Last month, celebrated local Restaurant Navi was briefly dragged into the media spotlight. A customer had been charged a hefty late table cancellation fee for a table of six and had taken to social media to voice their shock and disapproval. The story was picked up by 7News online, and subsequently by Yahoo News, the Daily Mail and even the New York Post. What followed was a slew of negative comments and reviews on Google and on the restaurant’s social media accounts.
The Navi team tried to contact the customer to discuss, but they reportedly did not want to speak with them. The restaurant then resorted to social media to defend their decision and to clarify their booking and cancellation policies. The situation was eventually resolved with the customer getting a full refund despite the table of six only being replaced with a table of two.
While this was not a pleasant situation for anyone involved, it does spark an important conversation about the impact of last-minute cancellations on small restaurant businesses, why cancellation policies are sometimes necessary, and what customers can do to work with restaurants to navigate unforeseen circumstances.
The impact of late cancellations on small businesses
Late cancellation policies have been around for a long time, particularly for smaller, more up-scale and labour-intensive dining establishments. They act as a deterrent for no-shows and people who book multiple restaurants to keep their options open. They also ensure a business will at least break even, instead of losing money at the end of the week.
Restaurants that have similar policies include establishments such as Attica in Ripponlea and Restaurant IGNI in Geelong. The former charges a non-refundable $150/person deposit at the point of booking, and the latter charges between $100–200/person for a late cancellation.
On her podcast Dirty Linen food journalist Dani Valent spoke to Restaurant Navi’s owner and executive chef Julian Hill. They had a frank discussion about what happened, and also talked more broadly about why last-minute table cancellations impact some restaurants more than others.
Julian said, “We charge quite low for what we serve, compared to the style of restaurant. The reason we are able to do that is that we are full every week and we cover the cost. There is no wastage. If I started to factor in that 6 might not show, or even a 4 might not show, the prices will probably have to go up $40–50 a head, just to make sure I’m not going backwards.”
The restaurant only seats up to 28–30 patrons, and they don’t turn the tables.
“I’m not [financially] backed by anyone. It’s just me. So it really hurts when it happens.”
Cancellations don’t just lead to restaurants looking empty. It also leads to having to pay for more staff who are rostered on and food wastage. Emotionally, it can be hard on staff as well. When you add to that the rising cost of goods, rent, overheads and wage costs, most restaurants are not able to put their prices up to reflect this as fast as they should.
For many small businesses, a large table cancellation can be the difference between breaking even and losing money that week. In Julian’s case it’s the difference between having a pay-check and working for free.
Comparing apples to oranges
I spoke to Jess Ho, food and wine critic formerly for Time Out Melbourne, and author of Raised By Wolves. As an ex-hospitality industry worker they have an honest and blunt attitude when it comes to these issues.
“There is a reason why there are cancellation policies, and none of them is that businesses are trying to grift you,” says Jess.
Business models and size have a huge effect on the kind of policies that are put in place, they say. This is because “there are no two venues that have the same offering, number of staff, seats per venue, or pay the same outgoings”.
There is a big difference between a 100+ seater, fast-casual restaurant in the city backed by wealthy investors and a small, fine-dining suburban restaurant. You just cannot compare the two – it is apples to oranges.
“Some are the family businesses, and others are ego-driven ticks on a portfolio,” they said.
“The thing is, people don’t honour a restaurant reservation the way they do any other experience they have to pay for.”
“If you can’t attend a concert or go on holiday, you forfeit the ticket price. People just feel differently about dining because it’s something you usually pay for after the experience.”
Life happens – What should I do?
Firstly, and perhaps most importantly, always read a restaurant’s cancellation policy at the time of booking. These days, most restaurants will send you a confirmation email or a text. If you are not in agreeance, this is a good time to cancel without penalty.
Ensuring that your dining companions know about the restaurant’s cancellation policy is always a good move. It will make them think twice about committing and they will not be unnecessarily surprised in the event of a cancellation. They might also be more willing to split the cost of any penalties.
If something happens that is out of your control and you do have to cancel last minute, try to contact the restaurant as soon as you are able to. Send them an e-mail, call them, or message them via their social media accounts.
The more time you give an establishment to find a replacement for you, the more space you will have to negotiate. No small business owner wants to have a bad relationship with their customers. However, understand that while most owners are very reasonable, you still may not be able to get out of it without paying something.
“Life happens,” Jess quips. “But know that the business transaction starts as soon as you make a booking.”
