Why no-show fees are the answer you’ve waited for

Even before the pandemic, no-shows accounted for 1 in 5 bookings in the UK alone, costing the industry £16 billion (€19 billion) a year. And the problem hasn’t improved since the reopening and relaxing of restrictions.

Currently, no-shows wipe out around 20% of all restaurant bookings. We’re not talking about a slow Tuesday night, either. It’s the busy periods that feel it the most.

Mix that climbing percentage with the ongoing labour shortage and supply chain crunch, and you’ve got a cocktail that is unsustainable for most restaurants.

Instead of waiting for the tides to turn, see how to reduce restaurant no-shows using deposits, prepaid tickets and no-show fees.

Using deposits or prepaid tickets to prevent restaurant no-shows

Asking for a deposit up front guarantees revenue from every booking, and it drastically lowers the chance of a no-show. The drawback is that it may turn away potential customers… but maybe that’s a good thing. You’ll end up with reliable guests that you know will show up or cancel ahead of time.

As for the guest, the deposit is, well, a deposit. They’ll get that amount subtracted from their final bill.

Prepaid tickets work the same way, but they cover the entire cost of the meal. These are wildly popular for events and experiences but work for regular bookings, too.

Asking guests to purchase a ticket for a reservation is a much larger commitment than a deposit or a no-show fee, but there’s no better way to 100% cover your costs.

Taking no-show fees when a reservation is missed

Instead of collecting money up front, many restaurants are using no-show and late cancellation fees. Credit card details are stored and charged only if the guest doesn’t show up for the booking.

How much do restaurants charge for a no-show? Restaurants in Norway are finding success with no-show fees ranging from €160-€350 per person. With Superb’s Guest Experience Management platform (GXM), you can decide if you want the fee to cover the entire meal or just your base food costs.

With no-show fees, it’s important to set a cancellation deadline and provide guests with a clear way to cancel their reservations ahead of time.

For guests that do show up, asking for credit card information in advance doesn’t change their experience at all – compared to deposits or prepaid tickets where money was paid before actually entering your restaurant.

The benefits of charging for no-shows

1. Creates a financial safety net

No-show fees and deposits help recover some of the money you’re losing from a missed reservation.

While it’s not the full cost of the meal, your staff’s salaries or the environmental impact of food waste, it is better than nothing. And unfortunately, with the industry’s no-show average climbing past 20%, ‘better than nothing’ is a good place to start.

The silver lining is that when a party doesn’t show up (despite a no-show charge), you may be able to seat walk-in guests or those on your waiting list. When this happens, the no-show fee is more of a revenue boost than a consolation prize.

2. Provides job security for your team

When guests fail to show up for the table that they’ve booked, you’re left with fewer covers and therefore less work for your staff. As a manager, what do you do? Do you send team members home early to save costs? Or do you find busywork to occupy their time?

With reservation no-show deposits and fees, you’ll have more of a financial cushion to keep paying salaries and wages.

The restaurant industry is currently facing a labour shortage with staff turnover costing restaurants around €130,000 a year. Introducing no-show charges at your restaurant can help you keep the staff you have.

3. Reduces no-shows

Adding a financial commitment to a reservation is the best way to ensure someone actually shows up or at least cancels in advance.

“We used to average between 2-4 no-shows a night. As soon as we implemented the credit card policy, we only experienced one no-show.” – Matt Orlando of Amass in Copenhagen, Denmark

The downside of taking deposits or charging no-show fees

1. Keeps customers from making a reservation

It would be different if you managed an airline. But you don’t. In the restaurant world, reservations have traditionally been free to make.

Asking guests for a deposit or credit card confirmation might confuse and possibly turn guests off from booking. It may also look like you don’t trust your guests (not the best way to start their experience).

It’s a very real possibility that you could see fewer online bookings with no-show charges in place. But you won’t have to worry that you’re left with missed reservations, either. And you can always fill any decrease in online reservations with walk-ins.

Campaigns like Foursquare Group’s #savemyseat is working to change customers’ mindsets. This UK-based initiative started with the aim of getting the public to pay deposits when making a table reservation.

In Portugal, the hashtag #reservaeaparece (show up for your reservation) is trending on social media as part of the movement that unites dozens of chefs, sommeliers and restaurants against no-shows.

