So you’ve booked a reservation at a restaurant you’ve been dying to go to, and then behold, meetings run late, life happens, and, while you remember to cancel with your dinner date, you forget to cancel with the restaurant. It happens to all of us, even hospitality industry staff.
Meanwhile, back at the restaurant, your reserved table is all dressed up with no place to go while walk-ins battle for the supposedly occupied seat.
For our most recent Restaurant Insights report, How Diners Choose Restaurants, we surveyed 500+ frequent diners and found that 60% of respondents rarely or never make a reservation. We also found, however, that people’s responses were heavily influenced by age and location.
Baby boomers are less likely to make a reservation: 78% rarely/never make a reservation.
55% of Generation X
45% of Millennials
Urbanites are all for the reservation: 63% always or most of the time make a reservation.
People who said they weren’t likely to make a reservation
Small town folk: 82%
What Are the Benefits of Taking Reservations?
To take resos or not to take resos? That is the question.
On one hand, reservations help restaurant management decide on how to staff, like whether or not to call an extra body or call off extra staff. Reservations also give management a better idea of food and beverage output and, of course, costs and profits.
Reservations also give customers peace of mind: yes, there will be a table with your name on it. No, you won’t have to wait in line. This is especially true for those reservation-loving, busy urbanites who want to know there is going to be a spot for them and they won’t have to wait long.
But don’t get too excited about the benefits of reservations; there are some downsides, too. While reservations might fill up the bar – making a restaurant look busy and desirable – people also may turn around when they see the place is too packed.
Then there’s, of course, the no-show.
What’s the Impact of a Reservation No-Show?
According to OpenTable, six percent of people who make reservations over the phone don’t show … which is basically the restaurant-industry version of “ghosting.” Just like an online date who disappears, reservations sometimes just disappear. No text, no phone call, no FYI.
No shows can cause unnecessary wait times, which can inflict double the loss of profit on a restaurant. When a reservation doesn’t show up on a busy night, restaurants lose out on the revenue from the reservation and from the walk-in customer who was deterred by the long wait, and potentially, a second visit.
All this before they’ve even taken a bite! Lose-lose-lose.
Take Vancouver’s Pidgin Restaurant, who lost an estimated $3,000 on Valentine’s Day last year after 20 of their 100 reservations didn’t show. The consequences went beyond revenue loss and caused lost tips for servers and higher labor costs.
How can any manager schedule for cost effectiveness or fairness when they expect a full restaurant and fall short?
What Can Restaurant Owners Do About Lost Reservations?
For larger restaurants with even larger table turnover, a no-show might not have a large financial or labor impact – but for smaller restaurants, the consequences can be dire.
Here’s what you can do if you’re a small restaurant who is looking to manage labor cost and predict revenue more accurately.
1. Don’t Take Reservations
If you’re an urban, busy, and trendy restaurant, Eater suggests doing away with the reservation. Why? Because you’ve got the foot traffic and word of mouth to know you’ll always be busy. Fine dining restaurants, however, are an except to this rule: fine dining restaurants are usually chosen for special occasions rather than because a customer is walking down a busy strip with a grumbly belly.
2. Overbook Reservations
Now this one … this one is a gamble. And the stakes are high. Overbooking reservations risks disappointing customers who have taken measures to ensure in advance that they’ll have a seat.
But at the same time, overbooking locks down the restaurant profit, at least in the short term. Our Restaurant Insights report found, however, that 91% of diners said recommendations from friends got them in the door of a new restaurant. Overbooking is one sure way to disappoint and fire-up customers, which could compromise your ability to get return business.
The question remains: is the short-term gain worth it? We recommend going with this option if you’re no-show rate is especially high, but don’t expect overbooking to be a long-term strategy, as it could eventually affect word of mouth. Remember, your reputation, in the long run, is worth more than a few quick buck in the short term.
3. Use Waitlist Apps
While waitlist apps don’t have the power to incessantly tug at a customer’s pant leg, they do prompt guests to confirm their reservation, either via booking notification or text message. “Press Y to confirm or N to cancel.”
Automating reservation confirmations clears the waters for all parties in the following three ways:
- Automation leads to a more accurate prediction of who will be attending the reservations made.
- Automation saves hosts and management the time it takes to confirm reservations during busy times.
- Automation gives customers an easy way to cancel and notifies restaurants immediately, so they can fill the table.
Apps like OpenTable boast a 20% decrease in no-shows because of automation. Sending an email or tapping a button on an app yields more accurate results when it comes to reso-confirmations.
4. Take a Financial Hostage
The “show up or lose out” mantra might be less-than-loved by many restaurants, but some high-demand restaurants can get away with it.
Restaurants that are high in demand but have a longer dinner service, for example, would lose out if tables simply cancelled. The demand factor gives them a leg up because customers perceive their experience as one worth paying for in advance. Thus, some restaurants who fit this bill are choosing to take a financial hostage in return for a table. They either charge deposit that goes towards the bill or keep a credit card on file with a charge for last minute cancellations. Some are even using ticketing apps that allow customers to “buy a table.” Similar to a missed doctor or dentist appointment, the late-fee-turned-table-fee is a slow-growing trend.
While the state of the reservation may vary by restaurant, there are some obvious solutions some restaurants can implement: kill the reservation or use an app to mitigate, remind, and get more accurate numbers. If knowledge is power, then so is the technology that enables it.