No-shows – a fact of restaurant life?
If you have ever been to the movies, hired a car, attended a concert or taken a flight, the chances are you paid for the experience online at the time of booking it, or at the very least left a deposit. You did so willingly, to secure something you could look forward to in the future. If you then didn’t turn up for the event, you lost your money and took it on the chin. That's the way the world works, right?
Eating out at a restaurant or pub holds similar values, so why is the restaurant sector seemingly hesitant to introduce online methodologies already proven elsewhere?
Restaurateurs appear reluctant to take deposits or pre-payments despite leaving them virtually no recourse should a customer fail to show. Reasons given range from fear that customers simply won't like this shift in process, to the perceived extra administration that installing new technology may incur together with potential additional costs impacting already fragile margins. We think that restaurateurs are being unfair to themselves here, in that they have every right to recourse when they are owed money, just like any other business.
There has been much media coverage recently of restaurant owners highlighting the financial impact on their business of no-shows. Radio phone-ins, TV news footage and daytime talk programs frequently feature restaurateurs speaking passionately, sometimes angrily, about selfish non-showing customers creating a huge cost-base and potentially crippling the business. We get it, we really do, but often wonder why those businesses put up with it.
During one recent radio phone-in, a caller recounted how he booked a table for eight people but didn’t show up, his justification being that “…it’s what people do. Things happen, plans change, life gets in the way”. Well, we may understand those sentiments but no-show customers should also expect restaurateurs to implement their own measures as part of what they do.
Sectors have adopted technology at different rates, with the knock-on effect being consumers accepting and eventually embracing the changes. It wasn’t very long ago that hoteliers went through the same pains: no-shows were always a fixture of the industry with hoteliers taking the same view as many restaurateurs today: “What can we do about it? Nothing. Customers won’t like it if we take deposits/pre-payments”. Fast forward just a few years and it is now absolutely the norm for hotel bookers to secure their stays with a pre-payment or deposit. Not doing so is almost unheard of.
Times have changed and customers do now expect to pay up front for their services, especially when booking online. Doing so has become a global trend and an accepted part of the customer journey.
What some F&B businesses seem slow to grasp is that this change is consumer and technology lead – customers actually want to complete their transactions, including payments, online and accept that the way they interact with their favourite brands is changing fast. By leaving a deposit or paying in full for their reservation beforehand, customers enjoy a sense of security right at a time when pent up demand for the dining experience is extremely high. Media reports are already illustrating the difficulty in pre-booking tables in pubs and restaurants, such is the demand. We think deposit and pre-payment facilities are a great opportunity to offer customers something very positive and practical.
The good news is that there are software systems out there which don't cost the earth and will, in all likelihood, have a very positive financial impact. It is estimated that one in five customers will fail to show for their reservation, meaning that a restaurant or pub with fifty covers could lose ten bookings. With an average revenue of, say, £20 a head that's £200 lost in no-show revenue in a single day which could be offset by the use of software costing well under £200 per month. Is technology now sending a little more appealing?
Technology need not be difficult to implement, or create extra administration. Web-based reservation software has the ability to take deposits and pre-payments and is designed to be easy to use right out of the box. While getting used to a new system takes a bit of effort, in reality the end result will be far more accurate than using pen and paper in a frantic pub or restaurant (and technology-native staff will love it, too).
Should the restaurant stick with their old thinking and with a shrug just accept the no-show phenomena as a fact of restaurant life? We don’t think so. It is time to put in place robust systems which create a firm commitment from the customer in exchange for a fantastic food & drink experience. And let’s not forget that customers will be aware that getting a table at their favourite restaurant will be a competitive process in the short to medium term, so knowing that their reservation is secured with a deposit should be very reassuring.
New challenges always bring about new opportunities. Restaurant owners shouldn't be afraid of introducing a deposit and pre-payment system, because quite simply they deserve not to put up with margin-robbing no-shows.
Going forward, customers will get used to the new norms and in many cases actually expect a more technology-rich journey including the taking of deposits or full payments.
Simple systems are available which are not difficult to implement or use and will actually enhance the business operation, while safeguarding profits. Modern web-based systems will often pay for themselves very quickly.
If would-be diners want their gastronomic experiences badly enough, they will willingly leave a deposit at the time of booking, or pay up front. With respect to those that won't, requesting them to do so early in the booking journey via simple technology will mean they effectively de-select themselves from the process. That will free-up capacity for more reliable and lucrative customers.
Favouritetable provides reservation software, pre-booking modules, deposits and pre-payments functionality, take-away features backed by a full manager portal and a host of restaurant-centric features. We're passionate about restaurants, which is why we have developed the best value full-function restaurant software on the market.
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