Making a meal out of restaurant ‘no-show’ penalties

The Restaurants Association of Ireland (RAI) has in recent months encouraged its members to penalise customers who book tables and don’t show up. It says up to one-in-five are “no-shows”, costing restaurants money in lost business.

RAI has suggested they charge booking deposits – €20 per table has been suggested as a “fair” charge – to be forfeited if tables don’t show without cancelling.

This appears to be a reasonable practice. It has run foul, however, of the State watchdog, the Competition and Consumer Protection Commission (CCPC). It has admonished the RAI for attempting to co-ordinate the booking policies of its member restaurants.

The RAI has accused CCPC of “losing the run of itself” by targeting a small business organisation trying to deal with a hot button issue for the industry. CCPC has responded that its role is to protect consumers from co-ordination.

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In this instance, who is most deserving of protection? Customers who rudely may not show up, or the restaurant owner?

Let’s say you own a restaurant with about 15 tables: there are small establishments like this up and down the land. Going by the RAI’s average, two or three tables will not show up on a busy night. That’s a fifth of your capacity wasted.

Business precedents

If customers don’t show up for a booked airline seat, they still pay. If you don’t show up for a hotel room, you pay. Customers are used to this policy. Why should restaurants be any different, they argue.

Competition watchdogs may argue that it isn’t the policy they object to, but the co-ordination of it across the industry, which may be anti-competitive.

The RAI may well not be entitled to co-ordinate the policies of members. But it should be entitled to publicly raise no-shows as an issue of concern. But once it is raised, the inevitable next question is: what should they do about it?

The flipside is that, for restaurants that do charge booking deposits, it could be a legal game-changer. Taking a deposit implies a legal contract has been entered into. This puts a different shade on blithely picking up the phone to book a table of four for granny’s birthday dinner.

Obligations to fulfil contracts always run both ways.