‘No-shows’ have become a serious concern in the restaurant industry in recent years. It was recently reported that one restaurant in Edinburgh had had 450 reservations not honoured by their customers.
Of course, this can have a significant impact on revenue where the restaurant is unable to replace that lost business at short notice.
This is of particular concern for smaller businesses where a small number of no-shows can have a disproportionate effect on their business. However, restaurants are often left with few rights to recover their lost revenue.
Possible Approaches to Recover Lost Revenue
An increasing number of businesses are introducing schemes to attempt to tackle this problem. Some approaches to reducing the impact of no-shows include:
- Introducing advance deposit payments – usually reserved for parties over a certain size, but a restaurant could use its discretion in requesting a deposit for other reservations
- Taking payment details in advance to be used in the event that a last-minute cancellation is made, to deduct an agreed cancellation fee.
It is clear that a balance needs to be struck between protecting the restaurant’s position, and remaining attractive in what is an increasingly competitive market.
With the above approaches, a restaurant will need to ensure that it has a well-drafted policy in its terms and conditions, which are made clear to the customers at the point of booking. Restaurants will need to give careful consideration to the procedure for taking and returning deposits, and to ensuring that consumer regulations are properly complied with.
There are other practical measures that restaurants can sensibly implement without risking falling foul of consumer regulation. Calling customers on the day of the reservation (or perhaps a few days in advance) to confirm their booking is one approach adopted.
Alternatively, some restaurants make clear at the time of booking that tables will only be held for a short period of time, and will be lost if the diner fails to attend within that time.
These practical measures will often be preferable to the application of cancellation fees and other ‘contractual’ remedies. However, a careful consideration of all options, and what best suits your business, will always be worthwhile.
Ed Rimmell is a partner at award-winning regional law firm VWV. Ed can be contacted on 0117 314 5232 or at firstname.lastname@example.org.