As the economic storm continues to rip into business at fine-dining restaurants across the country, some operators are attempting to shore up sales by taking on the pervasive problem of no-shows.
Frustrated by consumers who make reservations and then do not honor them, several restaurateurs have installed controversial no-show fees that can run anywhere from $25 per person up to $175.
No-shows are “a massive problem,” said Drew Nieporent, whose New York-based Myriad Restaurant Group owns and operates such popular restaurants as Corton, Nobu and Tribeca Grill. “It happens every day. The cost to us is incalculable.”
Daniel Patterson, chef-owner of the nine-table Coi in San Francisco, said no-shows long have posed a problem for upscale restaurateurs.
“But we used to absorb this behavior more easily,” he said. “Now it has become exacerbated by the economy and the rise in costs.”
Nor, Patterson said, are operators just talking about the difference between making a large profit and a slim profit.
“It can be the difference between staying in business and not staying in business,” he said, estimating that no-shows accounted for as much as 20 percent of his business before he implemented a $100 per-person no-show fee.
The vast majority of operators attempt to deal with the problem by insisting that patrons confirm their reservations by phone within 24 hours. But even that fails to solve the problem, they say. As a result, a handful are taking a more hardline approach by warning scofflaw patrons that their credit cards will be charged with a fee if they fail to honor their dining commitment.
Reservationists at Thomas Keller’s critically acclaimed Per Se in New York inform potential patrons that they will be charged a penalty of $175 per person if they fail to cancel three days prior to the date of their seating.
The website for the tiny but extremely popular Momofuku Ko on New York’s lower East Side tells customers they must agree to the following terms: “I understand that although I may cancel my reservation any time, if I cancel less than 24 hours in advance of my seating time or do not attend my reservation, I will be charged $150 per person.”
Gordon Ramsay’s New York restaurant Maze, formerly The London Bar, cautions guests that a fee of $120 per person will be charged for a cancellation within 48 hours or for a no show.
And at Atlantis Resort & Casino Paradise Island in the Bahamas, patrons for Mesa Grill, Café at the Great Hall of Waters, Bahamian Club, Casa d’Angelo, Waters Edge and Chop Stix are told that their reservations must be cancelled 24 hours prior to actual dining time or they will be charged a $50 per person no-show fee.
“It’s not really about being punitive,” said David Hart, director of operations for Tavern on the Green in New York, which has had no-show fees for several years. “It’s about trying to keep the dining room full.”
The high-grossing Tavern has a cancellation policy for holiday bookings stating that consumers must cancel at least four days before the date or a $50 per-person fee will be levied against their credit cards. For regular reservations, parties of four or more are informed they must call within 24 hours to cancel.
“It’s not about the charge itself,” Hart said. “We make almost nothing on a $50 per-person charge on holidays.” He said the average per-person check on holidays is about $100. “But if we have four days, we still have time to [resell the seats]. It also helps to give us a more accurate account of who’s coming.”
But even with a threat of a no-show fee hanging over their heads, some consumers continue to play fast and loose with reservations. Hart estimates that on a holiday like Mother’s Day, for which Tavern serves anywhere from 1,800 to 2,200 covers, the restaurant may log as many as 100 no shows.
Holiday no-shows also are a problem for Myriad’s restaurants. Nieporent said parties of five or more are told that a cancellation fee of anywhere from $25 to $35 per person will be charged against their credit card if they fail to honor holiday bookings or cancel in time.
“The biggest night to get victimized is New Year’s Eve,” he said. “We spend hours every day calling people to reconfirm, but sometimes even with that they don’t show. It hurts.”
Coi’s Patterson also voices similar frustration about the no-show problem. “We don’t get much walk-in business here,” he said. “It’s all reservations. When someone calls three weeks in advance, that spot is booked. We’re probably not going to be able to sell it again, even with 24 hours notice.”
Patterson said initially he levied a $25 charge, and later raised it to $50, but neither had any effect. Finally, he increased it to $100, which he says has gotten customers’ attention. Coi’s per-person check average runs well in excess of $125.
“But the fee is not designed to be punitive,” he said. “What we do here is time- and labor-intensive, and we literally buy what we need for that night. And if we lose a table of four, that’s 15 percent of the night’s take.”
Patterson said he attempts to be reasonable about charging the fee to customers’ cards, however. “It someone calls and says their flight has been cancelled, we don’t charge,” he said. “If we feel it’s a legitimate reason, we’re fine with it.”
But, he continued, “if we call them, and they say they’re sick and we can hear that they’re in another restaurant, then we charge them. I see it as being a business contract. That’s the deal we all make. They agree to show up, and we agree to have the table ready.”
Patterson acknowledged, however, that he is uncomfortable with the policy. “The restaurant business is about hospitality,” he said. “It’s not like we’re happy about this. Charging for a no-show is a ‘lose-lose’ situation.”