"Don't Fall Victim to or Cause No-Shows": Omakase and 100 Rolls of Gimbap Penalty Raised from 10% to 40%

Penalty Cap Raised for Industries Heavily Impacted by No-Shows
Wedding Hall Cancellations Now Subject to Penalties Up to 70%

The Fair Trade Commission has significantly revised the penalty standards for restaurant reservation no-shows and wedding hall contract cancellations to reflect changes in the consumer environment. The penalty cap for reservation-based restaurants has been raised, and for last-minute wedding cancellations, the penalty rate will now vary depending on who is responsible.

The Fair Trade Commission has significantly revised the penalty standards for no-shows due to reservation defaults. Image to aid understanding of the article. Pexels

On December 18, the Fair Trade Commission announced that it will implement the revised standards for consumer dispute resolution in order to ensure fair and smooth resolution of disputes between businesses and consumers.

The core of this revision is to adjust the standards for disputes arising from restaurant reservation no-shows and wedding hall contract cancellations to better reflect current realities. First, industries that prepare ingredients and menus in advance based on reservations, such as chef’s specials (omakase) or fine dining, have been separately classified as "reservation-based restaurants." This reflects the significant losses these businesses face, such as having to discard ingredients, when a no-show occurs.

Penalty Standards Raised for Reservation-Based Restaurants and Group Reservation No-Shows

Image of gimbap to aid article understanding. Pixabay

Previously, the penalty for reservation no-shows was set at up to 10% of the total usage amount during dispute mediation. Under the revised standards, reservation-based restaurants can now set penalties up to 40% of the total usage amount, while general restaurants can set them up to 20%. This takes into account that the average cost ratio in the food service industry is around 30%.

Large orders or group reservations, such as ordering 100 rolls of gimbap, also face significant losses from no-shows and will be subject to similar standards as reservation-based restaurants. However, these standards only apply if the reservation deposit and penalty terms are clearly communicated to the consumer in advance; otherwise, the general restaurant standards will apply. If tardiness is to be considered a no-show, this must also be communicated in advance. If the reservation deposit received by the restaurant exceeds the actual penalty, the difference must be refunded to the consumer.

Penalty Standards for Wedding Halls and Lodging Also Fully Revised

Image of a wedding hall to help understand the article. Pexels

The penalty standards for wedding hall contract cancellations have also been revised. Previously, if a wedding was canceled from 29 days before the event up to the day of the event, the penalty was set at 35% of the total cost. Under the new standards, greater responsibility is placed on the consumer. If the cancellation is due to the consumer, a penalty of 40% applies for cancellations 29 to 10 days before the event, 50% for cancellations 9 to 1 day before, and up to 70% for same-day cancellations.

If the contract is canceled due to circumstances on the business side, the penalty is set at 70% of the total cost for cancellations after 29 days before the event.

In addition, under the current rule allowing free cancellation up to five months before the wedding, if goods or services have been provided after the contract is signed, and the items and costs are specified in advance with the consumer's written consent, the business may claim contract processing fees even during the free cancellation period.

Furthermore, in the lodging industry, if a stay becomes impossible due to natural disasters or similar events, free cancellation is allowed even on the day of the reservation. It is also clearly stated that free cancellation is possible if there are issues with part of the route to the accommodation. For overseas travel, the standards have been clarified to allow free cancellation if the Ministry of Foreign Affairs issues a Level 3 or 4 travel advisory.

A Fair Trade Commission official stated, "We expect that the revised consumer dispute resolution standards, which reflect changes in consumer realities, will make a practical contribution to improving consumers' daily lives and ensuring fair dispute resolution."