Tick, Tock: time’s running out to tackle restaurant no shows, but Dimmi’s blacklist is not the answer

(Image courtesy of Tock)

Dimmi lit up our Facebook feed last week after announcing that 38,000 diners had been ‘blacklisted’ from Australian restaurants via their bookings platform. It’s all part of their strategy to combat restaurant no shows ― a phenomenon that they reckon costs our industry around $75 million a year.

Restaurant no shows are indeed a massive problem for the hospitality industry ― so we’re delighted to see a business as large as Dimmi (a TripAdvisor company) take action on it. See, some diners don’t realise what far-reaching effects it can have when they don’t turn up for a restaurant booking. It lowers staff morale, it creates environmental wastage and ― in the long term ― it puts the venue at risk of shutting its doors.

For fine dining venues the problem is amplified. So much work goes on behind the scenes in preparation for a guest’s booking, and it starts pretty soon after their reservation is made. For instance, when you make a booking at Lûmé, our chefs begin preparing for your meal about a week before you arrive. Our front of house team take time to look at who’s made the booking, and find out if you’ve dined with us before, whether you have any favourite wines we might need to order in, or whether you have dietary requirements we need to adjust our menu for in order to accommodate. Depending on the night and the number of bookings we have, we may also need to put extra staff on. If it’s a busy Friday or Saturday, we’ve most likely had to turn down a lot of diners who would have liked to make a booking as well.

So you can see that it’s not just about filling a table on the night, but the various resources ― including labour, special orders and supplies ― that are paid for in advance by the restaurant…all in the lead up to a guest sitting down for a tiny slice of time to enjoy their meal.

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Over the years, some restaurants have adopted the ‘walk-in only’ system as a way of protecting themselves against no shows. But these venues factor the walk-in model into the style of food they offer, the efficiency of how it’s prepared, and the type of service they provide in order to make it work. This model best fits venues with higher numbers of covers per night, and those who offer a more casual service with greater economies of scale in their food preparation (perhaps by using an off-site kitchen to service multiple venues, or cooking many dish components in advance so that they can be stored and reheated more easily). However, it’s not a suitable business model for a fine dining venue, where service is highly personalised and menus are prepared in exact quantities for the number of guests dining that night.

We don’t think Dimmi’s blacklist is the right answer either. Since it was first introduced just over a year ago, the list of customers blocked from making restaurant bookings has risen from 3,159 to 38,000. In that time, no-shows have only decreased by 25%. While it’s great to know that Dimmi have committed to eliminating no shows by 2020, three years is a long time to wait for restaurants who are struggling with the issue now.

At Lûmé we know the problem well. Back in 2015, we’d started losing around $3000 a week in no shows. That’s not just money lost in labour and overheads, but food wastage too (we order produce in exact quantities in order to avoid wastage, and aim to minimise environmental impact by taking only what we need of local foraged ingredients). The fact is that if we were using the ‘blacklist’ solution to combat no shows, our restaurant would be closed by now.

Instead we looked to the US, where the growth of hospitality tech startups has been accelerating rapidly.  That’s where we found Tock ―the online reservations system developed by Nick Kokonas (Alinea) and Brian Fitzpatrick (Google), and backed by stakeholders including Thomas Keller (The French Laundry), Dick Costolo, ex-CEO of Twitter and Jason Fried, CEO of Basecamp.

Tock use a prepaid ticketing system to manage restaurant reservations ― much like way you’d book a flight through an airline, or tickets to a concert. It’s different to taking a deposit then charging a guest if they fail to rock up. Instead, everything is done up front. If a guest needs to change their reservation, they can still do that as well with prior notice – but tickets are not refundable for unexplained no shows. 

Within a week of switching our bookings over to Tock, our no show rate dropped dropped down to 0.13%. 

It might not be the answer for all restaurants, but for us it definitely was.

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Pre-ticketed dining ―  avoid if you’re a technophobe

Last year, John Lethlean wrote a pretty scathing and ill-informed article about ticketed dining. We saw it and immediately cringed to think that it represented the opinion of Australian media. It read like the collective opinion of those who fear technology, hate change, and want everything to stay the same way it’s always been because, err…that’s how it’s always been. But with Worlds50Best arriving on our shores this year, the article did our restaurant and tourism industries no favours in positioning Australia as an innovator, global leader, or even legitimate player in the international dining scene.

