This week, I was planning a get together for 35 people. Considering the cost of food for such a large number of people, the added sale of drinks, and the hefty gratuity that restaurants charge for large parties, the restaurant I chose was bound to come out ahead by servicing my party. But instead of optimizing the restaurant’s business revenue, they sabotaged themselves by alienating the person bringing them revenue.  If not more.

Their biggest mistake was telling me that they couldn’t seat my party until all members were present (this is a pet peeve of mine). That meant all 35 people in my party would have to wait to be seated until the very last member arrived. Given that plans change and people encounter unavoidable hold-ups, who knows how long my party would have to wait to be seated. Not only that, but by having 30+ people milling about the front of the restaurant, other patrons may have seen this as an exceptionally long waiting list and gone elsewhere for their meal.

Initially, the staff member told me that “If we seat two people at a table for eight, we lose money.” But this is exceptionally narrow-minded thinking. Losing a large party, especially one of 35 people, is extremely damaging to a restaurant’s nightly sales. There’s a difference between adhering to the letter of the house rules and the spirit of them. I’m certainly convinced that in servicing a party of 35, they would have recouped that “lost money” 15 times over.

And then there’s the damage to their brand, which directly equates to revenue (I wrote about a similar scenario in another post). In the end, the customer’s truth is all that matters. Not only did they lose money, but they alienated me and my party with their poor customer service. Now, if I tell someone about my bad experience with this restaurant, that may be only one voice and one customer among all their clientele. The initial loss in revenue may not make a difference to the restaurant’s business. But if 35 patrons have a bad experience with that restaurant, the loss in sales and customer base becomes exponential.

So the question becomes:

How did this restaurant lose money by trying too hard to optimize their business revenue?

They alienated me — and possibly 34 other customers. They stated that they’d prioritize a party of two over a party of 35. They lost money by having a table sitting empty.  They lost additional sales from party members who were likely to order drinks and even appetizers while they waited for other party members.

Granted, any business wants to optimize their revenue, but by remaining rigid to their own policies, this particular restaurant sabotaged themselves.

Have you had other experiences where, in trying to optimize their business revenue, a small business or start-up has damaged their relationship with their customers and lost sales?