Why Restaurant Reservation No Shows Suck (and what to do about it)
Why should you start using restaurant ticket software instead of taking telephone reservations? Because each reservation no-show costs you $200. But don't take our word for it, check out the empirical data below!
Restaurant reservation no shows has been the sore subject of media reports, a war of words on Twitter, and the occasional blog post. But that may not be enough to convince you to stop taking reservations and start selling tickets because you're business owner who needs objective data. Some say "evidence" while others say "empirical data", but if you own a restaurant, you'll just say "Oh my gosh!"
The Wharton School at the University of Pennsylvania, a prestigious center for world renowned research, has published a new study on reservation no shows.
The study, Dealing with No-Shows, looks at the negative business impact no shows have on a restaurant's bottom line and then considers possible solutions. One is to punish customers with high penalty fees, referred to as "stick" as in carrot and stick.
Asking for a credit card number as part of the spoken reservation is a quick stop gap that has been put into place by restaurants desperate to stave-off no shows. The Wharton study lends a lot of credibility to the practice when done within reasonable limits.
For example, Le Bernardin, a three Michelin-starred restaurant in New York City with $127 prix-xe dinner menus and over $150 tasting menus, charges $50 to reservation holders who fail to show up or cancel the reservation 48 hours in advance.
Outside the boundaries of reason, an extreme example is the $200 no show fee being charged by Gordon Ramsey at his restaurants in London. That fee amount is more than the average spent per-person(!) at Savoy. The irony of Ramsey's extreme measure is that they have attracted so much media attention the $200 penalty is a marketing ploy of sorts that has increased business.
Punishing the customer is effective, and without consideration of the potential bad PR it may cause, it will lessen no shows, as well as financially compensating the restaurant when they do occur. The opposite approach is to reward the customer for making good on her spoken promise using small incentives.
The website takes reservations for over 850 restaurants in ten different cities around the U.S. One difference it has from other reservation websites such as OpenTable is that customers receive a discount from 10% to 40% for the meal when they make a reservation through Savored.com. In addition, more and more restaurants are selling discounted gift certificates through Groupon or LivingSocial
Not mentioned are the costs incurred by the restaurant to subscribe to these online services in the form of percentages and fees. Coupons may be a viable solution for casual and low-end dining, but for $100+ per-person dining experiences the overhead cost may be far too high.
So what was the final result of the 43 page long study?
The result of our model suggests that restaurants should charge a no-show penalty as high as the price of meal while giving a discount to reservation customers. Our results are consistent with the current practice of some high-end restaurants selling non-refundable tickets for their prix-fixe menus where ticket holders lose the face value of the ticket when they fail to show up.
Unknown to the Wharton School research team are the ancillary benefits of restaurants selling tickets (cash up front, secondary re-sale as free marketing device, etc.) in addition to being a solution for no shows. Had the study factored in these ancillary benefits, they resulting recommendation would not have been to punish the customer.
ThunderTix Solves Restaurant Reservation No Shows
From the initial spoken promise to show-up, to the expectation of having a table held in reserve (to the exclusion of others), and the unspoken promise to pay after the dining experience is over, that telephone reservation has been the mainstay of the restaurant business almost as long as there have been telephones. Well, the times they are a changing.
ThunderTix can help you start selling tickets online in as little as one business day with no long-term contract commitments. We make nightly deposits of your sales dollars directly into your bank account, giving you the liquidity to buy only what you need for the menu – no waste.
When you say “table d’hôte” we know what you mean. In addition to being the most restaurant friendly ticketing software available, know that ThunderTix has years of experience in enabling venues to sell tickets online. You will inherit all that expertise when you decide to make the move from telephone reservation to selling tickets, either all-at-once or gradually.