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New York restaurants fight back against reservations by bots

174 points| lxm | 2 years ago |bloomberg.com | reply

318 comments

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[+] crazygringo|2 years ago|reply
I've never understood why restaurants themselves don't charge for prime-time reservations. If scalpers can do it, the restaurant can too.

Because let's be honest -- dining at certain highly exclusive restaurants on a Friday night is just as much of an event as going to the theater. These aren't neighborhood restaurants with average food that are meant for locals that we're talking about here. These are fancy. If you want to eat at 7 pm on Friday, why shouldn't it be more expensive than Tuesday at 5 pm?

And if restaurant owners don't want to take advantage, they can always offset it by lowering the food and drink prices slightly the whole week long. (Not that they're obligated to -- making a profit is already hard enough as is.)

[+] bmmayer1|2 years ago|reply
I can speak to this! I was "canceled" in 2014...before it was cool...for doing exactly this[0]

A couple reasons restaurants don't do this:

1) Loss of quality control over customer experience. For example they provide a $100 dinner, but the client expects a $200 dinner. That creates bad experience

2) Desire to maintain accessibility on price point (same reasons artists don't charge more for tickets) and perceived inequities of charging extra for reservations

3) Rewarding loyal customers who value the food / brand / hospitality rather than the highest bidder which tends to bring in out-of-towners, Amex centurion card holders, wannabe influencers -- people that don't help create loyalty

There are many other reasons I'm sure as well. Most chefs/GMs/owners I talked to at the time emphasized that they sincerely are not in this for the money, and yes, they like to make a living, but being able to build a community of food lovers who are passionate about their brand is what they really care about. I ended up pivoting to try to build a shift management app soon thereafter...didn't work out but a good entrepreneurship lesson!

[0]https://techcrunch.com/2014/07/03/everyone-seems-mad-at-rese...

[+] steveBK123|2 years ago|reply
I’ve thought the same in NY for a while. Any reasonably popular spot is now gates by an obnoxious reservation system like resy.

I have to check every Tuesday at midnight for the 5 minutes that the next weeks tables open up before they are booked. Then I have to put down a credit card. Next I get bombarded with push notifications and texts with increasing urgency leading up to dinner that I must show up on time or forfeit money. When I show up on time they don’t seat me but suggest I go wait at bar and buy drinks. Finally they seat me and remind me I only have the table 90 minutes.

You know what, just charge me for seats. Let’s just go completely nakedly economic because you’re already 90% there with extra steps in the way.

It is called the hospitality industry but you’d never know it given what the dining experience has turned into.

[+] paxys|2 years ago|reply
Plenty of high end restaurants in the city do this. The problem is that it usually makes things worse. If I want to book a dinner, and the restaurant has something like a $200 non-refundable deposit, I'm going to think long and hard before committing because my plans can always change. A bot on the other hand wouldn't hesitate because they can turn around and sell the reservation to anyone they want. The deposit is simply a cost of doing business for them.
[+] kenhwang|2 years ago|reply
My friends actually had a startup that did exactly this and had pretty great initial success.

Restaurants could pick how much they charged for reservations, whether that cost could be applied to a portion of the bill, or whether it was a straight up auction for spots.

They thought there would be pushback from customers, but the customer feedback was excellent.

The friction mostly came from the restaurants. They either had antiquated reservation systems (many on pen and paper) and didn't like the idea of letting software control their table planning (since free reservations could be cancelled on the spot on the whim by the serving staff but cancelling a paid slot really irked everyone). Or poor accounting practices that made it really hard for them to accept that a customer already prepaid $500 for a meal in another system that'll all be bundled in a big check later. Or that they couldn't be sketchy about customer tips if it's being tracked.

It was also difficult to scale the business quickly because every restaurant had to be trained and onboarded individually, and every restaurant had an unicorn of an operation that the software had to be able to handle.

[+] wenc|2 years ago|reply
I think Tock tried to do dynamic pricing for tables. (Tock was founded by Nick Kokonas a former Chicago mercantile exchange trader and co owner of Chicago-based Alinea). Alinea also has other ways to prevent no shows like selling tickets etc.

Tablz from Toronto does dynamic pricing.

