibility is required when applying the rules. Restaurateur Mark Greenaway, told the Edinburgh Evening News: “If two people turn up when a table of four has booked, am I realistically going to charge the two diners double price? No, because I’m not trying to annoy my customers. I’m trying to stop the no-shows.”
If you’d like to turn no-shows into future customers, you could turn forfeited reservation fees into gift vouchers so that no-show diners can choose to dine with you on another occasion.
Related content: Read how our booking widget can help you fight no-shows
Many fine-dining restaurants that offer tasting or fixed event menus have chosen to go down the ticketing route, asking diners to purchase tickets in advance so that their costs are covered. This non-refundable ticketing, therefore, acts as an insurance policy for the business if the diner is unable to attend.
If the customer then decides to cancel, the restaurant may be able to re-sell their ticket allowing the customer to recover their money. However, much the same as if you’d bought tickets to the theater or a concert, there’s no guarantee of a refund at the eleventh hour.
This technique has proved very successful in Nick Kokonas's restaurants Next and Alinea, so much that other fine-dining restaurants in the USA have started adopting the system for themselves.
Although ticketing is becoming increasingly popular for operators of in-demand restaurants, it may not be the best option for smaller ones. Unless your restaurant is impossible to get into, ticketing can be very off-putting for customers, so you risk dropping the number of reservations you'll get if you go down this route.
If you own a popular restaurant, you could try going reservation-free or restricting reservations to less busy times. Depending on location and layout, this isn’t always going to be practical since you may not have space for walk-in customers to wait.
It’s also harder to predict staffing and stock requirements when you’re unsure how many people you’re likely to be catering for that day.
And don’t forget, not all customers are happy to wait for a table. For example, families with kids may find it difficult to entertain and appease hungry youngsters while they wait to be seated. This type of situation is likely to have a negative impact on their personal dining experience and those around them too.
This is especially applicable for fine-dining restaurants that people dine at for occasions. In such establishments, people expect to have pre-booked tables rather than waiting around for tables to get empty.
If you decide to restrict reservations at your restaurant, it's a good idea to look at past trends to recognize off peak-times or times where walk-ins are higher to choose the right time to restrict reservations accordingly.
Use overbooking strategically
Strategic overbooking is another rather underused tactic for overcoming no-shows. The aviation industry has been doing it for years, and if adopted in the right manner, could prove to be successful for restaurants too.
The key to effective overbooking is being well equipped with data. Keep track of your restaurant's no-shows to identify patterns and trends - look for variables that lead to higher no-show rates like a day of the week, lunch vs dinner shift, online vs phone reservations.
Also look at your restaurant's stretched capacity to find out how many diners you can accommodate at a time without affecting the guest experience, and try not to overbook beyond that number.
Once you've done your research, you can start experimenting with overbooking, but cautiously. It's not suitable for every restaurant, so make sure you have covered all your grounds before you take the leap.
Related content: Read how to use overbooking to your own advantage
Make cancellations easier
One reason people often fail to cancel their reservations is the lack of ease to do so. If diners are provided with a simple, convenient way of making changes to their booking, they are more likely to do so ahead of time, leading to a reduced no-show rate.
The easiest way to make cancellation simple is by using a reservation software like Eat App that allows diners to cancel their bookings directly through the reservation confirmation email with just a few clicks.
However, if you're not using reservation software, make sure diners are easily able to reach you (and get a response) for cancellations through other platforms like phone calls, social media platforms, SMS, and WhatsApp. The easier the cancellation process, the more likely diners are to actually cancel.
Even if the cancellation is last minute, it gives you the opportunity to provide the table to a walk-in customer and make it available for others who may be looking for a booking at the eleventh hour. In case you're using an online waitlist system, the table can be opened for someone on your restaurant's waiting list.
However, making cancellations easier could prove counterintuitive and encourage people to make multiple bookings with the slightest intention of actually dining at the restaurant, and although last-minute cancellations are better than no-shows, they don't always result in empty tables getting filled.
Pairing easy cancellations with a strict cancellation policy, like not allowing any changes within 24 hours of the reservation time, may prove more effective in reducing your restaurant's no-show rate.
Track repeat offenders
Keeping track of flaky customers who cancel reservations multiple times is another useful tactic. Restaurants could reach out to them through email or SMS to acknowledge their no-show and provide them with an incentive for their next visit or put strict policies in place that block a diner from making reservations at the restaurant after a certain number of no-shows.
Restaurants can keep a record of these repeat offenders through a simple excel sheet, although that may become tedious to track in long term.
Most reservation systems keep track of a guest's no-shows within the guest history. With some advanced systems like Eat App, you can also automatically tag guests who have crossed a certain number of no-shows to keep your staff informed.
Related content: Read about Eat App's automation feature
Remind customers about their upcoming reservation
Reaching out to diners to re-confirm their reservations 24-48 hours prior can also be helpful, as it helps guests stay on top of their reservations and cancel easily if needed.
You can do this by dropping a quick call to your diners, or if using a reservation system, easily set up automated email and SMS reminders to be sent out to them.
Although it's a simple technique, it can help significantly reduce your restaurant's no-show rate.
Reward punctual customers
Another simple way of encouraging people to be punctual and not skip their reservations is to incentivize it by acknowledging and thanking them for honoring their commitment.
Providing them with a complimentary dessert, a voucher for their next visit, and most importantly, an impeccable dining experience goes a long way in reducing no-shows at your restaurant.
Use tech to reduce no-shows efficiently
By now, we've established that reducing no-shows at your restaurant is no simple task-it takes dedicated staff, time, and effort. The good news is that there are now online reservation systems that can assist you in the process and help reduce no-shows in a more effective and efficient manner.
Online reservation systems streamline your restaurant operations and help improve your no-show rates significantly with advanced functionalities like:
- Providing diners with a simple way to make changes to their reservations
- Automated confirmation and reminder emails to diners with upcoming reservations
- Tracking flaky customers through detailed guest history and automated guest-tags
- Direct reservation deposits directly through the system
- Selling tickets for special events like New Year's Eve, Brunches, etc. directly through the system
- Virtual waitlists that allow guests to add themselves to the restaurant's waitlist easily so that they can be allotted a table automatically in case of a cancellation or no-show
- Detailed guest profiles with contact information all in one place, making it easier to reach the customer quickly to confirm their attendance
- A fully equipped system with guest details and history, past trends, and more that enables restaurant staff to provide a highly personalized guest experience
- Highly accurate data about guest and reservation history to identify past trends and make informed decisions for restricting reservations and overbooking
No-shows have been a big problem for restaurants for a long time, but lately, it has gotten out of hand. It's become increasingly important to reduce them.
What we have learned is that there is no one perfect strategy that can help reduce no-shows, you have to make intuitive decisions based on various factors to decide what will work best for your restaurant. Even then, preventing no-shows entirely is a far-fetched idea. But applying the right tactics at your restaurant can help you deal with no-shows to a great extent.