Restaurants in Singapore are experimenting with making it compulsory for customers to make a deposit for reservations.

This is after people in Singapore have developed a habit of making reservations but not showing up in the end.

Worse, the customers don't even bother cancelling the booking way ahead of time or end up not even picking up their calls when the restaurant checks back.

As a result, F&B businesses suffer losses by incurring greater overheads as more food and staff than necessary get prepared to meet artificial demand.

Deposit for reservations not new

This idea of getting customers to pay upfront for reservations, in particular for group bookings, is not new.

But this issue was recently in the spotlight after Bjorn Shen, the 35-year-old chef and restaurateur of Artichoke, highlighted how bad the situation can get for a medium-sized eatery such as his.

He estimated that one-third of Artichoke’s revenue for the night on March 24 had been lost as a result of reservations that had not been honoured.

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Majority of seats for reservation

Artichoke, an eight-year-old restaurant, located at Middle Road and serving up Middle Eastern dishes, seats 100 diners -- 80 seats are allocated for booking reservations and 20 for walk-in customers.

From April 2018, his restaurant would begin taking credit card details for group bookings of 10 or more people as a countermeasure.

A common practice

A deposit policy is practised around the world.

In order to reserve a table at restaurants, customers must provide their credit card details. Those who do not honour their bookings are charged a portion of their expected spending, which can come up to a few hundred dollars for a sizeable group.

Artichoke’s new policy will be similar.

Credit card details are taken, and if the booking is cancelled less than 24 hours or if there is a no-show, a penalty fee is charged.

The penalty fee -- dictated by each eatery -- comes up to half of the average bill for brunch and dinner services at Artichoke.

The average bill for brunch is S$36, so the fee is S$18 per person booked. The average check for dinner is S$60, so the fee is S$30 per person booked.

Over the years, it has been estimated that no-shows and last-minute cancellations occur about 20 percent of the time.

Other restaurants in Singapore

Other restaurants, generally the fancier ones, take credit card details for large group bookings. These include mod-Sing restaurant Wild Rocket, hip tapas bar Sum Yi Tai, modern Peranakan restaurant Candlenut, and Sicilian restaurant Gattopardo at Tras Street.

Gattopardo takes a deposit fee of S$50 per person for dinner and S$30 per person for lunch (excluding GST) for bookings of eight or more people.

Modern French restaurant Gunther’s, re-opening soon, takes credit card details for reservations of seven and above. No-shows or cancellations within three hours of the booking are charged S$350 per person, plus taxes.

Backlash

However, getting customers to pay upfront is bad for business.

Shen said Artichoke had attempted credit card pre-authorisation four years ago, but scrapped it after a few months because they were losing business.

This also results in a perceived lack of flexibility and transfers the responsibility of any absenteeism back to customers.

This could push those customers to restaurants that appear to have friendlier reservation practices (i.e. no deposit needed).

Moreover, the main gripe from disgruntled customers is that margins at Artichoke, for example, ought to be healthy enough for it to survive eight years, even without operating at full capacity due to cancellations and no-shows.

But the counterargument to this is that airlines and movie theatres already charge customers upfront for their attendance, so it shouldn't be any different for any other business establishment operating on premises with finite spaces and incurring opportunity costs.

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