More than half of diners say restaurant cancellation fees are excessive, survey finds

More than half of Australian diners believe restaurant cancellation fees and card holds for missed bookings are excessive, according to a nationally representative survey of more than 1,000 people, even as the hospitality industry argues the charges are becoming essential to survive mounting cost pressures.

The survey, commissioned by Money.com.au from Pureprofile in May this year, found 51 per cent of respondents consider cancellation fees excessive, while just 22 per cent view them as reasonable.

Nearly half of those surveyed, or 48 per cent, say there should be no fee at all for missed restaurant bookings.

The average fee Australians consider fair is $15 per person, a figure that sits well below the $50-plus charges levied by some venues.

Millennials emerged as the most frustrated cohort, with 61 per cent describing cancellation fees as excessive.

However, Baby Boomers are the most likely to vote with their feet, with 33 per cent saying they would avoid venues with strict cancellation policies altogether.

"Most people understand why restaurants want to protect themselves against no-shows, particularly when they're holding tables for large groups or operating during busy periods like weekends," says Sean Callery, Money.com.au’s head of insights.

"But many Australians believe that some venues have pushed too far by charging excessive cancellation fees or imposing strict card hold requirements.

"The risk for venues is that strict booking conditions could end up driving customers away altogether.

"People will simply take their money elsewhere if they feel the penalties outweigh the convenience of making a reservation."

Callery says while restaurants have every right to protect themselves from lost revenue, consumers also expect a degree of flexibility when plans change.

"The challenge for venues is finding that balance without alienating potential customers."

The findings come as the restaurant and café sector faces a convergence of cost pressures that industry leaders say make no-show protections increasingly necessary.

The Fair Work Commission confirmed a 4.75 per cent increase to the national minimum award wage from 1 July this year, adding to labour costs across the hospitality sector.

Venues are also preparing for the new Payday Super obligation and a looming ban on card surcharges, both of which will squeeze already thin margins.

The Australian Restaurants and Cafés Association has previously described cancellation fees as an essential safeguard for operators navigating those pressures.

Research from hospitality platform SevenRooms showed that Australian restaurants lost an average of $5,971 annually to no-shows and ghost diners in 2023.

However, venues implementing cancellation fees face legal guardrails under Australian Consumer Law.

Legal services firm LegalVision notes that cancellation fees must reflect a business's genuine loss from the missed booking and cannot function as penalties.

Fees deemed disproportionate to the actual loss suffered may be void and unenforceable, and the Australian Competition and Consumer Commission has the power to impose fines on businesses that breach the rules.