Should Your Restaurant Introduce a Deposit Policy?

20 May 2025

Written by Libby James

Libby James is co-founder, director and an expert in all things merchant services. Libby is the go-to specialist for business with more complex requirements or businesses that are struggling to find a provider that will accept them. Libby is regularly cited in trade, national and international media.

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Deposits in Hospitality – A Merchant’s Guide

In recent years, no-shows have become a growing concern for the hospitality industry. Whether you run a cosy neighbourhood bistro or a bustling city eatery, empty tables due to missed reservations can have a serious knock-on effect on your bottom line.

One solution gaining popularity is the use of restaurant deposit policies — asking guests to commit financially to their reservation. But is this the right move for your business?

In this article, we’ll explore the benefits and challenges of taking deposits, how software can streamline the process, and how to implement a policy that supports both your operations and your customer relationships.

What Are Restaurant Deposits?

Restaurant deposits are upfront payments customers make when booking a table. These can take different forms:

A small non-refundable fee
A deposit that’s deducted from the final bill
A prepaid amount for food or drink orders
Full payment for set menus or group bookings

This approach is often debated—some diners may find it inconvenient, while others understand the reasoning behind it. For restaurant owners, it’s a balancing act between protecting your income and keeping your customers happy.

Why Consider Taking Deposits?

1. Reducing No-Shows

According to ResDiary’s 2024 Hospitality Industry Report, 76% of venues reported no-shows in 2023, with 8% of bookings not turning up. That equated to an average annual loss of £3,621 per venue.

Taking deposits helps reduce this risk. When customers have made a financial commitment, they’re far more likely to honour their booking—or at least cancel in advance.

2. Improved Operational Planning

No-shows don’t just mean lost revenue. They can also lead to:

Excess food waste
Overspending on staffing
Lower staff morale due to missed tips
Missed opportunities to seat other diners

With confirmed bookings, you can plan your rotas and stock orders more efficiently—essential for keeping costs down and quality high.

3. Enhanced Guest Experience

Taking deposits can also improve service. For example, some systems allow pre-orders and upfront payments for set menus or large group bookings. This is particularly useful on high-demand dates like Christmas, Valentine’s Day, or Mother’s Day.

Not only does this speed up service, but it also allows you to manage dietary requirements and reduce food waste before the guests even arrive.

What Are the Potential Drawbacks?

Customer Reluctance

While many customers are happy to commit, others may be deterred by the idea of paying in advance—especially if the policy isn’t explained clearly. It’s essential to understand your audience and tailor your policy to suit them.

Less Flexible for Walk-Ins

If your restaurant thrives on walk-in traffic, a rigid booking system with deposits might be unnecessary. Larger venues with a constant flow of guests might not benefit as much from this approach.

More Admin (Without the Right Tools)

Manually tracking deposits, managing refunds, and recording pre-orders can become time-consuming if you’re not using modern systems. That’s where software can make all the difference.

How Hospitality Software Can Help

The good news is that taking deposits no longer needs to be a headache. Working with the right software provider makes managing reservations, payments, and communication simple and efficient.

Choosing the Right Booking and EPOS System

Look for hospitality software that includes:

Deposit and pre-payment features
Table management tools
Automated reminders by text or email
Allergen and dietary tracking
Google reservation integration
Card-holding or auto-charging functionality

Some restaurant systems can even assign deposit codes, customer tags and notes, helping your team provide a more personal and consistent service.

When integrated with your EPOS system, these tools ensure seamless front-of-house and kitchen operations, from managing bookings to printing pre-orders in the kitchen.

Getting Started with Deposits

1. Decide What Type of Deposit to Take

Do you want to:

Hold a non-refundable deposit to secure bookings?
Allow deposits to be deducted from the bill?
Pre-charge for set menus or drinks packages?

Choose what best fits your service style and clientele.

2. Time It Right

You don’t have to charge deposits for every booking. Many restaurants apply them during:

Friday and Saturday evenings
Bank holidays and seasonal events
Private dining or large group bookings

This flexible approach helps you mitigate risk without deterring everyday diners.

3. Be Transparent

Clearly communicate:

What the deposit covers
Whether it’s refundable
The cancellation policy and any charges

Make sure this is visible on your website, booking confirmation, and via staff if reservations are taken over the phone.

4. Send Reminders

Use automated messaging to remind guests of their upcoming booking. This reduces forgetfulness and encourages cancellations in advance if plans change—keeping your table turnover steady.

