While Christmas may feel a long time away, you may have received some enquiries for Christmas functions at your restaurant, bar or cafe.
It’s important to protect your business against the financial impact of cancellations and late number changes. Nothing like having 40 pax booking not show up. Here’s five tips from Whites Legal.
1. Know who’s paying
This depends on whether you want to make the contact person liable, or their company.
If the contact person is liable for the whole bill, make sure you say that in the terms and conditions. If the company isn’t paying, it’s too common for a few in a party to skimp on their share of a split bill. It shouldn’t be your job to chase up the cheapskates.
If the company is paying, there are two important considerations:
- Know the identity of the company. Get the name of the company, its ABN and its address. Check it on ABN Lookup.
- Making sure the organiser has the authority to make the booking and incur a debt for the company.
2. Confirmation of final numbers
The key here is clarity. That agreement should state:
- by what time final numbers are required; and
- what happens if there’s a late cancellation or if the booking drops below (say) 60% of the booking.
Leave enough time between confirming final numbers and the day of the Christmas party to fill the booking if it’s cancelled or if there’s a big drop in numbers.
3. Taking and keeping a deposit
If you receive late notice of a cancellation, you may be entitled to keep a deposit or charge a cancellation fee. It’s a similar concept for taking a deposit when booking a table at a restaurant.
However, it’s important that the deposit kept is a genuine pre-estimate of the loss, or that any cancellation fee charged is the actual loss suffered. A clause which tries to keep or charge more will risk being a contractual penalty and be void.
You shouldn’t keep the deposit if someone else books and fills that cancellation. You didn’t suffer a loss caused by the no-show. Taking that money will risk being a contractual penalty.
What’s critical is that it’s clearly explained to the organiser. The best way of doing that is to put it in writing.
4. Timing of payments
You have a lot of flexibility on when you take payments. As always, the key is clarity.
One suggestion, particularly for bigger bookings, is:
- a modest deposit to secure the booking;
- an interim payment when numbers are confirmed; and
- final payment at the end of the party.
You should explain what happens if a particular payment isn’t made. For example:
- failure to pay the deposit means the booking hasn’t been made or secured; and
- failure to make the interim payment is seen as a cancellation.
5. Document it
Clarity or miscommunication – which would you prefer?
Write up an agreement for the purpose of these bookings. The agreement should set out the basis on which you’ll accept a booking for a Christmas party at your restaurant, bar or cafe.
When you write the agreement, keep in mind the tips in this Small Plate.
When you take an enquiry, get an email address from the person who’s placing the booking and send the agreement through.
You may want to have a printed copy of that email on hand on the day to help diffuse any disputes over the terms of the booking.
Take the time to plan what you’re going to do and write out that agreement.
If you’re not entirely sure, get your agreement checked. Last thing you want is a hole in your policy which causes both a PR nightmare and financial loss. Get some advice from Whites Legal.