With this blog I want to divert a bit from restaurant insurance policy issues and focus for a moment on a problem that is costing more and more restaurants money. The problem of the reservation no show. I want to share with you some ideas that a few other restaurant owners are using to fight this growing problem.
Now let me start by saying that I know that no shows are not a problem for every restaurant out there. Those most vulnerable to this problem are restaurants that have a high per table revenue and limited seating. It’s pretty easy to see that if you are turning people away from your restaurant because you are holding reservations for those who don’t show up, then you are losing revenue. One way a number of restaurants deal with this problem is to simply refuse to accept reservations at all. I can see why this might be an attractive choice to a frustrated restaurant owner, and if you have lines outside your door every night then this is probably a great solution. But if not, here are a few issues that this policy might create that you may not have considered. First of all, you will not be able to know how many customers you are losing because of the no reservation policy. There is a fairly new restaurant in my town that I have not yet visited because they don’t take reservations. They are located in the entertainment district in my town and if I go there to eat, it will be before I attend an event nearby. Their no reservation policy has kept me from choosing them several times. And they don’t know that they have missed my business because of this. Also, consider that their regular clients may be forced to tolerate a long wait time for dinner on nights where there is entertainment in the nearby venue. Is this the way to treat your regular customers who keep you in business?
So what are other restaurants doing to combat this problem? There are a few that try using social media to punish their no shows. I have seen a photo on twitter of two waiters holding up their middle fingers with the caption that says this is to the people of two different no show tables last night. Now, if this can pass for humor, I suppose it is one answer, but it really doesn’t provide a long term solution to this problem.
More and more restaurants are tinkering with policies that charge diners for a no show on a reservation. While this may seem a bit drastic on first glance, remember this rule – Your clients will interact with you in the ways that you train them to do so. If you choose to try this approach, market this new policy to your advantage. Let them know that your restaurant is so popular that you have had to create ways to limit the people visiting you each night and this is one of your strategies. If you have the same results that others have had with this policy, you will probably find that in reality you won’t have to actually charge many no shows. The truth is, when faced with the prospect of paying for a no show, most diners who were not very serious about showing up in the first place will not place the reservation. Another phenomenon associated with this policy is that you may have to steadily increase the no show charge until you reach the place where you actually have very few no shows. Don’t use this policy to make money, rather use it to weed out the less serious reservations from the serious ones.
A Chicago restaurant has taken this idea to the next level. They require diners to purchase a nonrefundable ticket in advance. No one gets in without a ticket. The tickets are priced with a dynamic pricing model that makes it more expensive to eat during the busiest times and cheaper when the demand is lower. This has allowed the restaurant to better manage their flow of customers and thus has created a much better dining experience for all customers.
If you are losing money in your restaurant to no shows, consider using some outside of the box ideas to better train your customers to behave in ways that don’t damage your revenue stream. Don’t be afraid to try something new, but be sure that you have mechanisms in place to measure the results so that over time you can tweak your ideas to make them as profitable as possible.
Clinard Insurance Group is the restaurant insurance store. We insure more than 100 restaurants all across North Carolina and South Carolina. We would like to use our expertise and our volume of customers to help you get the restaurant insurance protection that you need at a price that will blow you away. Please give us a call, toll free at 877-687-7557 for help with your restaurant insurance. Or you can visit us on the web at www.TheRestaurantInsuranceStore.com.
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