Xmas Day Lunch cancellation. Refund rights?

Emmia

the_lunatic_is_in_my_head said:

ArbitraryRandom said:

the_lunatic_is_in_my_head said:

RefluentBeans said:

Apparently the manager should get out his Excel sheet and work out how much each patty, fry, gherkin, and drink would cost and then take that off and refund the difference. <sarcasm>

I agree - the whole debate is rather silly. 

The only thing silly here is a lack of understanding of how businesses work, a member of staff will have drawn up a menu whilst looking at what offers their suppliers are running for Dec. 

The menu will have been costed and then a margin applied. 

Simplistically speaking, gross profit is how much you have left after cost of sales (in this case food), net profit is how much you have after all overheads (staff, rent, energy, advertising, etc, etc), you apply a high enough gross profit to ensure you cover all the non-direct overheads, typically 65% for restaurants (you can Google it if you don't believe me). 

For set menus it will be averaged, obviously some items are more expensive to provide which is why you often see a supplement charge on set menus for dishes such as steak. 

What are you expecting, them to pluck a figure out of thin air to charge for lunch? 

I've been reading this thread in fascination - I have no experience in hospitality and rarely eat out so don't feel like I have much to contribute... but I do have a question. 

With the above, assuming it is as you say, would that not be calculated based on an assumed number of customers (especially for an event like Christmas where they can assume a certain level of demand and with staffing etc based on confirmed bookings close to the day). 

If they have maybe 20 people booked in for lunch, planned overheads accordingly, and had 5 cancel with no notice, then that could be 1/4 of their estimated 'gross profits' gone with no significant change to their net costs, so how do they calculate the refund - Based on the rate of profit they 'should' have earned for the day, or the rate that they earned without those sales? IYSWIM

I'm sure some might say who wants a customer who does this but the circumstances are exceptional, I'm sure many people wouldn't go out for a jolly up when a close member of family has just been admitted to hospital. 

The hotel won't have any evidence (other than the OPs say-so) that one of party was in hospital. 

Cynically, from the restaurants perspective, COVID can be a convenient excuse for a customer avoiding the costs associated with changing their mind...

MeteredOut

I was at a football match yesterday, and sit with another few folk. One person was not there as his wife was admitted to hospital that morning (in the end it was nothing too serious, thankfully).

Should he get a refund of the ticket he had pre-bought?

The event was not a sell-out. Should it have been different if it was sold out?

I wonder if there is a market for insurance for this sort of scenario (OPs, or the one I posted here)?

Emmia

MeteredOut said:

I’m late to this, and perhaps this was already mentioned (and lost in the noise), but did the OP find out if the event was completely sold out on the day? If, not, then the “they could have sold the table to another party” holds less weight.

But, IMO, they shouldn’t expect any refund.

Their opportunity to resell is curtailed by the fact that 1 person cancelled the day before, and the others on the same day, it doesn't matter whether more people could have dined, the restaurant would be set up for the expected number of guests.

This leaves the hotel with almost no opportunity to minimise their losses by reselling the table - who goes into a restaurant on Christmas day (of the sort the OP went to) without a booking and expects to be able to dine?

Plus, it may have been a menu choices in advance arrangement, leaving the "replacement guests" (if the hotel had found them) likely to be stuck with the OPs party's menu choices.

ArbitraryRandom

the_lunatic_is_in_my_head said:

ArbitraryRandom said:

the_lunatic_is_in_my_head said:

RefluentBeans said:

Apparently the manager should get out his Excel sheet and work out how much each patty, fry, gherkin, and drink would cost and then take that off and refund the difference. <sarcasm>

I agree - the whole debate is rather silly. 

The only thing silly here is a lack of understanding of how businesses work, a member of staff will have drawn up a menu whilst looking at what offers their suppliers are running for Dec. 

The menu will have been costed and then a margin applied. 

Simplistically speaking, gross profit is how much you have left after cost of sales (in this case food), net profit is how much you have after all overheads (staff, rent, energy, advertising, etc, etc), you apply a high enough gross profit to ensure you cover all the non-direct overheads, typically 65% for restaurants (you can Google it if you don't believe me). 

