Canceling your reservation will cost you the same as the dinner

To celebrate his wife’s birthday in 2022, Brian Azara, a mechanical engineer in New York City, reserved a table for two at a Michelin-starred restaurant in Brooklyn. But when their son was suddenly admitted to hospital with severe asthma, Mr Azara had to cancel the booking. A few minutes later, he checked his credit card bill and saw a $200 charge.

“It was probably 23½ hours before we were supposed to get there,” Mr. Azara said, but the restaurant declined to reverse the charge, citing the 24-hour cancellation deadline. While he sympathizes with the financial challenges restaurants face, he said the suit was “very painful.”

Mr. Azara’s run-in with cancellation fees reflects a broad shift among restaurateurs, many of whom now feel they have no choice but to penalize guests who increasingly cancel reservations at the last minute or don’t show up at all. Even a few missed reservations, they say, can disrupt the careful planning that restaurants do to manage their operations and balance the books.

“Cancellation fees bring people back to reality when they make a reservation,” said Erica Hall, general manager and co-owner of the restaurant and “karaoke saloon” in Brooklyn. Chino Grande. “They remember it’s an agreement.”

According to data from the reservation service Resy17 percent of U.S. restaurants on the platform charged at least one cancellation fee in January, up from 13 percent a year earlier and 4 percent in January 2019. The practice was even more widespread in major metropolitan areas, with a quarter of restaurants in New York on Resy charged at least one cancellation fee in January, as did a fifth of restaurants in Los Angeles and Miami.

Ms. Hall, who has worked in restaurants for nearly two decades, said she noticed a marked increase in no-shows and cancellations after social distancing rules and vaccination mandates were relaxed in New York City in early 2022. In response, Chino Grande began charging $20 per person for missed reservations just two months after opening in June 2022. Since then, no-shows have dropped by 90 percent, Ms. Hall said , and late The number of cancellations has fallen by two-thirds.

“Late cancellations are still common, but people often call or email to let us know” so they don’t get charged, Ms Hall said – “which is great.”

Uncommunicative diners are not a new problem for restaurants, but their numbers appear to be increasing. a Report 2021 from the reservation service OpenTable found that 28 percent of Americans surveyed admitted to not showing up for a reservation in the past year. A 2023 study from Barclays Bank revealed that almost half of the UK’s 200 restaurants reported a 40 per cent increase in no-shows compared to the previous year, while cancellations with less than 24 hours’ notice rose by 35 per cent.

Restaurants’ ability to charge fees has increased in recent years with the advent of reservation apps such as OpenTable and Resy, which allow restaurants to require guests to enter credit card information to complete a reservation.

Before, “the best you could do was ask guests with larger parties for a deposit,” says Lilly Jan, a lecturer at the Cornell School of Hospitality Administration who specializes in restaurant trends.

The reservation companies also send guests an automatic text message the day before the reservation asking them to confirm or cancel. Typically, this means restaurants must be notified of a cancellation at least 24 hours in advance, although Ms. Hall gives Chino Grande diners notice until 6 p.m., the start of dinner.

Restaurant owners say they must strike a delicate balance when setting rates, which can range from as little as $10 per diner to more than $50. Ed Thaw, the owner of the Michelin-starred restaurant Leroy in London, finding the right punishment was an exercise in calibration: too low and the eating behavior remains the same; too high and reservations disappear.

After initially assessing a cancellation fee of 20 pounds ($25), Mr. Thaw this last October down to £30 ($38). The effect was immediately visible: the number of no-shows and last-minute cancellations fell by 27 percent. “Thirty pounds is a good deal for us,” Mr Thaw said.

David Yun, an owner of C as in Charlie in New York City, saw similar results when he imposed a $25 per person cancellation fee on the 40-seat restaurant in October. The number of no-shows, he said, fell by half.

For restaurants that require reservations for every table, these costs can be essential. “We rely almost exclusively on our reservation book, so it’s important to us that we know what we’re getting on any given night,” says David Schwartz, a Toronto restaurateur who charges a 25 Canadian dollar ($18) cancellation fee at Sunny’s Chinese and 50 Canadian dollars ($37). MIMI-Chinese.

Yet many restaurants are reluctant to adopt a zero-tolerance policy. Carlos Camacho, the general manager and beverage director of Snail Bar in Oakland, California, said he charges on a case-by-case basis.

“We charge no-shows if they don’t contact us in advance,” he said. “But even then it’s a challenge because we want people to come back another time, so sometimes I waive the fee.”

Unsurprisingly, cancellation fees aren’t exactly popular with diners. Some customers who cancel late try to move their reservation to the future and then cancel to avoid being charged. Others lock their credit cards before a debit can take place, or dispute the debit with their bank.

The fees have sparked social media rants, including a heated dispute between a potential diner and a Boston restaurant that recently national front page newsand negative reviews on Yelp or Google Reviews.

“It’s hard to remove those one-star reviews,” said Mr. Thaw.

Emma Esrock, a communications professional in San Francisco, said she was hit with late cancellation fees last fall after her online request to cancel her reservation didn’t go through. When she saw the $50 charge on her credit card bill, she emailed the restaurant.

“They said I didn’t let them know within the deadline,” Ms Esrock said. But the incident had a silver lining: The restaurant gave Ms. Esrock a $50 gift card. “If they hadn’t done that, I would have never set foot in that restaurant again.” She used the gift card last month.

“Restaurants don’t want to punish people,” said Cornell’s Dr. Jan, adding: “I think it comes down to customers understanding the impact of their actions: if you care about the industry and you like eating out and you want If you see a local restaurant continuing to do well, a little politeness and attention goes a long way.”

Many in the industry are wondering if cancellation fees are against the very idea of ​​hospitality; Customers are not called guests for nothing. But others, like Mr. Schwartz in Toronto, wonder why diners should be exempt from a mundane code of conduct: If you can’t come, cancel the reservation on time or pay the price.

“Doctors and airlines have been doing the same thing for centuries,” he said. “Companies have costs; Why should restaurants be any different?”

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