5. Collect Payments Efficiently

Modern booking software lets you take payments through your website, social media, or even via Google search. This not only streamlines the process for your guests, but helps you better manage your shift schedules.

Real-World Revenue Impact

Let’s say your restaurant typically earns £20,000 over a weekend. A 15% no-show rate could cost you £3,000, or £12,000 a month.

That’s money lost on food, staffing and missed sales. Introducing a deposit system—even if just during peak times—could turn that around.

Deposit Options at a Glance

Deposit Type	How It Works	Best For
Reservation Deposit	Small fee to secure the booking	Everyday diners, smaller groups
Bill Deductible Deposit	Deposit is subtracted from final bill	General use, less customer resistance
Prepaid Menu	Full payment made upfront for fixed menu	Events, private dining, large groups
Card Hold Only	Card is charged only on late cancellation	More flexible, softer commitment

Ready to Implement a Deposit Policy?

As with most operational decisions, there’s no one-size-fits-all approach when it comes to taking restaurant deposits. The key lies in finding a balance—protecting your business from the financial impact of no-shows, while maintaining trust and convenience for your customers.

Start by reviewing your current systems. Do they support the flexibility you need? Can you automate the admin to free up time for what really matters—creating great dining experiences? Are your payment providers giving you the best deal possible?

The good news is, you don’t have to figure it out alone.

How Merchant Advice Service Can Help

At Merchant Advice Service, we specialise in helping hospitality businesses:

✅ Choose EPOS systems that work with your existing booking or pre-order software
✅ Reduce card processing fees by comparing merchant accounts across the UK market
✅ Integrate payment solutions that allow for seamless deposits, prepayments, and billing
✅ Ensure software compatibility with your preferred reservation platforms
✅ Find reliable providers who understand the challenges of the hospitality sector

Whether you’re a fine dining restaurant, pub, café, or event space—we can help you streamline your tech, save money, and protect your bookings with confidence.

Wrapping It Up

If you’re considering implementing a deposit policy or upgrading your existing systems, a great first step is exploring your options. The Payments Directory® is designed to help you compare a wide range of EPOS providers, merchant account services, and integrated payment solutions—all in one place.

Whether you're looking for systems that support deposits, pre-orders, or seamless software integrations, the directory gives you the tools to make an informed choice on your own terms.

FAQs

Do restaurant deposits put customers off?

Some customers may be cautious about paying in advance, especially if the deposit is non-refundable. However, when the policy is communicated clearly and fairly—such as allowing the deposit to be deducted from the final bill—it’s often well accepted. Many customers also understand the need to protect against no-shows.

Can I take deposits only at busy times?

Many restaurants choose to request deposits only during peak periods such as Friday and Saturday evenings, holidays, or for large group bookings. This approach helps protect your business during high-demand times without discouraging everyday bookings.

Do I need special software to take restaurant deposits?

While it’s possible to manage deposits manually, using hospitality booking software makes the process far easier. Many systems allow you to collect deposits automatically, send reminders, and manage bookings all in one place. These platforms often integrate with your EPOS system too.

What type of deposit should I take?

This depends on your business model. Common options include: a small, non-refundable fee; a deposit deducted from the bill; prepayment for food or drink packages; or a card hold with a no-show charge. Each has its pros and cons. Consider your customer base, average booking value, and how flexible you want the system to be.

How much should I charge for a deposit?

There’s no fixed rule, but many restaurants charge between £5 and £20 per person, depending on the occasion and booking size. For prepaid menus or private dining, full payment may be appropriate. The key is to choose an amount that creates commitment without seeming excessive.

Is it legal to take non-refundable deposits in the UK?

Yes, but you must clearly communicate your deposit and cancellation policy at the time of booking. It’s important that customers understand whether the deposit is refundable, and under what circumstances. Transparency is key to avoiding disputes or negative reviews.

What happens if a customer cancels or doesn’t turn up?

That depends on your policy. Some venues refund deposits if enough notice is given (e.g. 24 or 48 hours), while others retain the fee to cover losses. If you use a card hold system, you can choose to charge a no-show fee only if the guest doesn’t cancel in time.

Can Merchant Advice Service help me set this up?

Absolutely. We can help you find EPOS and booking systems that handle deposits and pre-orders, ensure your chosen solution integrates with your current software, save money on card processing and merchant account fees, and choose the right providers for your type of venue.