When Your Restaurant Cancellation Fee Costs as Much as Dinner

To celebrate his wife’s birthday in 2022, Brian Azara, a mechanical engineer in New York City, booked a table for two at a Michelin-starred restaurant in Brooklyn. But when their son was suddenly hospitalized with severe asthma, Mr. Azara had to cancel the reservation. A few minutes later, he checked his credit card account and saw a $200 fee.

“It was probably 23½ hours before we were supposed to be there,” Mr. Azara said, yet the restaurant refused to reverse the charge, citing its 24-hour cancellation deadline. While he sympathizes with the financial challenges restaurants are facing, he said the charge “really kind of stung.”

Mr. Azara’s run-in with the cancellation fee reflects a broad shift among restaurateurs, many of whom now feel they have no choice but to penalize diners who are increasingly canceling reservations at the last minute, or not showing up at all. Even a few missed reservations, they say, can upset all the careful planning restaurants do to manage operations and balance the books.

“Cancellation fees bring people back to reality when they make a reservation,” said Erica Hall, a general manager and co-owner of the Brooklyn restaurant and “karaoke saloon” Chino Grande. “They remember it’s an agreement.”

According to data from the reservation service Resy, 17 percent of the U.S. restaurants on the platform charged at least one cancellation fee in January, up from 13 percent a year earlier and 4 percent in January 2019. The practice was even more widespread in big metropolitan areas: A quarter of New York restaurants on Resy charged at least one cancellation fee in January, as did one-fifth of restaurants in Los Angeles and Miami.

Ms. Hall, who has worked in restaurants for nearly two decades, said she noticed a distinct uptick in no-shows and cancellations after social distancing rules and vaccine mandates were relaxed in New York City in early 2022. In response, Chino Grande began charging $20 per person for missed reservations, just two months after opening in June 2022. Since then, no-shows have dropped by 90 percent, Ms. Hall said, and late cancellations have fallen by two-thirds.

“Late cancellations still happen regularly, but people tend to call or email to let us know” so they don’t get charged, Ms. Hall said — “which is great.”

Uncommunicative diners aren’t a new problem for restaurants, but their ranks appear to be growing. A 2021 report by the reservation service OpenTable found that 28 percent of Americans surveyed admitted to not showing up for a reservation in the last year. A 2023 survey by Barclays Bank revealed that nearly half of 200 British restaurants reported a 40 percent rise in no-shows over the previous year, while cancellations with less than 24 hours’ notice jumped 35 percent.

Restaurants’ ability to impose charges has been bolstered in recent years by the advent of reservation apps like OpenTable and Resy, where restaurants can require diners to enter credit card information in order to complete a reservation.

Before that, “the best you could do was ask guests with larger parties for a deposit,” said Lilly Jan, a lecturer at the Cornell School of Hospitality Administration who specializes in restaurant trends.

The reservation companies also send diners an automated text the day before the reservation, asking them to confirm or cancel. Typically, that means giving restaurants at least 24 hours’ notice of a cancellation, though Ms. Hall gives Chino Grande diners until 6 p.m., the beginning of dinner service.

Restaurant owners say they have to strike a delicate balance when setting fees, which can range from as little as $10 per diner to more than $50. Ed Thaw, the owner of the Michelin-starred restaurant Leroy in London, said finding the appropriate penalty was an exercise in calibration: too low and diner behavior remains the same; too high and reservations drop off.

After initially setting a 20 pounds ($25) cancellation fee, Mr. Thaw raised it last October to £30 ($38). The effect was immediate: No-shows and last-minute cancellations dropped by 27 percent. “Thirty pounds, for us, is the sweet spot,” Mr. Thaw said.

David Yun, an owner of C as in Charlie in New York City, saw similar results when he imposed a $25 per person cancellation fee at the 40-seat restaurant in October. No-shows, he said, dropped by half.

For restaurants that require reservations for every table, these fees can be essential. “We rely almost solely on our reservation book, so it’s important to us that we know what we’re getting on a given night,” said David Schwartz, a Toronto restaurateur who charges a cancellation fee of 25 Canadian dollars ($18) at Sunnys Chinese and 50 Canadian dollars ($37) at MIMI Chinese.

Still, many restaurants are reluctant to adopt a zero-tolerance policy. Carlos Camacho, the general manager and beverage director of Snail Bar in Oakland, Calif., said he charges fees on a case-by-case basis.

“We charge no-shows if they don’t reach out ahead of time,” he said. “But even then it’s a challenge because we want people to come back another time, so sometimes I’ll waive the fee.”

Unsurprisingly, cancellation fees aren’t exactly popular with diners. Some late-canceling customers try to move their reservation into the future and then cancel to avoid triggering the fee. Others lock their credit cards before a charge can go through, or dispute the charge with their bank.

The fees have provoked social media diatribes, like a heated dispute between a would-be diner and a restaurant in Boston that recently made national headlines, and negative reviews on Yelp or Google Reviews.

“It’s hard to remove those one-star reviews,” Mr. Thaw said.

Emma Esrock, a communications professional in San Francisco, said she was hit last fall with a late-cancellation fee after her online request to cancel her reservation didn’t go through. When she noticed the $50 charge on her credit card bill, she emailed the restaurant.

“They said I didn’t let them know within the time frame,” Ms. Esrock said. But the incident had a silver lining: The restaurant gave Ms. Esrock a gift card for $50. “I would have never set foot in that restaurant again if they didn’t do that.” She used the gift card last month.

“Restaurants don’t want to punish people,” said Dr. Jan of Cornell, adding, “I think it comes down to customers understanding the impacts of their actions: If you care about the industry and you enjoy dining out and you want to see your local restaurant continue to do well, a little courtesy and consideration goes a long way.”

Many in the industry wonder if cancellation fees are at odds with the whole idea of hospitality; customers are called guests for a reason. But others, like Mr. Schwartz in Toronto, wonder why diners should be exempted from a commonplace code of conduct: If you can’t make it, cancel the reservation on time or pay the price.

“Doctors and airlines have been doing a similar thing forever,” he said. “Businesses have costs; why should restaurants be any different?”

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