Both #savemyseat and #reservaeaparece aim to inform diners about the importance of cancelling restaurant reservations and how no-shows are devastating for the industry.

With movements and campaigns like this helping to educate the public about why you need to take deposits and no-show fees – it's the way you safeguard your business and protect your future – we know guests will get used to the idea over time.

And with more and more restaurants joining the no-show fight, that change is around the corner.

“It’s up to us in the industry to change it. If we let people get away with that behaviour (no-shows), it’s never going to happen. The more you do it, the more it becomes standard practice and guests will have a better understanding of it.” – Mikael Svensson of Kontrast in Oslo, Norway

2. Opens the door for more questions

Be prepared that adding a no-show policy to your online reservations may lead to more questions from guests. Whether they’re calling just to double-check that it’s real or asking if there’s a way around it, the influx of calls and emails may be too much to handle.

To prepare, make sure your no-show policy is clearly stated during the reservation process – forget the legal-style text and go for clarity. Display your policy on your reservations page and don’t hide it in the fine print or on a separate page.

Below is an example of how A. Wong in London uses Superb’s GXM to notify guests of their cancellation policy.

Don’t forget to state the cancellation deadline in your policy – especially important if you’re storing credit card information. Explain that there is a window to cancel for free (12-48 hours beforehand, etc.) and that the fee is only taken after that window closes.

Make sure the cancellation process is also outlined and that you can accept changes in the reservations if they contact you before. This allows unsure guests to still make a reservation even if they're not clear on how many people are coming.

To deal with emails, create and use a template to reply to questions regarding your no-show policy. Something that clarifies the policy again and thanks the guest for their understanding and support.

For phone calls, use a prerecorded message so staff won’t get tied up on calls. Or have a script ready so your team isn’t left freestyling an answer.

And, if you’re prepared to waive no-show fees for special guests or customers who call and complain, have that policy ready and make your team aware of it.

No-show protection with Superb

Superb’s GXM platform makes it easy to implement no-show fees. You can set how much to charge in case of a no-show, decide whether to charge a fee per reservation or per person, and publish your no-show policy on your online booking page to avoid confusing diners.

If you’re wary of introducing no-show fees, start by requiring them only for larger parties. You can also charge only during peak times when a reservation no-show has the greatest impact.

With GXM, you can ask guests to purchase a ticket in advance for dinner, a tasting menu, experience, etc. You can also choose to sell prepaid tickets for specific menus or special events. The choice is yours.

For credit card confirmation and prepayments, you decide when to ask for a credit card confirmation. You can even send an email or SMS asking your guest to confirm their upcoming reservation with a credit card.

However you choose to add a layer of no-show protection to your reservations, our easy-to-platform (and stellar Customer Support team) will help make sure your policy is simple for guests to understand.

Check out 7 other ideas to prevent no-shows here.

“Superb’s (Guest Experience Management platform) has drastically reduced our no-show percentage. We dropped from 30 no-shows per month to one.” – Michelin-starred Caino in Montemerano, Italy

Why are no-shows on the rise?

Can we blame Gen Z for this, too? While they do have the highest no-show rate among diners… age isn’t the only factor causing no-shows to skyrocket. 

• More and more people are eating out. Dining out isn’t reserved for special occasions anymore. It’s a regular, weekly thing. That diminishes the necessity of making a reservation because customers see space at your restaurant as a given.

• Bookings at more than one restaurant. The most indecisive of all reservations – the multiple bookings across the city. Online reservations have made it even easier to book the time slot at different restaurants. The problem is that when those people finally decide that they do indeed want to eat at your restaurant, they’ve missed the cancellation deadline at the other places and left them with no-shows. (That’s if they even consider any deadline at all.)

• Online reservations take away accountability. For all the good they bring to the industry, online bookings require 0 interaction with an actual human. When that accountability goes, it’s easier to forget that one decision affects a real business with real people trying to survive.

• HOGO. What has months of lockdown, curfews and PPE given us in the end? HOGO – the hassle of going out (thanks to The Times for creating that one). The guest with the best of intentions can easily catch HOGO and decide to stay in after all – even after making a reservation. Charge for no-shows and turn that HOGO into FOMO – fear of missing out on that deposit.