How to Turn Cancellations and No-Shows Into Regulars
A Big Problem
Last-minute reservation cancellations and no-shows are among the biggest challenges facing restaurant operators today.
While industry-wide statistics are difficult to come by, it has been estimated that as many as 20% of potential diners may fall into one of those two categories on any given night. In a sector with notoriously slim margins in the best of times, this lost revenue can take a devastating toll. According to one study, no-shows and late cancellations cost restaurants as much as £16 billion a year across the UK alone.
Hospitality operators are frustrated, with reactions ranging from social media tirades to impassioned pleas to diners. It’s clear that last-minute reservation cancellations and no-shows are a massive problem, and that they aren’t going away anytime soon. So what can restaurateurs do to actively curb this behavior? Let’s take a look…
Deposits, Prepayments and Fees: A Balancing Act
Many operators try to safeguard against reservation delinquency by collecting a deposit at the time of booking. Some even require full prepayment, treating a reservation as a ticketed event just like a play or a concert. This puts the onus on the guest to either cancel in time or show up on time, as these venues will often reallocate tables if a party is more than fifteen minutes late.
Others have implemented cancellation fees to offset the lost revenue and dissuade guests from skipping out on their reservations. And certain restaurants – particularly in the fine dining space – may charge as much as the full tasting menu price per person for parties who fail to cancel with enough prior notice. Yet some diners argue that these practices can negatively affect the guest experience before they’ve even set foot in your venue:
“Whenever I give up my credit card number and am told I’ll be charged for bad behavior, I hear several messages, none of them warm and fuzzy. It says that I’m not trustworthy. It says that the restaurant sees me as a revenue source before it has had a chance to treat me like a guest. It says that a reservation isn’t an appointment with pleasure; it’s an obligation to be kept.”
— Pete Wells, The New York TImes
It’s unclear how often operators actually choose to enforce these policies. Some send truant customers a gift card for the amount of the fee collected, while others will refund the money if the party visits at a later date. Many fear that imposing up-front payment might scare off potential customers, or that charging no-shows after the fact could sever the guest relationship altogether. It’s a complicated dynamic, and protecting your business interests while keeping your guests happy can be a delicate balancing act.
Overbooking: A Slippery Slope
Much like airlines and hotels, some restaurants choose to purposely accept more reservations than they can actually accommodate at any one time, banking on the fact that a certain percentage of guests will not show up. This practice is called overbooking.
While those industries have years of historical data to reinforce this strategy, restaurant mathematics requires a bit more guesswork. After all, most people do show up for their reservations, and even the most seasoned maître d’ is subject to human error from time to time.
To keep guests waiting for a table that’s been promised to them at a particular time is to risk complaints, negative reviews, or — worst of all — that they will never return to your establishment. For many hospitality operators, overbooking is simply too much of a gamble.
Restaurant Management Software: A Proactive Approach
Today’s software solutions allow for a more proactive approach to no-shows and late cancellations. A strong reservation management platform can help restaurants optimize the guest experience every step of the way.
Operators establish clear expectations from the start by communicating their cancellation policy with guests immediately at the time of booking. Guests have the flexibility to quickly and easily modify their own reservation details including date, time, party size, phone number and notes, without having to cancel and re-book.
COTE in New York City utilizes SevenRooms software to collect guest credit card information, communicate their cancellation policy, and allow guests to easily modify their own reservations.
Pre-arrival touchpoints like confirmation and reminder emails and text messages keep operators connected with guests and help ensure that the restaurant stays top of mind as their reservation approaches. Better yet, guest experience platforms allow operators to customize these messages, opening up endless marketing opportunities.
Even same-day shuffles have become more manageable. Savvy restaurateurs could always accept walk-ins to fill in the gaps created by no-shows. Now virtual waitlist technology benefits restaurants and diners alike, streamlining the guest experience and allowing operators to quickly and efficiently utilize all of their table inventory.
Marketing Automation: Your Secret Weapon
Perhaps the cleverest trick to handling even the most fickle guests isn’t a trick at all – it’s a mindset. As frustrating as no-shows and late cancellations can be for operators, the fact that these people booked a reservation in the first place shows positive intent. That means you’ve already caught their attention once – so why not use this as an opportunity to reconnect?
Luckily, marketing automation tools can help you streamline and simplify that process. Client tags allow you to quickly identify your no-shows and late cancellations, then automatically reach out to them with targeted marketing campaigns meant to re-engage those guests.
Robust guest profiles in the SevenRooms CRM system include customizable client tags to easily identify frequent no-shows, then leverage marketing automation tools to re-engage those guests.
Hospitality operators who choose to reframe this challenging scenario in a positive way are able to communicate a simple but powerful message to the guest: We respect that plans change, and we’re sorry that we missed you this time. But guess what? We would still love the opportunity to serve you in the future.
Yesterday’s No-Shows, Tomorrow’s Regulars
It’s a well known fact that acquiring new customers costs significantly more than nurturing existing ones. Luckily, by utilizing marketing automation software to create additional touch points throughout the guest journey, you can drive revenue and retention seamlessly. Restaurant operators using these tools strategically can turn yesterday’s no-shows into tomorrow’s regulars.
Book a demo today to learn how SevenRooms can help set your restaurant up for success with these powerful marketing automation tools.