For set menus it will be averaged, obviously some items are more expensive to provide which is why you often see a supplement charge on set menus for dishes such as steak. 

What are you expecting, them to pluck a figure out of thin air to charge for lunch? 

I've been reading this thread in fascination - I have no experience in hospitality and rarely eat out so don't feel like I have much to contribute... but I do have a question. 

With the above, assuming it is as you say, would that not be calculated based on an assumed number of customers (especially for an event like Christmas where they can assume a certain level of demand and with staffing etc based on confirmed bookings close to the day). 

If they have maybe 20 people booked in for lunch, planned overheads accordingly, and had 5 cancel with no notice, then that could be 1/4 of their estimated 'gross profits' gone with no significant change to their net costs, so how do they calculate the refund - Based on the rate of profit they 'should' have earned for the day, or the rate that they earned without those sales? IYSWIM

They could only have 20 for lunch with a waiter for each table or they could have 200 covers with minimal staff, ultimately the event will have been costed and if the hotel have that obligation to offer something you'd expect them to be honest about it really.

Thank you, but it doesn't really answer my question... if there's an expectation of profit based on a certain number of customers, does the restaurant need to use that margin to decide between profit or cost, or is it the (presumably lower) figure of the profit they actually made that sitting? 

Because if the margins were tight and the venue small then it's plausible (just about) that the cost of that table @ ~£700 was the profit for that lunch service.

At which point they would reasonably and lawfully be responding as they did to the OP (that they can't refund due to the net costs and short notice meaning inability to mitigate their loss by reselling the table). 

the_lunatic_is_in_my_head

ArbitraryRandom said:

Thank you, but it doesn't really answer my question... if there's an expectation of profit based on a certain number of customers, does the restaurant need to use that margin to decide between profit or cost, or is it the (presumably lower) figure of the profit they actually made that sitting? 

Because if the margins were tight and the venue small then it's plausible (just about) that the cost of that table @ ~£700 was the profit for that lunch service.

At which point they would reasonably and lawfully be responding as they did to the OP (that they can't refund due to the net costs and short notice meaning inability to mitigate their loss by reselling the table). 

Yes if there's no profit, I guess there's no profit to refund from the pre-payment, equally in a hypothetical situation if there were no costs at all then the trader would be better retaining profit again leading to nothing due as refund.

I mentioned a few pages back, I'm not sure how costs are looked at with this sort of thing, there's an argument certain costs exist any way, there's argument for proportioning them out (presumably to a limit) but either way as you say it's just about plausible the meal was at cost

ArbitraryRandom

the_lunatic_is_in_my_head said:

ArbitraryRandom said:

Thank you, but it doesn't really answer my question... if there's an expectation of profit based on a certain number of customers, does the restaurant need to use that margin to decide between profit or cost, or is it the (presumably lower) figure of the profit they actually made that sitting? 

Because if the margins were tight and the venue small then it's plausible (just about) that the cost of that table @ ~£700 was the profit for that lunch service.

At which point they would reasonably and lawfully be responding as they did to the OP (that they can't refund due to the net costs and short notice meaning inability to mitigate their loss by reselling the table). 

Yes if there's no profit, I guess there's no profit to refund from the pre-payment, equally in a hypothetical situation if there were no costs at all then the trader would be better retaining profit again leading to nothing due as refund.

I mentioned a few pages back, I'm not sure how costs are looked at with this sort of thing, there's an argument certain costs exist any way, there's argument for proportioning them out (presumably to a limit) but either way as you say it's just about plausible the meal was at cost

Makes sense. 

Unfortunately for the OP, if that's the position the restaurant takes, then they have no real right to insist on 'evidence' (to see the books) so would be chancing it at small claims.

Might be worth it for maybe £350, but only if the OP has an idea of the cost/quality of the food and size of venue so they can judge the likely hood of there being anything to claim. Risking an extra £50 in filing fees... and not something I'd do, but ultimately an option. Maybe a LBA quoting the rules (given above).