Some of London’s top restaurants are now asking for sizeable deposits from customers when they book to stop reservation squatting which can play havoc with cash flow forecasting and costing some businesses money in lost covers. This is why some of the capital’s top names have decided to take action.
But should all hospitality businesses be taking heed and putting deposits in place? Are there other tools that they can deploy?
What is reservation squatting?
This is when tables are booked out but then the customers don’t show up. This means revenue is lost because that table had not been open to other potential diners. Unless the restaurant is able to secure a last minute booking, the seats remain empty.
For restaurants already experiencing rising product costs – and in some cases, rent price hikes, this can be devastating to their business.
To try and stop this happening, restaurants including Gymkhana, a two-Michelin-starred Indian hotspot in Mayfair, are now asking diners to commit to a minimum spend and pay towards this with a deposit.
Why is it happening?
In an explainer video, the Financial Times says that it can be people hedging their bets – perhaps an influencer who has three or four top restaurants that they want to visit to wow their followers.
However, it can also be a bot programmed to grab a table, which then appear on reservation resale websites. If a restaurant is popular – perhaps it is just gained a Michelin star – getting a table can prove hard. These reservation resale websites use bots to claim tables, which they can then auction with desperate diners. Many of these people won’t know that the website they are booking through isn’t above board.
How businesses should respond
For businesses trying to keep favour with their customers, instigating a deposit scheme could fill them with dread. However, there are ways to explain their reasoning, including that they want to be able to buy their best produce and having the booking secured ahead of time, allows them the financial stability to do this.
This might be a more palatable reason than the invasion of bots, which some customers might be sceptical of.
However, there are innovators also trying to solve this problem. In the Startups 100 list is Ambl, founded by Jed Hackling and Aaron Solomon. This startup lets businesses list last minute availability in real time so that punters searching for somewhere to eat can simply book and walk in. The app offers search options including party size, price point and what kind of venue they are looking for, whether a restaurant, cocktail bar, pub or coffee shop.
While this doesn’t stop the bots or unscrupulous diners, it will help businesses lessen the impact of no-shows; including on their bottom line.
