Restaurants are Mad as Hell at No-Shows and They’re Ready to Fight Back

via WSJ.com

By SUMATHI REDDY

The morning after two groups of diners didn’t show up at the restaurant Noma in Copenhagen last month, chef and co-owner René Redzepi took to Twitter. “And now a message from the Noma staff: to the people of two different no-show tables last night,” he wrote, and sent a picture of staff members showing their middle fingers.

The tweet, deleted shortly after it was posted, was a joke, says Peter Kreiner, managing director of Noma. But at a restaurant that has just 12 tables and takes in as much as $500 per person for a meal, no-shows aren’t taken lightly. “It’s quite a large percentage of the sales that we missed out on,” he says.

As more people don’t show up for their reservations, some high-end restaurants are taking action, from charging no-shows to shaming them on social media. Sumanthi Reddy has details on Lunch Break.

Fickle diners are every restaurant’s worst nightmare. A select group of high-end chefs and restaurants are fighting back—from charging people who don’t cancel in time to using Twitter and other social media to call out no-shows.

The impact of an empty table can be a significant in an industry where average profit margins run as low as 3% to 5%. In cities like New York, it’s not unusual to find 20% of diners unaccounted for on any given night.

Restaurant owners expend tremendous resources trying to confirm reservations. Some restaurants, like Wylie Dufresne’s wd~50, will turn down a reservation from someone with a history of not showing up. Other chefs, like Ron Eyester of Rosebud in Atlanta, will jot down a note if a diner seems wavering on the phone, so that the staff knows not to hold the empty table too long.

A number of high-end restaurants now require credit-card numbers from anyone reserving a table. Some, like Hearth in New York and Cochon in New Orleans, seek credit cards only for larger parties and for special occasions. Others, like Eleven Madison Park in New York and Coi in San Francisco, extend the policy to parties of any size.

In January, Eleven Madison began charging anyone who didn’t show up or cancel a reservation 48 hours beforehand $75 a head. Owner Will Guidara says the restaurant was losing eight to 10 people per night. He adds, “With the length of our wait list and how many people we’re turning away, it just became really difficult to say, ‘No, no, no,’ to so many people and then have people who were supposed to be joining us just not showing up.”

Since the policy has been in place, Mr. Guidara says he has had to charge only a couple of cards a week.

According to online-reservation system OpenTable, 10% of restaurants nationally seek credit-card numbers for certain reservations, while about 15% of restaurants in New York do so. Those numbers have been trending down, the company says.

Eleven Madison Park / Francesco TonelliManhattan’s Eleven Madison Park requires credit cards for reservations and charge people who don’t show.

But Sherri Kimes, a professor at the Cornell School of Hotel Administration, thinks the practice will only increase. Ms. Kimes says her research has found that consumers are open to being charged for last-minute cancellations—as long as restaurants keep up their end of the bargain. “When the customer shows up… their table better be ready,” she says.

In Australia, a campaign to publicly name no-show diners through Twitter has been gaining steam. Erez Gordon, owner of Sydney’s Bistro Bruno, said in an email that he has outed customers just a few times, when they failed to respond to his calls. He likened it to diners’ jumping online to anonymously rate restaurants. “With Twitter, we are given the opportunity to respond in exactly the same manner as our guests respond if they feel we have let them down,” he said.

In the U.S., too, frustrations run high. “Every single day I will look at how the previous night went and every single day there’s upwards of 40—four, zero—no-shows at Nobu,” says Drew Nieporent, owner of the Myriad Restaurant Group.

Mr. Nieporent has called people the next day to find out why they didn’t show up. “Quite frankly, it’s worse now, because with online reservations we’re not even speaking to the customer,” he says. “So it could be someone in theory who is a concierge at a hotel or a broker who can book prime-time tables 30 days in advance, hold on to tables for 29 days and maybe, if they feel like it, call to cancel.”

Often, the price charged for a no-show doesn’t compensate a restaurant for its loss. At New York City’s Del Posto and Jean-Georges, the no-show fee for OpenTable.com reservations is $50 a head. In October, Mr. Nieporent’s Corton began requiring credit cards to reserve tables on Friday and Saturday nights and charging no-shows a $50 fee if they don’t cancel 48 hours ahead.

Daniel Patterson, the owner of Coi, says that when he started a $25 and then a $50 penalty for no-shows about three years ago, he saw few results. It wasn’t until he upped the amount to $100 that the rate dropped from 20% to 10%. “Our menu is $165, so we’re still losing money,” he says. “It’s really not about charging people. It’s really more about making sure they’re serious about the reservation.”

Other restaurants charge more. When Torrisi Italian Specialties in Manhattan began accepting reservations in November, it chose to charge diners for the full $125 tasting menu if they don’t cancel 24 hours ahead. Diners who reserve its shorter $60 menu have until 4 p.m. that day.

At the Chef’s Table at Brooklyn Fare, where reservations are snapped up six weeks ahead of time, consumers pay the full $225 prix-fixe price about a week in advance.

Perhaps most radical is the system started last year at Grant Achatz’s Chicago restaurant Next. To dine there, customers must buy nonrefundable tickets for a meal in advance. A dynamic pricing system makes tickets at prime times pricier. Mr. Achatz’s business partner, Nick Kokonas, says the system has been so successful they plan to use it at their Alinea restaurant.

Mr. Kokonas is working on a system for other restaurants. Another Chicago restaurant will pilot-test it soon. He sees one reaction from restaurateurs: “Show me how to do it.”

Write to Sumathi Reddy at [email protected]