Customer no-shows are estimated to be costing the Australian hospitality industry $75 million a year, with businesses using a restaurant booking platform blacklisting close to 40,000 customers in the past year for not showing up for their reservations.
Booking site Dimmi says it is aiming to stamp out customer “no-shows” from Australian restaurants by 2020, and this week revealed its partner restaurants have blacklisted 38,000 diners for not honouring bookings since February 2016, a number which is up from around 3,000 the year before.
Dimmi founder and chief executive Stevan Premutico told SmartCompany that while it makes “no sense” commercially for Dimmi to be campaigning against badly behaved diners, it is worth educating the Australian public about the financial impact that no-shows have on the bottom line of many small Australian businesses that contribute to Australia’s hospitality industry.
“Restaurant owners typically own a 3% margin. For every $100, owners are likely to take $3 from that service. When there’s a booking for four people and there’s a no-show, it’s highly likely if they don’t show they won’t be able to [fill] that table,” Premutico says.
“The reality of that is it’s going to result in that restaurant going home without having made any profit.”
While Premutico says there’s been a decrease in the total number of no-shows recorded by Dimmi over the past year, there’s been a greater focus on calling out those that don’t honour their bookings.
“It’s un-Australian and something that goes the heart of the hospitality industry,” he says.
“I don’t think Australians do this with malice. I think there’s a lack of understanding about the impact that has on small business.”
According to Dimmi, restaurant owners have complained about hearing a variety of bizarre excuses for people not attending a booking, including owner of nel. Restaurant Nelly Robinson, who has frequently been told “both my partner and I booked for the same night”, which results in an empty table.
Feedback is key, but be careful with blacklists
Businesses can now more readily review the behaviour of their customers after a single interaction, says Michelle Gamble, director of Marketing Angels, but communication about things like booking policies is still important if you want to ensure people behave the way you want them to.
“I think it’s a new and emerging kind of trend that we’re seeing. If you look at Uber and Airbnb, they’re platforms where the vendor can rate the customer—both [parties] have the power to do that, it’s so transparent, and neither wants to get a bad reputation,” she says.
It can be a different story in the restaurant industry, where booking sites often don’t have the quite the same format in place for both diner and restaurant to mutually rate their experiences.
“I think it’s difficult because it’s not that quid pro quo thing, it’s not set up like those other programs [like Uber] are,” Gamble says.
Gamble suggests if your business is looking at using a booking platform you shop around to make sure things like customer reminders and information about your booking policies are readily built into the system.
“You need to have good systems in place where the platform asks for confirmation,” she says.
While there’s value in educating people about the impact they have on your business if they don’t honour their bookings, the idea of a “blacklist” can be difficult to communicate and enforce, says Gamble.
“How effective is it going to be? People could just book under a different name,” she says.
“Instead, I think it’s good to educate people about the effects.”