Looking at data from our platform, we compared non-fulfillment and cancellation rates for bookings that required a $10 or $50 deposit.
Our data indicated that more users did not complete bookings that had a S$50 no-show fee compared to S$10. But surprisingly, the cancellation rate was about the same.
This suggests that psychologically, S$10 was enough for the customer to feel invested enough to honor their reservation.
But it’s not just about how much to charge, but also when to impose such charges. Restaurants may consider no-show fees during peak hours or on certain days of the week when demand is high. For example, restaurant Grub charges holding fees every day at its busier Junction 8 outlet, but only on weekends at its Stevens Road outlet.
Another way to do this is for customers to pre-purchase their meal as part of their reservation. After all, we are used to paying for plane tickets, hotels or cinema tickets. Restaurants could offer incentives for customers to prepay for their meals, such as bundle discounts or meal vouchers.
Instead of penalizing customers for not showing up, they are incentivized to show up by paying less for a meal they intended to eat anyway.
A restaurant in Chicago called Next has taken a unique approach to selling tickets for specific dates and times — like we would for a movie or a concert — since 2011, which the owner has since turned into a system offered commercially to restaurants. .
Some UK restaurants have also resorted to blacklisting customers who repeatedly fail to show up.
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