Dining and ditching not new, but refined during pandemic.
In October, a group enjoyed a parade of Japaneseinflected bites and fine wine for $2,700 at three-Michelin starred Single Thread. Now, the Healdsburg restaurant has learned it has to reimburse the entire bill. The diner disputed the charge — which made up the entire profit margin for a day, chef and coowner Kyle Connaughton said.
“Restaurants are having more incidents like that,” Connaughton said of disputed credit card charges. “Thankfully, it doesn’t happen to us a lot, but when it does, it is these highdollar amounts so it really means a lot.”
Dining and ditching isn’t exactly new, but restaurants are seeing different evasions from customers during the pandemic. It’s gotten easier for diners to avoid paying, owners say, because of contactless payments, online preorders and other ways that restaurants have adapted to models that put safety first. At the same time, owners fear that talking about it will only encourage the behavior.
The phenomenon was first re
ported by the Los Angeles Times, which noted a celebrated Korean restaurant permanently closed because of so many disputed charges. Bay Area restaurateurs say it’s happening here, too. Although the San Francisco Police Department doesn’t keep data for this exact fraud scenario and
crimes generally are down, other kinds of theft like burglaries are up by 62% this year. Officials have told The Chronicle they believe the rise is at least partially driven by the pandemic.
“There’s a lot of trust involved in how things are moving quickly
in trying to make (transactions) easy and seamless. Now, it’s created opportunity,” said Connaughton. “It’s an especially bad punch to the industry right now when everyone is struggling so hard.”
While restaurants can dispute the claims by providing receipts and contact information, owners say it takes a lot of work to dig up those details from months earlier and it’s likely not worth the time. At SingleThread, it’s not clear if the final check was paid with a stolen card or if the group simply decided they wanted to game the system for a free extravagant meal, said Connaughton. He disputed the issue but lost; either way, the restaurant is left issuing the $2,700 refund.
State Bird Provisions general manager Caitlin Donahue, who’s dealt with refund requests on gift cards for years, said these cases are “almost unwinnable.”
“It’s gotten to the point where I’ve almost given up,” she said.
Several times per year, a customer will buy a State Bird gift card, someone will redeem it at the restaurant and then the customer will request a chargeback, claiming the gift card was stolen. Usually, these are about $100 each. Even though State Bird keeps track of diners through its reservation system, Donahue said it’s a difficult confrontation: “Do I contact the guest and say, ‘Hey, the gift card
you used was apparently stolen?’ Am I accusing the guest or the person who gave it to the guest?”
Donahue said it’s hard to tell if it’s happening more these days with the restaurant’s constant closings and reopenings, but at San Francisco’s the Little Chihuahua, the problem with fraud is new.
One person placed five orders between November and January using stolen cards, according to Khephra Molloy, director of operations for the casual Mexican minichain. The damage totals $700, and Molloy was able to block the buyer from making future orders online and filed a police report. Missing $700 is not enough to sink the Little Chihuahua, but the incidents mess up the restaurant’s budget since the losses don’t come out of the same
month the food is made. And it’s not just this one person, Molloy said.
“I do think people are hungry,” she said. “It’s not like they’re stealing something to sell it. They’re stealing it and they’re going to eat it.”
If the problem persists, the Little Chihuahua may have to start checking IDs for takeout orders. But that gets logistically tricky when so many customers send their kids or a partner to pick up the order, not to mention customers are now wearing masks.
At San Francisco pizza restaurant Pink Onion, refund requests happen constantly through thirdparty delivery apps — up to five times a week, according to owner Matthew Coric. He said it’s impossible to know whether a customer truly did not receive their order when there are drivers who may
genuinely mix things up on their routes.
While restaurant owners agree it is more advantageous to fight these disputes with delivery companies than credit card companies, it still takes a lot of time that they generally don’t have. For Coric, he might learn of three disputes on a busy Friday night. Is it worthwhile — or even possible — to spend three hours on the phone to make back $150?
Some customers have figured out a way to regularly eat for free, and Coric isn’t sure how it can be prevented in the future.
“It’s just something you deal with,” he said. “It’s factored into the cost of doing business.”