Seriously, it was just embarrassing.

In the article, John was specifically referring to our use of Tock. This was our response at the time, which we originally posted on Facebook in May 2016. With Dimmi firing up the no show debate again, we think it’s a good time to revisit these little chats.

The article in the Weekend Australian –Tickets On Themselves –“Good restaurants are meant to be human, even unpredictable. So why are some so… impersonal?” by John Lethlean…

This article caused quite a stir here at the restaurant over the weekend. I’ve always read John’s articles with much enthusiasm and 9 times out of 10 I agree with his sentiments. However, his piece on ticketed dining on Saturday really hit a nerve with me for 2 reasons.
Lûmé was singled out as being clinical and impersonal when we are anything but.
Yes, I’m aware that it’s an opinion piece but after reading through the article several times, I can’t help but feel that his opinion is based on misinformation and is focused entirely on one side of the fence.
I realise the job f food journalists is to critique but I believe more and more so that their position is one to sell content. Wouldn’t it be a much more interesting read to have a story in front of you that states the facts of both parties so that readers can then have an informed opinion that they’ve arrived at all on their own?
I believe he has overwhelmingly misinterpreted our intention behind using Tock. A restaurant like ours focuses on the customer experience – not on making money. We provide a very niche product and we don’t expect to herd people through our door for the sake of numbers. Other more casual venues do this, and that makes sense because it’s part of their business model. They do high turnaround, and they serve food which matches that style of service and accommodates the risk of no-shows.
That’s not the business model of Lûmé.
Lûmé as a business model is extremely risky. It’s expensive to run; we offer a niche product at a time when the industry (in Australia anyway) is very risk averse and focused more on what will get bums on seats. I’m not interested in playing that game. For me, Lûmé is a creative pursuit. Yes, we obviously need to make money to open our doors, but ultimately the focus of our restaurant is to create a unique guest experience – not to replicate the ‘safe’ restaurant model that everyone is already doing.
I’m not saying that in 6 months time everyone will be using Tock, not at all. Tock itself is a niche product that we’ve chosen to align ourselves with because it makes sense for our business and to the guest experience we wish to offer. I don’t believe Tock, Lûmé, or any other restaurateur should be portrayed in a negative light purely for doing something in a different way. There’s no reason that old and new methods alike, can’t exist side by side. There are restaurants today that still use the same system for reservations that were used 250 years ago in Paris, France. Is there anything wrong with this? Not at all. All business’ are unique, as are the customers who frequent them. But at Lûmé, our ethos is based on embracing change, embracing creativity from all of our employees, innovation and learning. That’s what drives us and that’s what we hope our guests enjoy, about their experience with us.
I thought I’d share with you some information from our end on why we went with Tock and the impact that it’s had on our business.
Our profit margin sits between 5-7%. At the time of implementing Tock, we were losing anywhere from $1000-$3000 a week on no-shows. You don’t need to be a member of Mensa to realise that these figures don’t equate to a sustainable business model.
With the implementation of Tock in November 2015, we have had a 0.1% ‘no-show’ rate. Basically unheard of, I’m sure my fellow hospos will agree.
Another benefit – on average each week, a reduction in food costs by 5-9%. As our guests pay the full amount at the time of booking, we have an immediate and guaranteed cash flow which allows us to broker better deals with some of our suppliers.
A reduction in wage costs by 15%. Tock allows us to more accurately forecast staffing levels and also spend less time each day answering calls and emails. We’re a small business, we don’t have the luxury of hiring a reservations assistant. Don’t get me wrong, we could hire someone to do that but choose not to as I believe the money spent on that employee’s wage is much better utilised in other areas of the restaurant such as more wait staff/chefs, another bar tender, a better wine list etc. Things that actually benefit the guest when they walk through the door and sit down to enjoy the experience that they’ve paid a lot of money for. Does the average guest who is interested in dining in our restaurant, really care about talking to someone on the phone when they book? Our research and experience is a resounding, No.
In the 7 months since we have implemented Tock, we have had exactly 2 complaints about the system from guests. I’m pretty happy with those numbers to be honest. Both guests went on to book, they just needed a little help, which…we gave them over the phone.
