How to Handle a Chargeback as a Restaurateur

8 months ago   •   3 min read

By Brian Murphy

As a restaurant owner or operator of the latest and greatest restaurant in the neighborhood, a credit card chargeback is the last thing you want to see days or weeks after a guest transaction is complete. Understanding what a chargeback is and how to handle them is important to the success of your business—both now and into the future.

Understanding chargebacks.

Chargebacks take place when a guest disputes an inaccurate charge on their credit card and their financial institution reverses a payment. Credit card processor fees for chargebacks are expensive for restaurants, and they can have a significant effect on your bottom line and guest retention.

In fact, Chargebacks911 reported global losses due to ecommerce fraud increased by 18% in 2021. With that in mind, prevention is something that must be prioritized, and every member of your team should be aware of the efforts needed.

Disputing a chargeback.

Credit card processors will give you an opportunity to dispute chargebacks, but you must have evidence—and the amount of time you have to respond varies by processor.

Here are a few areas to consider for support of your counterclaim:

  • Responding in a timely manner
  • Providing matching signatures
  • Maintaining detailed delivery records
  • Supplying guest logs for takeout orders
  • Offering security camera footage of guests picking up an order
  • Using address verification service reports

Preventing chargebacks in the dining room.

When it comes to streamlining your processes, the best place to start is the guest experience. Consider your process and examine where the guest relationship begins, even when it is completely electronic. Managing the entire guest experience closely is the best way to avoid chargebacks, and it sets you up with data and proof, should you need it. Make sure to do the following:

  • Update your restaurant website so that it's descriptive and easy to navigate.
  • Be sure credit card statement descriptors are clear and include a business phone number.
  • Ensure that you're utilizing all the tools in your point-of-sale system.
  • Include manager names and contact information on receipts.

Your front-of-house staff members are the face of your operation, so be sure to train them for ultimate guest satisfaction. The best managers can train staff to keep a finger on the pulse of each guest, and any negative experience must be recognized and addressed before the guest leaves.

Technology options can help you build a better relationship with your guests, so make sure to utilize QR codes, enable mobile ordering, and cultivate a simple, timely, and personalized guest experience. Your guests may be experiencing survey fatigue, so find a clever way of offering them a chance to give you feedback without using a formal comment card. A scanned code or post-meal text survey that asks them a few simple questions is a good way to go, and offering a percentage off their next visit could go even farther. Incentives personalize the experience for your guests, and it provides you with an opportunity to get real comments before they can post a review online. Fees for chargebacks are expensive—a $5 discount will be less of a hit on your bottom line than a $20 or $100 chargeback fee.

Improving takeout procedures.

Takeout provides an element of anonymity for guests, especially when using a third-party app. By providing online ordering through your site, you can allow for better guest services, so include materials with their orders that offer them a glimpse into your operation. Including a message like this will hold the team accountable and give it a personal feel: "Your order today was assembled by [team member's name]." A QR code with a simple note from management, complete with manager names and contact information asking for feedback will further improve guest service.

Support for a potential chargeback with takeout orders include:

  • Using guest names when they pick up the food
  • Requiring the CVV security code on their credit card
  • Getting signatures for deliveries
  • Tracking names on orders that have resulted in chargebacks before

Excellent management, impeccable guest service, and an informed team can help to prevent chargebacks in your restaurant. Learn from each one that comes your way, and work with your team to reduce the possibility of it happening again.

Remember to take the anonymity out of the guest experience whenever possible, and let your guests know you truly care. Set your team up for success so that every last detail is handled for every guest, and come up with ways to communicate with them. Your efforts will solidify your team, giving them a bigger collective focus, and guests will communicate with you instead of taking the costlier route.

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