Restaurants resort to overbooking in the face of reservation failures
A restaurant’s biggest fear is a no-show, either due to last-minute cancellations or directly due to a customer’s failure to show up. And, unfortunately, this is more than a common occurrence. Especially since the pandemic, when the tendency to book in several places at the same time became widespread due to the difficulties in finding a table because of limited seating capacity.
Nine out of ten restaurants have as a top priority to reduce the number of no-shows, according to a survey conducted by The Fork among its global customer network. That this issue rises to the top of their concerns is because an empty table causes large financial losses, ranging from 5% to 20%, depending on the type of business. Not only because of the lost revenue, but also because in the case of large bookings it is often necessary to add the cost of extra staff.
In recent months, the average number of cancellations and ‘no shows’ has reached 30% in Spain. Faced with this upturn, more and more establishments are trying to insure themselves with cancellation policies or prepaid reservations. Some impose a penalty, while others charge part of the menu or the full amount. Formulas that years ago began to be embraced by Michelin-starred restaurants, but which have now spread to smaller restaurants as well.
There are still restaurants that are reluctant to ask for payment in advance.
Proof of the rise of these practices is that 5% of the clients of the booking platform The Fork have prepaid systems activated, which means more than 700 restaurants in Spain. Of these, 40% are Michelin restaurants. And it is not just a local issue, as more than 90 of the top 100 restaurants in the UK charge a fee if the customer does not show up for an appointment or cancels at short notice, according to an Observer analysis.
Such tools have legal backing, as long as the amount charged in advance is then deducted from the total amount, says the OCU. In addition, it must provide for cancellation and reimbursement due to force majeure and never overcharge. These are conditions that are very present in the CoverManager platform, responsible for installing the reservation system in almost 1,000 restaurants throughout Spain.
CoverManager stresses that one of the most valued functionalities among the restaurants on its platform is that they can find out if a customer has simultaneous reservations in other restaurants. Using this information, businessmen in the sector admit to Sivarious that they have begun to resort to overbooking to cover their backs against the sit-ins in restaurants. Mainly those who are still reluctant to ask for the card number to formalise a reservation.
Overbooking, a practice imported from airlines, has been an interesting economic solution for restaurants during specific periods. It was during the economic recession of 2008, when it became popular among restaurants in the United States, and it seems to be gaining momentum again today.
While it tends to work best for businesses with flexible capacity, i.e. more tables, the integration of digital solutions allows many restaurateurs to work their reservation rate from a “ghost room”. In this way, they start the service with more tables occupied than available.
If two reservations are presented at the same time, there is the possibility of using strategies such as the 15-minute rule, which consists of not charging for the aperitif if the waiting time exceeds that time. “You turn a negative experience into something positive,” says a reputable restaurant owner in Madrid.
Thus, although overbooking can be considered a technique based on the customer’s good work, the fact that today all periods are susceptible to cancellations encourages restaurants to consider it. “It’s risky, but in the last year there hasn’t been a day in which a table hasn’t failed, even after reconfirming”.