The money that we save by using Tock does not go towards expanding the lawns on my estate; I live in West Footscray and drive a Daewoo. Rather, Tock makes the Lûmé business model more sustainable. We can spend more on creating and evolving the guest experience.
A few more points to ponder on-
Our service charge is 5%. It is fully offset in our pricing. The only reason it is there is so that people don’t feel uncomfortable about wait staff standing over them waiting for a tip at the end of the night. Since we put it in place we have received a 35% reduction in tips. I will not be changing this.
I dare say that in Australia, where tipping culture holds no economic purpose other than entitlement and the adaptation of American values, many diners are confused about what’s expected from them. We want to remove that uncertainty and make them sure that everyone is taken care of. I personally don’t believe in tipping culture, especially in Australia.
Here’s what Danny Meyer has to say about tipping: http://ny.eater.com/…/95…/danny-meyer-no-tipping-restaurantsNoma and Fat Duck are mentioned as being excluded from this rant. Why? Because they’re already famous? Where does this double standard come from? Would it be better if we called ourselves an event only restaurant?
The Fat Duck use a ticketing system in their restaurant in Bray as well as the popup. In addition, according to their website:
“We will ask you for a discretionary 12.5% service charge which will be added to the final bill, along with drinks and other additional items which are priced separately.”
I’m not comparing us to The Fat Duck of course. I mean, as I said our service charge is 5%.
I also note that the majority of fine dining venues in Victoria include some degree of cancellation fee as part of their reservations policy. For example:
Brae – $100 per person
Attica – $250 per person (full cost of menu)
Dinner by Heston – $100
Nora – $95
In my mind, this is totally acceptable, as is our policy.
We endeavour to go above and beyond what our guests may expect of us. We create separate menus to suit any dietary requirements. We offer entirely new menu’s to repeat guests so that they may experience something new from the last time they dined with us. We offer a full vegan and vegetarian menu. We offer a full temperance beverage pairing for guests who choose not to consume alcohol but still wish to drink something other than water or tea with their meal. etc etc. The sole reason for opening Lûmé was to offer people an experience that they would not be able to have elsewhere. We work with an acting coach so that our staff (all our staff) may communicate better and more confidently with our guests. We work with a psychologist on our wording and terminology that we use around guests so as to make them feel more comfortable and at ease, and ultimately to have fun. How is the humanity lost in that?
We don’t ask guests to vacate the table by a certain time, and we don’t ask them to wait at the bar while we turn their table over. Let’s compare this with, say, Dinner By Heston (although according to John, they’re ‘influencers’ and are apparently immune to this discussion). Their website states:
“All early reservations before 8.30pm are reserved for a specific dining period. We may require your table back after the time listed below:
Tables for 1 to 2 guests are reserved for 2 hours
Tables for 3 to 5 guests are reserved for 2.5 hours”
Is it only the terminology that he disagrees with? Because we both know that the only people a pre-paid reservation system should hurt are those who are not sure if they want to show up. That’s a legitimate market, and there are other no-bookings restaurants which cater specifically to it. They scale back the personalisation of their service to fit that model in order to remain viable. But that’s a very different kind of restaurant to what I’ve tried to create at Lûmé.
We’re not suggesting we know best. But at least we’re willing to take a risk in the hope that we can keep this industry dynamic – not let it stagnate and be left behind the rest of the world. We want our customers to tell us what they think. If our customers have an issue with it, we’ll find a better way. But as I stated earlier, it’s just been business as usual. I understand that this might mean losing John as a customer, and the $50,000 he has to spend on dining a year.
Tock is not for everyone and every restaurant, but it is for us. For the sole reason that it helps us to offer better and more personalised customer service to the people that we ultimately opened our doors for…the guest.

— Chef Shaun Quade

 

One Reply to “Tick, Tock: time’s running out to tackle restaurant no shows, but Dimmi’s blacklist is not the answer”

  1. Brilliant, well-executed argument! Love it! It’s such a simple idea, yet so many people just don’t get it…I’m still shocked at Lethlean’s comments on the subject after being involved in the industry for so long – albeit just writing about it, not working IN it.
    Keep doing what you’re doing mate!
    Well done Shaun.

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