Diners Cancellation Fees Costs as Much as Dinner

Courtesy or Cash? Restaurants Turn to Fees to Fight No-Shows

Diners beware: Restaurants are increasingly charging cancellation fees, sometimes as high as $100 per person, to combat a surge in no-shows and last-minute cancellations. This trend is sparking debate, with some diners feeling unfairly penalized and others questioning why basic courtesy shouldn’t apply.

The story follows Brian Azara, who had to cancel his wife’s birthday dinner reservation due to their son’s hospitalization. Despite canceling over 23 hours beforehand, he was charged a $200 fee by the Michelin-starred restaurant. This experience reflects a growing trend as restaurants struggle with lost revenue from empty tables.

Data shows a significant rise in cancellation fees. Reservation service Resy reports a 13% increase in restaurants using cancellation fees in just one year. This practice is especially prevalent in big cities, with a quarter of New York restaurants on Resy now charging cancellation fees.

For restaurants like Brooklyn’s Chino Grande, cancellation fees have proven effective. After implementing a $20 fee, they saw a 90% drop in no-shows and a two-thirds reduction in late cancellations. Diners are also more likely to communicate cancellations to avoid the fee.

Industry reports suggest the problem is widespread. A 2021 survey found 28% of Americans admitted to skipping reservations in the past year. Another survey revealed a 40% increase in no-shows for British restaurants.

The rise of reservation apps like OpenTable and Resy has facilitated cancellation fees by allowing restaurants to collect credit card information upfront. These apps also send automated reminders to confirm or cancel reservations.

Finding the right fee amount is crucial. Restaurants like Leroy in London experimented with different fees, finding a £30 ($38) fee to be the “sweet spot” that reduced cancellations by 27%.

While cancellation fees can be a financial lifeline for restaurants, some, like Snail Bar in California, take a case-by-case approach, aiming to maintain customer relationships.

Unsurprisingly, diners aren’t thrilled with cancellation fees. Some try to avoid them by manipulating reservations or disputing charges. Negative reviews and social media backlash are also common.

Emma Esrock, a diner who was charged a $50 fee for a missed cancellation, highlights the importance of restaurants working with customers. The restaurant eventually offered her a gift certificate, salvaging the relationship.

The debate boils down to hospitality versus responsibility. Dr. Jan of Cornell argues for diners to understand the impact of their actions and prioritize courtesy. Restaurant owners, however, see cancellation fees as a necessary business practice, similar to those used by airlines and doctors.