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Chef Jeff Osaka On The Unfortunate Fixed Expense of Small Restaurants: No Shows

On the House is Eater's column that goes behind the scenes of the restaurant business, written by the owners, operators, chefs and others in the hospitality industry who make our favorite establishments tick. Today, chef Jeff Osaka of Twelve talks about the impact of reservation no-shows on small restaurants.

jeff%20osaka.jpgRunning a restaurant is a game of nickels and dimes, which happens to be the average profit margin of most fine dining restaurants - 5%-10% on the dollar and in some cases even less. There are a few controllable expenses in the business: Food cost and labor. Then you'll always have certain fixed costs lie rent, utilities, insurance, etc. Restaurants may save a percentage or two by cutting labor on slow days, as well as reducing food and beverage purchases.

There is one unfortunate fixed expense that must be accounted for, and almost always negates any savings: No-shows. This is when a guest books a table at a restaurant, but neither uses it, nor cancels the reservation.

Of course you can't always make it out to dinner. There are emergencies--someone falls ill, the baby sitter couldn't make it, inclement weather, but a phone call to the restaurant can make all the difference.

Some people are not aware of the size of Twelve, a mere 40 seats. If just 10 people no-show, that wipes out 25% of our dining room, a figure that's not easy to swallow. Canceling is still a loss, but with enough notice, we may have time to positively react by calling guests off the waitlist or opening our books to accept walk-ins.

Have a doctor's appointment? Schedule a tune-up for your car? A meeting at the office? If something came up and you couldn't make it, you would probably have the courtesy to call and cancel. Why are restaurants different? Do we garner less respect or importance than other services?

There are particular days and times that no-shows have become more prevalent than others—on the weekends and during promotional events. One example is Restaurant Week where restaurants around the city offer discounted tasting menus. It gives guests the opportunity to dine out at select restaurants when costs may prohibitive the rest of the year. The problem with this is sometimes diners get overly ambitious, making multiple reservations, sometimes for the same evening. It becomes a challenge to see how many restaurants they can cram into one week. What may end up happening is he or she chooses to dine at one, and forgets to cancel the other.This small, but negative gesture creates a domino effect. It leaves the neglected restaurant overstaffed and overstocked. And tips, which are a server's main source of income, are never realized.

I've read about extreme methods to reduce the amount of no-shows, or at least instill guilt into the culprit: Calling the no-show guest at an unreasonable hour, say 2 a.m., and let them know they are still "holding" their table, or using social media as a forum to publicly humiliate the offender, even posting a photo. We wouldn't do this at twelve, but we can sympathize with those who have.

Restaurants are fighting back by holding reservations with credit cards. I think this can be a great solution that puts restaurants back in the driver's seat. At Twelve, we use a reservation system that allows us to make notations such as birthdays or anniversaries, guest allergies or food preferences, and no-shows. We'll see a red flag on certain guests and do our very best to confirm his or her reservation, sometimes more than once.

If there's a point to be made or a plea to be heard, it comes down to common courtesy and respect for the service industry. This is my and my staff's livelihood, so please do the right thing…we're just a phone call away.

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