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  5. Report Released on Counter Measures against “No-Shows” in Restaurants

Report Released on Counter Measures against “No-Shows” in Restaurants

The restaurant industry starts initiatives for overcoming the challenge by uniting their efforts

November 1, 2018

The Expert Study Group on External Environment Development to Enhance Added Value to the Service Industry, a FY2017 research project commissioned by the Ministry of Economy, Trade and Industry (METI), held discussions on measures for avoiding damage to the restaurant industry caused by the canceling of reservations without notice from customers, hereinafter called “no-shows.” Based on their discussion results, the study group generated a report titled “Report on Counter Measures against No-Shows in Restaurants.”

The Japanese restaurant industry has been facing an annual estimated damage of approximately 200 billion yen caused by no-shows. No-shows significantly hinder restaurants’ efforts for productivity improvement as seen in a case that one no-show caused serious damage to a restaurant and drove the restaurant into bankruptcy. To address this situation, in collaboration with other related ministries and agencies to improve productivity in the service industry, METI will support the industry in overcoming challenges in the entire industry, which a single business cannot solve by itself.

1. Outline of the study group

The study group was convened in FY2017, consisting of lawyers, university professors, representatives of industrial associations and representatives of IT vendors for restaurants as members expertized in the no-show issue as well as officials of METI, the Ministry of Agriculture, Forestry and Fisheries (MAFF) and the Consumer Affairs Agency as observers, and since then, it has been holding discussions.

During these discussions, members of the study group delivered briefings on the current situation facing restaurants suffering from damage caused by no-shows and advantages to consumers that may be brought about by solving this issue, for e.g., making it easier for consumers to make a reservation at a restaurant that is normally difficult to get a reservation at.

Members of the Expert Study Group on External Environment Development to Enhance Value Added to the Service Industry

Industry Member Remarks
Lawyer Mr. Hirohito Kaneko Serves as Chair of the International Forum of Travel and Tourism Advocates; expert in travel and tourism laws
Lawyer Mr. Ryo Otsuka Expert study member of qualified consumer organizations; engages in a variety of efforts involving consumer problems
University professor Ms. Naoko Kano Professor at Keio University; leading expert on the Civil Code and the Consumer Contract Act; member of the Consumer Commission of the Cabinet Office
Restaurant industry Mr. Hisao Fukuda Director, Japan Food Service Association, an organization having over 800 member companies mainly involved in the restaurant chains industry
Restaurant industry Mr. Tetsuro Kojo Director, Zenkoku Inryogyou Seikatsu Eisei Dogyou Kumiai Rengokai, an association having over 80,000 members mainly consisting of small businesses
Consumer affairs industry Ms. Estuko Masuda Director, Japan Association of Consumer Affairs Specialists, an association conducting efforts for supporting consumers in litigations, consultations and education involving consumers’ problems
Restaurants supporter Mr. Kei Tokado President, Pocket Concierge Inc., a company providing a tool for supporting consumers to make reservations at high-end restaurants
Restaurants supporter Mr. Hitoshi Nakamura President, Toreta, Inc., a company providing a tool for supporting consumers to make reservations at general restaurants

Note: The study group held three meetings, bringing together officials of METI, MAFF and the Consumer Affairs Agency as observers, in addition to regular members.

2. Outline of the report

Aiming to solve the no-show issue, the study group categorized approaches against no-shows through classifying the damages incurred by restaurants by no-shows and dividing approaches into cases, i.e., reservations which were made for only tables or for those that include meals. In addition, some members pointed out the importance of awareness-raising activities for correcting the current business customs in the restaurant industry. Moreover, the study group uncovered that utilization of IT tools for improving productivity could be greatly effective in overcoming the issue.

Based on the discussion results, the study group generated a report titled “Report on Counter Measures against No-Shows in Restaurants.” The report explains that: solving the no-show issue will bring about benefits not only to restaurant businesses but also to consumers; restaurant businesses are allowed to request no-shows to pay cancelation charges; and restaurant businesses and consumers should tackle specific measures to reduce no-shows.

Highlights of the report
(1) The restaurant industry has been facing an estimated damage of up to 200 billion yen caused by no-shows, and solving this issue may bring about benefits not only to restaurants but also consumers.
 
Solving this issue is expected to bring about the following positive effects:
  • Other consumers can easily make a reservation at the restaurant, enjoy the best possible menu, and receive better service.
  • Restaurants can win more customers through improving the quality of foods and the service that they provide and improve quality meals through introducing the latest facilities and equipment into their restaurants.
  • Employees of restaurants, employees can enjoy wage hikes and reduce working hours through introduction of the latest facilities and equipment into their restaurants.
(2) Restaurants are allowed to request that no-shows pay cancelation charges: full payment to those who have reserved full-course meals, and charges set by respective restaurants to those who have reserved seats only, a result calculated based on their per-customer price.
 
  • Regardless of approaches that a consumer has taken in making a reservation at a restaurant, a contract between the consumer and the restaurant is established once the reservation is fixed. Consumers who are no-shows have been causing damage to restaurants and damaged restaurants are allowed to request such no-shows pay cancelation charges.
(3) Restaurants should alter consumers of cancelation policies before consumers make reservations. In addition, restaurants should explain the reasons as to why they have set such policies. Consumers should notify restaurants of their cancelation of reservations in advance to avoid becoming no-shows.

4. Future actions

The private sector will conduct awareness-raising campaigns to solve the no-show issue. Moreover, METI will support the restaurant industry in improving its productivity and solving challenges through introducing IT, taking advantage of support measures   for e.g. subsidies for introduction of IT   and also support private businesses in overcoming challenges that the entire industry is facing, which a single business cannot solve by itself, in collaboration with other related ministries and agencies.

Division in Charge

Service Affairs Policy Division, Commerce and Service Industry Policy Group

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