Apps That Sell Restaurant Reservations, Including Coveted Tables At A Premium Price

[ElGuapo]

Thoughts?

"Getting A Good Table By Flicking An App, Not Greasing A Palm" by Julia Moskin on nytimes.com

[DonRocks]

Thoughts?

"Getting A Good Table By Flicking An App, Not Greasing A Palm" by Julia Moskin on nytimes.com

In my opinion, it's going to happen no matter how much people complain.

When it does, restaurants will become miffed that these carpetbaggers have swooped into town, and will in turn begin charging premiums for last-minute reservations or premium tables so *they* can be the ones who make the money. In other words, this will be a short-lived industry. The Alinea "ticketing" process is an early pioneer in direct producer-to-consumer sales.

One could make the Ticketmaster argument - Ticketmaster has hardly been short-lived, but I'll bet it won't be around twenty years from now. Individual venues will come up with in-house ways to "close the gap" when it comes to what consumers are willing to pay, and how much the venues themselves receive. Ironically, this will most likely involve hiring workers who used to work at the companies who developed these apps.

It will be interesting to see if restaurants are willing to dump tables at discounted prices to places like Ticketmaster, or to opt out of participating, and only sell tables to customers who will be dining there. This could become quite the nasty little battle.

Of course, one could also make the same argument about HMOs and PPOs. Physicians are powerless to stop them, although some top doctors have opted out of insurance programs altogether and are getting away with it quite handily.

This will all happen over the course of a few years, not a few months, but also not a few decades.

Remember when you're getting angry: a Saturday night table at 7:30 is a different product than a Tuesday afternoon table at 1:15 (this is also why lunch prices are less expensive than dinner prices: supply and demand. So in that regard, "it" has been happening for quite some time now).

I think it is correct for restaurants to charge more for premium tables: Hotels charge more for premium rooms during busy times, airline ticket prices change by the minute, concert halls charge more for front-center orchestra seats - why shouldn't restaurants follow suit?

PS - This would also be the perfect time to eliminate the tipping system.

[DaveO]

On the other hand, there have been enough references in this forum from various restaurateurs about the "large volume" of reservations wherein the people never show.   And that is a serious problem for operators.

Its a classic demand and supply issue.  One other thought about it that comes to mind were the comments from a restaurateur in Philadelphia who had come from NYC.  I recall his commenting how volumes of customers/sales are lower in Philly...but costs are much lower in Philly.  Somewhat of a balancing "act" for him as an operator/chef.

Off the top of my head I think it might only have impact in a few areas of the country and to a relatively small number of restaurants relative to the universe of all restaurants and all "good" restaurants.   If the economy goes sour...I can only imagine it would have ZERO value.

[DonRocks]

This is going to shake things up a little bit.

[lperry]

One could make the Ticketmaster argument - Ticketmaster has hardly been short-lived, but I'll bet it won't be around twenty years from now. Individual venues will come up with in-house ways to "close the gap" when it comes to what consumers are willing to pay, and how much the venues themselves receive. Ironically, this will most likely involve hiring workers who used to work at the companies who developed these apps.

What's Ticketmaster?

[DonRocks]

What's Ticketmaster?

Or whatever it's called these days.

[johnb]

Remember when you're getting angry: a Saturday night table at 7:30 is a different product than a Tuesday afternoon table at 1:15 (this is also why lunch prices are less expensive than dinner prices: supply and demand. So in that regard, "it" has been happening for quite some time now).

I think it is correct for restaurants to charge more for premium tables: Hotels charge more for premium rooms during busy times, airline ticket prices change by the minute, concert halls charge more for front-center orchestra seats - why shouldn't restaurants follow suit?

Seems reasonable to me for restaurants to just charge more for Saturday than Tuesday, and so on.  That way they would keep the benefit of the higher demand -- there would be no, or at least a lot less, basis left to "scalp."  I know this isn't a new idea and there has been great reluctance to do it, but the lunch vs. dinner model seems to be a good starting point -- maybe throw on a few truffle shavings Saturday evening and triple the prices?

[Bart]

Somebody asked Todd Kliman about it in his chat this week and I love his response:

APPS SELLING RESERVATIONS ...:

On a similar note: what do you think about all these new apps "selling" reservations to places that don't take reservations? As a diner, I am completely against it. If they get in line an hour before and can get paid to do that how am I going to get in? Will it be like the concerts and sporting events for which the tickets sell out in a minute and sold online and double/triple the price?? How do we stop this?

Todd Kliman:

As for apps selling reservations to places that don't take them "” it sickens me.

Whenever people set out to game something, it sickens me. Ticket brokers sicken me. People flipping homes sicken me. They sicken me because they reinforce the idea that life is a scrum, and that if you aren't ruthless and thinking constantly about money and positioning you're done for, screwed. Game over.

I've heard and read the arguments that compare it to games and shows. It's sad that restaurants are going in that direction. "Dynamic pricing" "” where's George Carlin when we need him? "” is going to be more and more with us, I'm afraid, at the buzzy restaurants.

