Reservation no-shows can be extremely costly for all restaurants, but especially those that depend on reservations to turn a profit. Unfortunately, the average no-show rate for big-city restaurants is around 20%, which can lead to significant losses in an industry with such low profit margins (3-5%).
On top of that, it can put stressors on front of house staff to seat hungry and impatient walk-in guests when reserved tables are left empty. While we can’t force people to honor their reservations, we can take measures to deal with the problem.
Here are 4 ways restaurants can minimize the losses associated with reservation no-shows:
Utilize Guest Management Software
With the help of guest management software, restaurants can track and remind guests of their reservation automatically. Whether guests make reservations online, via phone, or through a customer app, all details are captured in the guest manager software.
Guests can receive confirmations and reminders via text messages, helping to minimize the number of guests who miss their reservation.
A guest manager solution can also be helpful for managing walk-ins during a busy night. Hosts are able to use the system to accurately predict a wait time based on a real-time view of the floor and historical data.
After adding the customer to the wait list, some guest management systems also enable diners to receive a confirmation text with a link to an app where they can track their place in line and even browse a menu while they wait. This can also decrease table turn time.
Keeping track of customers in a guest manager system is also useful when dealing with past no-shows. When these guests try to make another reservation, restaurants have the option of denying them.
Features like text confirmations and reservation tracking allow hosts to streamline table seating when guests do not show up when their table is ready.
Require Deposits with Reservations
Another method that restaurants use to deal with no-shows is requiring a small deposit or credit card number when customers make reservations.
One upscale New York restaurant started charging patrons $75 a head if they didn’t show up to a reservation or cancel within 48 hours.
Before implementing this strategy, the restaurant was losing eight to 10 people a night – and now only loses a couple of guests per week. Especially for fine dining restaurants with limited seating, each reservation matters.
Another method restaurants can use is having diners pay a deposit at the time of the reservation and if the customer doesn’t show up, a refund in the form of a gift certificate is issued. This enables the restaurant to offer diners another opportunity to try again in the future instead of turning them off completely.
Though these techniques may seem too extreme for simple dining, diners aren’t completely against it. Sherri Kimes, a hospitality professor at Cornell, found that consumers are open to being charged for last-minute cancellations, so long as the restaurant is always ready to seat them the moment they arrive when they do honor their reservation.
Restaurants are also combatting the losses associated with diners who don’t show up to their reservations by slightly overbooking the restaurant.
With about 10-20% of reservations ending up as no-shows, according to Restaurant Business, restaurateurs can compensate by booking 10-20% over their reservation capacity.
New York restaurant Mia Dona implemented the technique of accepting more reservations than usual between 7 and 9 p.m. when the economic downturn occurred to compensate for no-shows. “Even if this means lengthening diners’ waits for reserved tables, we, like other restaurateurs, want to make sure that no-shows don’t cost the restaurant money.”
Unfortunately, overbooking can mean lengthening the wait for reserved tables and upsetting customers who were promised tables at a particular time.
One extreme, but arguably effective way to reduce the amount of no-shows, is to eliminate reservations entirely. Though this isn’t a viable option for all restaurants, it means there won’t be any potential for no-shows. For restaurants popular or trendy enough to turn a profit without any help from reservations, this option can work quite well.
Another alternative would be limiting the number of reservations available. Limiting reservations may be a wiser choice for restaurants that need a few reservations a night during off hours to keep business booming.
The downside to limiting or eliminating reservations is relying on customers who are willing to wait for a table, which can be upwards of an hour or two depending on the popularity of the restaurant. Nick Kokonas, owner of Chicago’s Alinea, says that reservation-less restaurants “drive away customers that don’t want to wait in line.”
Though no-shows are undeniably annoying and costly for restaurants that depend on nightly reservations to turn a profit, there is no sure-fire way to stop it from happening. Ideally, these methods will reduce stress on the front of house staff, keep restaurants turning tables faster, and reduce losses.
How does your restaurant deal with no-shows?