More and more restaurants in New Jersey are using so-called “reservation fees” to cut losses and encourage diners to show up as scheduled.

With margins getting thinner, restaurant reservation sites are not only asking for credit card information to secure a reservation but some are charging as much as $25 a head if you don’t show up or cancel at the last minute, says Carl Gould, president of 7 Stage Advisors in Butler.

Outdoor feast

The Scenario

This is often the dynamic.

“You’re a potential customer and you’re trying to get a reservation at the restaurant that you want. But the time you want, they say there’s an hour's wait. So, you say to them, ‘Leave me on the list.’ Then, we call two other restaurants that we’d also like to go to and compare times. We pick one of the three, but we never call the other two back," Gould said.

"Now those other two restaurants have your name on the list. Then a walk-in arrives but the restaurant turns them away. Now we have an upset walk-in, and we lose the booking for the table and the money that comes with it because somebody put multiple reservations at multiple restaurants."

Restaurant service fees (Townsquare Media)
Restaurant service fees (Townsquare Media)

The Fees

Restaurants are onto this tactic so now if customers want to reserve a table, there will be a fee attached to it if those customers are no-shows, he said.

“We can charge a basic fee of twenty bucks or fifty bucks if you don’t show up or if it’s at a peak time, if you’re a table of 8, and you don’t show up, we’re going to charge you $20 per person or $160 total because you didn’t show up because that’s what we would have expected had you showed up,” Gould said.

While some diners may be put off by this, it’s survival time for many restaurants still recovering from the pandemic and dealing with higher food prices, Gould said.

Many diners don’t want to be on the hook for what can add up to hundreds of dollars if their dinner plans change at the last minute. But that’s exactly why restaurants are implementing these fees, he said.

Romantic couple holding hands together over candlelight

Peak Dining Times

Restaurants make almost all of their money during peak times, Gould said. They lose money every other window of time. They make the majority of the money during those small windows.

“They have to pay their mortgage 24 hours a day, but they only make money three or four hours a day, and they actually lose money the other 20 hours of the day, so they really have to protect those times,” Gould said.

This trend has been happening at many New Jersey restaurants, Gould said. Keep in mind that restaurants are not trying to make money on these reservation fees. They are just trying to minimize how much they lose should a customer not show up. The restaurants give the money back if they do show up. It’s only for no-shows.

Waiter Serving Group Of Female Friends Meeting For Drinks And Food In Restaurant

Preventing Fees

Gould said to show up for the dinner reservation or at least be courteous and call the restaurant to cancel, to avoid these reservation fees.

But also, it’s a good idea to book a dining reservation as far in advance as possible. That way, the customers (especially large parties) are more likely to score the time slot they want at the restaurant they want, Gould said.

“The more time you give yourself the more likely you are to show, and the less likely that this whole dynamic is to even affect you,” Gould said.

But he believes the trend of reservation fees is here to stay.

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