Already many of the best restaurants in the country are working to distinguish themselves from the merely very good restaurants. They're issuing contracts and taking credit cards in advance. They're styling themselves as speakeasies, so that you have to be in the know in order to eat there. They're situating themselves as restaurants within a restaurant "” in this way signaling to the diner that this is a more rarefied, more exclusive "experience."

This is the culture now.

And just wait five, ten years.

It's nothing to do with the food, you know. Nothing. It's everything to do with celebrity, with show, with a sense that a restaurant is a place where things happen.

[johnb]

Tyler Cowen, a food writer, and two restaurant owners weigh in on the issue.

http://www.nytimes.com/roomfordebate/2014/06/18/should-restaurant-reservations-be-for-sale

[RWBooneJr]

Tyler Cowen, a food writer . . .

I'm thinking his appearance on the panel has more to do with his other job as one of the foremost (or at least most famous) libertarian economists. I agree with his point about weighing other "costs" associated with hard to come by reservations, but not his "money as democracy" philosophy. I suspect that a system which guarantees wealthier people more access (based on greater ability to pay) wouldn't comport with most peoples' idea of "democracy."

[Pat]

I'm thinking his appearance on the panel has more to do with his other job as one of the foremost (or at least most famous) libertarian economists. I agree with his point about weighing other "costs" associated with hard to come by reservations, but not his "money as democracy" philosophy. I suspect that a system which guarantees wealthier people more access (based on greater ability to pay) wouldn't comport with most peoples' idea of "democracy."

"Food writer" wasn't used as an appositive in johnb's post.  There are four contributors, one of whom is a food writer/editor with a Rachael Ray magazine.

[RWBooneJr]

"Food writer" wasn't used as an appositive in johnb's post.

The essential point remains: how a person views the selling of restaurant reservations boils down to what that person might see as "fair," which is inexorably intertwined with his or her political views. In any event, it would seem to be impossible to stop a secondary market for restaurant reservations from developing unless the restaurants themselves step in and either: (1) police it, by checking IDs against reservations or some similar measure; or (2) obviate it, by themselves charging a fee equal to demand.

This brings up a related point: the reason there are consistently long waits for tables at restaurants like Rose's Luxury is that they aren't charging enough. Those situations tend to correct themselves over time as either perceived quality* declines or prices go up. So, what we're really talking about are new, "hot" restaurants that haven't hit their equilibrium yet or a very small number of tables at prime times on weekends where demand across the city is at its peak.

*Part of this perception is the restaurant's "buzz," which in almost all cases declines over time.

[johnb]

The essential point remains: how a person views the selling of restaurant reservations boils down to what that person might see as "fair," which is inexorably intertwined with his or her political views. In any event, it would seem to be impossible to stop a secondary market for restaurant reservations from developing unless the restaurants themselves step in and either: (1) police it, by checking IDs against reservations or some similar measure; or (2) obviate it, by themselves charging a fee equal to demand.

This brings up a related point: the reason there are consistently long waits for tables at restaurants like Rose's Luxury is that they aren't charging enough. Those situations tend to correct themselves over time as either perceived quality* declines or prices go up. So, what we're really talking about are new, "hot" restaurants that haven't hit their equilibrium yet or a very small number of tables at prime times on weekends where demand across the city is at its peak.

*Part of this perception is the restaurant's "buzz," which in almost all cases declines over time.

Seems to me you pretty much are in agreement with Cowen.  The "solution," if this really is a problem, is for the restaurant to charge more, and that of course takes us right back to the concept that charging money is a substitute for jumping through hoops (like standing in line).

[RWBooneJr]

Seems to me you pretty much are in agreement with Cowen.

Quite the opposite. Time (i.e. waiting in line or spending hours trying to get a reservation through normal means) is the only thing that equalizes us all. Everybody gets 24 hours in a day. In fact, the "cost" of securing a table under the current system is comparatively less for a low income earner than a high income one, to the extent that the latter (at least theoretically) foregoes more income for the same commitment of time. That comports more with my notion of "fairness" than Cowen's, though that's a political view. I merely stated that the inevitable result of the current "climate" is a secondary market for reservations or restaurants charging for tables according to demand. The restaurants have the power to either accept or reject this development. I hope they resist, but it's all on them.

[porcupine]

Another one jumps into the fray.

[TedE]

Restaurants getting into the game with an app designed for business travelers.

Not detailed in the article is how many tables the participating businesses will set aside at peak times for this partnership, but they probably don't even know those numbers yet as the demand side of the equation doesn't seem to be established.

Question: The public in general seems up in arms about the prospect of private individuals snapping up seats for sale to higher bidders at a profit (see the link in the post just prior).  In this case the restaurants are cutting out the middle man acting in conjunction with the middle man and profiting by holding those seats for who are essentially those same higher bidders.  Will there be the same outrage?  What's the difference?  It's basically the same thing that well-connected concierges have been doing for decades.  Does the guise of "business travel" give it a sheen of respectability, whereas some guy hoarding reservations for anybody who is willing to fork over a premium a "scalper"?

Edited for the proper placement of the middle man in this continuum