There was a big story in the news recently about restaurant reservations being classed as legally binding contracts. Belgian Beer Cafe Torenhof, hit the headlines following a social media rant about a booking for 50 guests that turned out to be only 20 diners. Experts have said that technically, the customer in question was in a contract and could be liable for any losses the venue faced through their number of restaurant no shows.
Restaurant no shows are the well-documented scourge of the hospitality industry and have the power to make a great night into a loss-making one. Many restaurateurs just accept that they will have people not turn up and as a result, often overbook their venues. But this then angers the customer as they sit around waiting for a table, sometimes heading online to write a ratty review. Operators may feel like they are in a lose/lose situation, but would they ever take anyone to court over a no show?
In short, probably not. As anyone who has managed or owned a venue will tell you, hospitality businesses are generally operating on tight margins. It doesn’t cost a huge amount to take someone to a disputes tribunal ($45 for anything under $2,000) but there are hidden costs attached; lawyers fees, lawyers letters, travel. Another thing hospitality folks will tell you is that they don’t have much time. If you’re a sole trader, taking time off to go to a tribunal may be a luxury you don’t have. For the sake of getting back a few hundred dollars, having those days off, or getting into work to run the shift might be worth more money.
Then there is the added cost to your reputation for potential customers. Everyone in the industry may agree with your decision to go to court and you do have a legal right to do so, but we all know bars and restaurants trade on word of mouth. It’s a situation that most operators would shy away from, scared of any backlash, whether it would be justified or not.
So what’s a restaurateur to do? Accept losses and empty tables? Or accept irritated customers as they overbook/understaff or cut corners on quality?
At ResDiary, we don’t think it needs to be like that: take a form of security payment instead.
Many venues are now selling tickets for tables, much like a show or a concert. Restaurant ticketing doesn’t work for everyone but if your venue is in-demand, or you sell a set-menu, it makes sense. The customer has paid upfront, that table belongs to them, and if they can’t make their booking, they can happily sell it on. You’re not left with an empty table and even if you are, you’ve not lost money as it’s paid for.
Deposits are a long-accepted way of securing large party reservations. They put money in your pocket, before the customer arrives and create a sense of obligation in the guest. Guests know that if they don’t show up, they lose that deposit. Mark McGuinness, owner of the Belgian Beer Cafe mentions in the articles that he is kicking himself over not doing this. Sure, some people will blanch at the idea of paying anything upfront but anyone with an unsecured reservation can potentially be one of those annoying restaurant no shows.
Another option if you’re a bit nervous about taking money upfront is tokenization. It’s a relatively new concept, where you store the customer card details on a secure system and charge the card in the event of a no-show in your restaurant. It’s not fool-proof as there can be no guarantee the account will have funds in order to take the money later on, but many venues find it works as a deterrent to ghost-guests. It’s also been proven to encourage people to cancel in advance, in order to save being charged.
Of course, you can take payments manually but it’s a generally accepted fact that payments should be done by an electronic system. That way, everything is secure, payments are taken in a PCI compliant fashion and options like reminders and prompts at the point of booking are available. It’s also super quick, with the addition of payments only adding a few seconds to the booking process but saving you hours of headaches.
If you’re a ResDiary user, all these methods are already available to you. Just contact us for more information below. If you’re not a ResDiary user, all you need to do is sign up and start protecting your business within a few days.
Join other restaurants like Kazuya, Cocoro, Tantalus, Clooney and many more in securing your revenue and improving your service.