Restaurant cancellation fees are popping up everywhere. Here’s why

COVID-19 restrictions may have eased, but cancellation polices have stuck around.

Australian Retailers Association chief executive Paul Zahra said last-minute cancellations are a challenge for all service-based businesses, including restaurants, hairdressers, masseurs and beauty therapists.

“These businesses rely on bookings to manage staffing and order supplies to ensure a smooth operational flow,” he said.

“When customers cancel last minute, it not only leads to lost revenue but impacts inventory management and staffing schedules, which can have a domino effect on service quality and profitability. For small businesses that operate on thin margins, these cancellations can be particularly damaging.”

Norton Hospitality Group, which owns nine pubs in Victoria, Queensland and Tasmania, has a flat $10-a-head booking cancellation fee for its Saint & Rogue bar in Melbourne.

General manager Alex Norton says it’s a modest charge designed to stop people booking multiple venues and picking their favourite on the night, without letting other places know.

“It just comes down to pressure,” Mr Norton said. “The fear of losing more money is greater than the annoyance of asking people for a card, or risking turning some people off because they don’t want to commit to it.

“But we’re only going to charge someone if they don’t turn up. We need that security barrier because if someone books for 20 or 30 people, you bring in staff earlier, so it has a large huge effect if they’re a no-show.

“Sometimes we call them and you can hear they’re in another venue and either just forgot or don’t care. It’s frustrating.”

Fine dining venues, which cannot rely on walk-ins to replace no-shows, charge anywhere from $50 to nearly $200 a head for cancellations. Even mid-tier restaurants say losing a table of eight at the last minute can cost them more than $1000 in staffing and supply costs.

In Sydney, Bentley Group’s Monopole charges $90 per person for no-shows or cancellations within 24 hours of the booking. Merivale charges $100 a head for cancellations within 48 hours of the booked time at its venues Felix, Bert’s, Fred’s, and Mr Wong. Upmarket steakhouse Bistecca and Brasserie 1930 has similar policies.

Rockpool charges $50 a head for cancellations or changes in numbers made within 24 hours of a booking at its Sydney, Melbourne and Perth venues.

Victorian regional fine dining star Brae handles the problem differently. It requires the full menu price to be paid in advance, with a 50 per cent refund ($180) for cancellations made within a week of the booking, unless a customer gets COVID-19, in which case it’s a full refund.

Beaconsfield’s O.MY Restaurant charges the full menu price of $150 per person for cancellations made within 24 hours.

Losing one table of two could cost the intimate 25-seat restaurant up to $700, but manager Chayse Bertoncello says he’s only had to enforce this a handful of times since it opened in 2011.

“Everything is prepared in advance, and we don’t get foot traffic, so I can’t replace those people,” Mr Bertoncello said.

“We have been pretty lucky, but I think there’s still a big issue of people cancelling late or booking four places and then settling on one, and just expecting not to get charged. You can’t do that at the airport.

“The industry runs on incredibly tight margins, so even losing one table can be brutal for cash flow.”