the Korea Fair Trade Commission has announced a revision to increase the no-show penalty threshold for reservation-based restaurants such as omakase and fine dining to 40%. learn more about the changing rules for restaurant and wedding reservation refunds.

have you ever made a reservation for an expensive restaurant like Omakase or Fine Dining recently and been surprised to be asked for a deposit of over 100,000 won? Or have you ever made a reservation, canceled due to unforeseen circumstances, and been upset that you didn't get your full deposit back?

no-shows are more than just an inconvenience, they can have a serious financial impact on small businesses, especially restaurants that take reservations and prepare food in advance, which means they lose money on ingredients and labor.

to address these issues, the Korea Fair Trade Commission (KFTC) released the Consumer Dispute Settlement Standards Amendment, which drastically revised the standards for no-show penalties to bring them more in line with reality. Here's a complete rundown of the latest no-show penalty standards in 2024 and what to expect when booking a restaurant or wedding venue.

why are no-show penalties going up?

until now, restaurants have only been able to charge guests a deposit of up to 10% of the total bill, which is what they pay to secure the reservation and also acts as a "penalty" to cover the restaurant's losses in the event of a no-show.

for example, let's say four people booked a $200,000 per person fine-dining reservation and then no-showed. The total bill was $800,000, but the restaurant could only collect $80,000 (10%) in penalties.

however, the chef must have ordered the best ingredients for these four customers days in advance and prepared them that morning, and the actual cost of the ingredients alone is often much higher than 10%. In the end, the no-show was a unilateral loss for the restaurant owner.

in order to reduce the damage caused by no-shows and to establish a reasonable reservation culture, the KFTC has established the "Restaurant No-show Damage Prevention Plan" and significantly increased the penalty standard.

changed restaurant reservation deposit standard (20% vs 40%)

the biggest feature of the KFTC's amendment is that it divides restaurants into two types and sets different reservation deposit thresholds.

general restaurants: from 10% to 20%

most of the "general restaurants" we all know and love can now take up to 20% of the total bill. that's double the previous 10%.

but there's a very important exception. what if you're a regular restaurant and you take a 'bulk order' or a 'group reservation'? For example, imagine an order for 100 rolls of kimbap at 4,000 won (totaling 400,000 won). the kimbap shop owner has to buy all the ingredients needed for 100 rolls in advance and prepare them. if this order is a no-show, the damage will be as bad as an omakase, right?

that's why we allow restaurants to take up to 40% of the total amount as a deposit. for an order of 100 rolls of kimbap, you can set a deposit of up to 160,000 won.

reservation-based restaurants (omakase, etc.): 40% new

the most notable part of this revision is the addition of a new type of restaurant called 'reservation-based restaurants'.

a "reservation-based restaurant" is a restaurant that takes reservations in advance for omakase, fine dining, or beef entrustment, and prepares and serves food according to the number of customers. these restaurants have been most vulnerable to no-shows because they purchase expensive ingredients in advance to match the number of reservations.

in the future, these "reservation-based restaurants" will be able to take up to 40% of the total amount of the reservation.

for example, if four people make a reservation for an omakase that costs 100,000 won per person (totaling 400,000 won), the restaurant can collect up to 160,000 won (40%) of the reservation. the KFTC said that it set this threshold considering that the cost of goods in the restaurant industry is usually around 30%, which means that it is a realistic threshold to ensure that restaurants can at least cover the cost of ingredients (30%) even if a customer no-shows.

memorize your cancellation policy!

as the deposit has risen, so have the "restaurant reservation refund rules" that we as consumers need to know. if you can't make it, the amount of your refund will be completely dependent on when you cancel.

restaurant refund criteria (the magic of the one-hour window)

for restaurants, all you need to remember is "1 hour".

  • cancellation up to 1 hour before: 100% full refund

  • cancellation within 1 hour: only 25% of the reservation is refunded (i.e. 75% is a penalty)

  • no-show: No refund (100% penalty)

refund Criteria for Reservation-Based Restaurants (Every Day Matters)

for "reservation-based restaurants" like omakase and fine dining, the criteria is tighter: "one day" and "one hour" matter.

  • cancellation 1 day before: 100% full refund

  • cancellation up to 1 hour before the event (same-day cancellation): 50% of the reservation only (50% penalty)

  • cancellation within 1 hour: 25% of the deposit only (75% penalty)

  • no-show (no contact): No refund (100% penalty)

of course, all of these rules only apply if the restaurant clearly communicates its refund criteria to consumers in advance. something like "50% refund if canceled 1 hour in advance, no refund if no-show" must be disclosed in the booking app or confirmation text to be effective. Restaurants can also set their own criteria, such as "10 minutes late is considered a no-show," which must also be disclosed in advance.

venue penalties also change (mutual reimbursement is new!)

it's not just restaurants that are seeing big changes to their 'wedding penalty' rules. since this is one of the biggest reservations of your life, you'll want to take a close look at the "wedding cancellation refund" rules as well.

the bottom line is that the closer you get to your wedding date, the more significant the penalties become.

  • cancellation thresholds for 150 days, 60 days, and 30 days in advance: similar as before

  • cancellations 10 days before the wedding: 40% of the total cost

  • cancellations 1-9 days before the wedding: 50% of the total cost

  • cancellations on the day of the wedding: up to 70% of the total cost

the closer you get to the date, the more the venue loses the chance to get another booking, so the penalties have increased significantly to reflect that loss.

but there's another provision that's even more favorable to consumers. it's called "mutual indemnification. if the contract is canceled for reasons attributable to the venue (remodeling, double-booking, etc.), the venue must also pay the consumer the "same percentage penalty." For example, if the venue unilaterally canceled nine days before the wedding, it would have to reimburse the consumer for 50% of the total cost.

frequently asked questions (FAQs)

conclusion: A one-line summary for smart consumers

the FTC's "no-show penalty" revisions can be summarized in one line.

"Reasonably compensate operators for their losses (increased penalties), but make sure consumers are informed of the criteria in advance (prior notice obligation), and make operators equally responsible (mutual indemnification)."

while this may seem like a bit of a bump in the road for consumers, we think it's a necessary change to establish a healthy booking culture. It's time for us to be smart consumers who read the "cancellation policy" carefully when making a reservation and prepare for any eventuality.

what do you think of this revision to the no-show penalty standards? feel free to share your thoughts in the comments!

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