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on 19 November 2013

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Transcript of Overbooking

Is it ethical to overbook reservations at a restaurant
~Is it ethical to overbook reservations in a restaurant?
At a business standpoint
overbooking is a very smart idea.
So here's an explanation
Lets say you have a restaurant that can seat 40 people at one time
And the time for each individual or group to order, consume, and leave for the next group to sit down is 1 hour
Then if the price of each meal per person is an average of $20
And if the cancellation rate is around 15%
6 cancellations per hour
$120 in lost revenue per hour

In a four hour night you lose...
If the cancellation rate is at 25%
the need for overbooking would become a necessity.
10 people would cancel their plans every hour adding to 40 for the night

The total loss revenue from cancellations...
What is the meaning of ethics?

A dictionary would define ethics as moral principals that humans abide by.
Overbooking reservations in a restaraunt can cause some customers to have to wait sometimes up to an hour to be seated.
This can cause customers to be upset
and probably never come back to this restaurant. The manager could always
pull out his gift card book....
But this is where ethics come
in. This customer could have had
a special evening planned, for an anniveresary or maybe even a proposal. He planned this date for quite a while. He made his reservation, called ahead to make sure they had tables. He shows up, and comes to find that the restaraunt is full and he would have to wait an hour for a table to open up.
As a customer, I would be appalled at this practice of overbooking reservations.
Lucky for me the choice is easy.
I was asked to determine the ethicality on the managers point of view.
And as a business practice, this is a smart move to make.
As long as the restaurant is full of hungry costumers, money will be rolling in.
Full transcript