After many years of dealing with ‘restaurant no-shows’, restaurant owners are having to change their policies to cope with the ever-increasing prices. 20% of all reservations turn out to be no shows. This means on average restaurants could be losing out on £233 a night. No-shows are one of the leading causes of many restaurants being forced to shut down.
Why are more restaurants charging for no shows?
No shows are a major concern for restaurant owners as they can impact the establishment’s expected revenue. Many food manufacturers have increased the price of their food and therefore the restaurant is faced with higher costs. This has then led to increased menu prices and competitve pressures from other restaurants. Restaurants are unable to risk no-shows as they pose too great a financial implication upon the restaurant. The industry group UK Hospitality said the issue of no shows is “deeply damaging to venues”.
Can restaurants charge a cancellation fee for no shows?
Many restaurants have put in place policies that help stop the price of no-shows from adding up. Charging for no-shows means that the restaurant still earns some money for the cancellation despite it not being an exact match of what they would have originally earned. The introduction of cancellation and no-show fees makes people aware of the effect their cancellation had upon restaurants and catering places. An average cancellation fee can range from 5-10%, depending on the nature and local laws. In high end locations, e.g. London’s West End, no-show fees can be as much as £195 per head. By implementing tougher regulations, more people will be aware of the damage they are doing when cancelling at short notice and not bothering to show up for their reservation.
There are other things that restaurants can do to avoid no-shows. One way in which restaurants can reduce the risk posed by no-shows is by asking for a deposit when the customer books a reservation. The deposit makes people feel inclined to attend as they have paid for the table and decreases the chance of them cancelling at short notice. The deposit is then used for the bill and is therefore not lost.
Why aren’t some restaurants charging for no-shows?
Not all restaurants charge. Some only take bookings by phone or email and get the customer to confirm a week in advance. Despite the clear warnings that owners put on their website, many places are keen to show they are flexible and will aim to refund fees. People don’t always realize how much the restaurant could be losing when they don’t turn up and so don’t feel guilty for cancelling at the last minute.
Another contributing factor is that after the pandemic, restaurants had to rebuild their popularity and some businesses may never have recovered from the lull. Added with it the increasing number of cancellations, restaurants are pushed to the limit.
Is restaurant table booking common practice?
All restaurants are strongly recommended to have a cancellation procedure to avoid any problems with cancellations and no-shows. It is common practice to have a cancellation policy. It is important to note that any cancellation terms and conditions need to be fair to the customer. For example, demanding an extortionate amount of money for a cancellation two weeks beforehand would not be deemed acceptable. Common practice prevents the company from losing unnecessary money from cancellations.
How a restaurant broker can help restaurants save money?
As a restaurant owner, it’s important to protect your business and your consumers, in case an accident should happen. Many restaurants are at risk from cancellations that they cannot afford to keep up with or they are at risk from claims that could potentially have a long-term effect on the business – this is where NDML and Restaurant Insure come in.
Having an Restaurant Insure handler ready to speak to, providing that crucial information or advice should you need it, is vital. We know that setting up your own restaurant is a stressful time without the added stress of having to insure your restaurant.
Find out how to renew your restaurant insurance or how to get your restaurant insured by getting in touch with us today
What is Restaurant Insure?
Restaurant Insure is the UK’s top restaurant insurance broker. They cater solely to one type of business, offering bespoke policies and tailored insurance solution. Their aim is to improve protection for operators by providing targeted cover at better premium. NDML established Restaurant insure, the UK’s largest independent nightlife broker with 25 years’ experience protecting British hospitality.
If you would like to apply for restaurant insurance, click here for more information.