February 23rd, 2024
Based on restaurant industry estimates, up to 20% of all reservations end up being no-shows and with average restaurant profit margins of 2-6%, reducing no-show and reservation cancellation rates is crucial for restaurants to maintain profitability.
In this article, we will look at ten ways you can optimize your reservations and operation systems to reduce no-shows and late cancellations.
Making it easy for customers to cancel their reservations should be a priority for your restaurant. Not only does it enhance overall customer experience but it also reduces friction for customers who want to cancel ahead of time and can reduce late cancellations as well as no-shows.
How do you make it easy to cancel? It start with your reservation system which should have a very friendly user interface and user experience. Customers should be able to easily navigate to cancel reservation button or link and have the option to cancel with one click. If you’re sending reservation confirmations (which you should be doing), cancellation option should also be included in the reservation confirmation message or email.
When a customer cancels a reservation late or doesn’t show up, the ramifications are significant not only for your restaurant’s bottom line but also for your front of house staff who earn less tips and lack motivation to provide exceptional service. Introducing a nominal late cancellation and no-show fee is a great way to dissuade customers from not honouring their reservation.
It is highly recommended to keep the cancellation and no-show fees at nominal amounts of $25-$50 to not discourage customers from not making a reservation at all. Your restaurant will have to require a credit card to be added during the reservation process and most reservation providers will offer this option. When faced with a potential loss of $25-$50, a customer is more likely to honour their reservation and show up.
It is also important to make this fee transparent and clear to customers when they make a reservation. We suggest adding a notification to the reservation page prior to confirmation and to the confirmation email/message received by the cusotmer when a reservation is made.
Anyone can get sidetracked and forget about one’s commitments. Sending reservation confirmation and reminder text messages and emails should be a core part of your restaurant’s reservation system to ensure that customers are well aware of their booking. The flow for such messages should be one message to confirm the booking, reminder one week prior and another reminder 24-48 hours prior to the reservation. The varying factor here is your restaurant’s flexibility in terms of assigned seating for which you need a minimum of 24-48 hours. Each message should also carry a cancellation and reschedule links to make it easy for customers to cancel or reschedule with adequate notice.
Every restaurant owner knows that peak hours break or make your restaurant’s monthly performance and maximizing revenue during these hours is a priority. With up 20% rates in no-show or late cancellations, overbooking by 5-10% during peak hours offers a hedging strategy to restaurants.Firstly, it helps maximize seating capacity and revenue by accounting for potential cancellations, no-shows, and variations in party sizes, ensuring that tables are consistently occupied. Secondly, it minimizes the negative impact of no-shows and cancellations by having backup reservations to fill empty tables promptly, thus reducing revenue loss and optimizing operational efficiency.
The ideal overbooking percentage varies from restaurant to restaurant and requires personalized approach based on internal data.
Implementing a waitlist system alongside a reservation system can effectively reduce no-shows and late cancellations by providing a structured alternative for managing demand. When reservations are fully booked, offering customers the option to join a waitlist allows the restaurant to fill cancellations and no-shows promptly with eager diners who are already on standby.
This not only ensures that tables remain occupied and revenue is maximized but also minimizes the negative impact of last-minute cancellations on operational efficiency. Overall, a waitlist system enhances customer satisfaction by efficiently managing seating availability, mitigating wait times, and optimizing the dining experience.
One of the best ways to reduce no-show rates and late cancellations over time is by rewarding those customers that do honour their reservations. There are a few ways to offer valuable rewards without having to offer free meals or complimentary drinks.
Your restaurant can offer priority seating or access to exclusive dining areas, personalized notes expressing gratitude for their commitment to the reservation and even extra loyalty points or discounts on future visits. By recognizing and rewarding their loyalty in this manner, restaurants can strengthen the bond with these valued customers, encouraging them to return and recommend your restaurant to their circle.
Integrated technology solutions that can combine a reservation system with other products integral to restaurant operations can create additional synergies to reduce no-shows and late cancellations.
Add-on integrations with waitlist and loyalty solutions can improve your restaurant’s overall reservation system and enhance customer experience while maximizing revenue potential.
Snappy offers reservation system with modular add-ons that can easily integrate with our waitlist and loyalty solution, giving you the tools needed to implement and improve your restaurant’s reservation system.
Having the right technology foundation for your restaurant is necessary to make informed data driven decision that help you optimize your restaurant’s operations and performance. Technology platforms like Snappy help you gather data on the frequency and timing of both no-shows and late cancellations over a defined period.Start by categorizing this data by factors like day of the week, time of day, reservation size, and booking channel (e.g., phone, online). Identify trends and patterns within the data to understand when and why no-shows and late cancellations are most prevalent. Utilize this analysis to adjust reservation policies and procedures, such as implementing reminder systems, adjusting booking windows, or modifying cancellation policies. You should consider collecting feedback from customers regarding their reservation experiences to gain further insights and refine strategies for reducing no-shows and late cancellations in the future.
Most customers are not aware of the impact their no-show or late cancellation has on a restaurant. It is the restaurant’s responsibility to ensure that their customers are informed about the negative ramifications their no-show has on not only the restaurant’s sales but also on the restaurant’s staff.
One of the best ways to educate your customers on this issue is to inform them during the reservation process or in a confirmation message that your staff could make up to 20% less during a shift if they can’t make it and forget to cancel early or no-show.
This way you’re letting your customers know that their uninformed absence doesn’t just hurt the restaurant owner but also its workers
Following up with no-shows or late cancellation customers is a great way to reduce future no-shows and gather valuable feedback about your current reservation system.
We suggest contacting them using their preferred contact method and offering understanding in regards to them missing the reservation. A brief explanation of the impact them missing their reservation can serve a purpose when done correctly.But more importantly, ask them about the reservation experience and their suggestion on how to improve the process. This can give your restaurant free feedback on improving the overall dining experience for your customers.
Reducing your no-show rates by at least 50% should be achievable if you follow the tips outlined in this article. While each restaurant is different and requires a unique approach, Snappy’s reservation and waitlist solution can help you achieve a significant reduction in no-show rates and late cancellations.
Keep the no-show and late cancellation fees at nominal amounts of $25-$50 to discourage customers from not showing up but also not discouraging them from making a reservation with a higher fee amount.
Most restaurants consider reservations cancelled within 24-48 hours of a customer’s schedule reservation a late cancellation. The reason for this time frame is a restaurant’s ability to fill and reassign table to ensure capacity is being maximized and can differ between each restaurant.
Given a 20% no-show rate average across the restaurant industry, every restaurant should consider over-booking by up to 10% to offset the potential no-shows and late cancellations.