Reservation no-show fees make it to America

A while back we wrote a couple of articles on the growing problem of reservation deadbeats plaguing the restaurants industry in Australia.

It's gotten so bad 'down under' that several Australian restaurants had implemented new policies that required would-be dinner reservers to leave credit card info upon reserving a table. If guests didn't show or cancel, they'd get hit with a no-show fee.

And now that practice has landed on the shores of America.

The Baltimore Sun recently had an article that featured restaurant Sotto Spora and it's owner, Riccardo Bosio, who was prepared to serve 95 guests a five-course meal while being serenaded by a tenor and soprano. Sounds like a fantastic even. The problem is that only 65 guests showed up.

Yikes.

Bosio says no-shows cost his restaurant up to $150,000 a year.

Double yikes.

No-shows also costs Bosio's serving staffs a lot in tips.

 Reservation no-shows cost restaurants hundreds of thousands of dollars every year.

The article puts blame on online reservation platforms like OpenTable, which takes the personal interaction out of the equation of making a reservation. The working theory is the lack of the human touch makes it easier for guests to not show last minute without feeling guilt.

OpenTable claims that less than 4% of reservations made through their platform end in no-shows. They also boast to find reservations for more than 16 million diners every month. So that 4% is a staggering number -- roughly 640,000 no-shows per month, spread out over 32,000 restaurants worldwide.

'Real people's lives and incomes are at stake'

To combat the last minute cancelation or, worse yet, the reservation deadbeat, Bosio has started implemented a new policy that requires guests to leave credit card info. For opera nights and major holidays, he charges $50/person for no-shows and cancellations made within 48 hours of the set date. For parties of six or more on weekends, the restaurant charges $30/person for reservations canceled with less than 24 hours notice.

So far the policy -- which was announced on Facebook -- has been met with support. Bosio didn't mince words when it came to how no-shows affect his business and his employees' lives:

"People need to realize that much like a doctor's appointment, or any other commitment, restaurant reservations are NOT a joke neither a game!" the Facebook post reads. "Real people's lives, incomes, hours are at stake ... So we intend to take a stand to make it right by our employees and all stakeholders!"

'We don't want to alienate guests'

Other restaurant owners are a little more cold on charging no-shows. Tim Reilly, beverage director for Bagby Restaurant Group, is seeing how things pan out with Sotto Sopra's new policy. He recognizes that reservation deadbeats are "detrimental to our finances and our business" but also doesn't "want to alienate any of our guests, because things happen."

Restaurants can report reservation deadbeats to OpenTable, but Reilly says his group doesn't even do that in fear of angering customers who might return.

(Can you really describe a no-show as returning?)

In fairness to Reilly, his main point is that sometimes Life happens and gets in the way of reservations. He doesn't want to punish his guests any further.

Janet Wagner, director of the Center for Excellence in Service at the University of Maryland, says no-show fees and late cancelations isn't all that uncommon.

"Cancellation fees are a standard practice in a number of industries — fees or penalties of some kind at hotels, airlines — it's not at all unusual," Wagner said. "So I think people are getting used to the idea."

Three ways to fight the no-shows

So how can you fight no-shows? Few options:

Charge a fee. You can go the route many Australia restaurants have and Sotto Spora, and charge super late cancelations or no-shows a fee. This would require taking a diner's credit card info as the reservation is being made. If they don't show, at least your establishment makes a few bucks for the trouble.

Confirm reservations. You can also try calling guests the day before or day of their reservation to make sure they're still attending. This isn't a sure thing as guests may still cancel, but at least you would've made that human connection that's often lacking in modern reservation booking.

Overbook. Some restaurants overbook their reservations, expecting a certain attrition of no-shows. While mathematically a good idea, when it doesn't work it can really annoy guests who made a reservation but are still forced to wait for a table. It's a gamble.

How are you combatting reservation no-shows? Let us know in the comments below or email us!

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