[+] bombcar|2 years ago|reply
Many bars and such already basically do this - they call it "happy hour" and it's often a whole afternoon until the rush.
[+] heisenbit|2 years ago|reply
In my city in Germany they are now doing exactly that - no show must pay. While there is no flood of bots we have trade fairs and too many people hosting a group guests started reserving seats in Chinese, Italian, Steak etc. restaurants to later offer their guest a last minute choice.
[+] mmanfrin|2 years ago|reply
I literally built this for OpenTable.
[+] richiebful1|2 years ago|reply
I've been to a restaurant that already does this: pay $X a head, with that dollar amount applied to your bill. I want to say one of the big restaurant POS providers (maybe Toast) provided the infrastructure behind it.
[+] bradleyjg|2 years ago|reply
Many people get mad if these things are made too explicit.
[+] nurple|2 years ago|reply
Most restaurants will have a cheaper menu for lunch than for dinner. Nice places will usually have different menus, but many just serve the same for simplicity and cost.
[+] justinlkarr|2 years ago|reply
I think this is actually common now. I'm often asked to make a deposit on a reservation when using Resy.

I'm not aware that there is variable or dynamic pricing component to it, however. That's a great idea and something I bet they are considering.

In practice, dynamic pricing it is not a panacea. You still need to beat the arbitrage market. Charge too much: customers don't reserve. Charge too little: brokers snap it up.

[+] NikolaNovak|2 years ago|reply
I thought "Lunch Menu" and "Dinner Menu" were a way to reasonably implement precisely that.

On the other hand if it gets more granular... there may be no winning. Budget-conscious will feel they're being priced-out, and the fancy-rich will not go to a restaurant that nickle-and-dimes / seems desperate for every last cent.

[+] WirelessGigabit|2 years ago|reply
Weirdly enough restaurants don't want reservations. They want long lines.

That way they create a situation where you SEE how popular a place is. A line is much easier to see than a date dropdown that is booked out for 2 months.

It's also easier to keep the restaurant full. A full reservation where not everybody shows up might cause empty tables.

A long line fixes that.

[+] sva_|2 years ago|reply
> I've never understood why restaurants themselves don't charge for prime-time reservations. If scalpers can do it, the restaurant can too.

Some do charge something like $50 for the reservation. And if you can't come because there is a major blizzard in the city, tough luck ...

[+] rootsudo|2 years ago|reply
Many places do have a booking fee and then grant it as immediate credit. $20 booking fee, $20 in credit for drinks and whatnot.

It isn’t a new idea. Free outside hours, booking fee with credit during prime time.

[+] whelp_24|2 years ago|reply
Does this really sound like an ethical practice to you? This doesn't benefit customers at all. Especially if it is already expensive, why make it more expensive?
[+] websap|2 years ago|reply
Well artists do charge differently for different areas of the venue. One could argue that prime time dinner is equivalent to watching Louis CK from the first few rows.
[+] philwelch|2 years ago|reply
Aren’t these the same restaurants where you can get a table by tipping the maitre d? Or did that stop being a thing in the last ten years?
[+] wodenokoto|2 years ago|reply
High end restaurants in Denmark (like Noma) will charge you the full course at reservation time. No backsies
[+] spyder|2 years ago|reply
One of the reason is mentioned in the article:

"When guests drop $100 or more just to walk in the door, “people have [the] wrong expectation when they come” he says because those expectations might be unreasonably high."

[+] pradn|2 years ago|reply
There's an app called Dorsia, which lets you purchase seats at sought-after restaurants. The purchase is usually in the form of a per-seat minimum spend. They start at $75 per seat, but some go into the hundreds. This app solves a few problems at once: customers get to buy their way out of the seat-scouting process (keenly watching the apps for open reservations, walking in and putting their name on the waitlist, bribing the host, knowing someone with pull, etc), restaurants guarantee some of their seats go to high-spending clients (you could walk out with spending $35 at a good number of these spots), and companies have something to offer to their customers as a perk - Dorsia membership (the fancy gym chain Equinox gives their customers Dorsia access, for example). None of this is democratic, but that's the nature of luxury.

https://www.dorsia.com/

[+] jareklupinski|2 years ago|reply
every time i heard about this app, i thought it was a prank, because i saw the movie
[+] paxys|2 years ago|reply
Dorsia is fine for what it is, but doesn't really solve the problem at hand. High rollers can always find a reservation regardless of scarcity, and similar services like Amex Concierge have existed for a long time now. Restaurants however also have to care about the other 99% of their clientele.
[+] lotsofpulp|2 years ago|reply
> None of this is democratic, but that's the nature of luxury.

What does democracy have to do with allocating a scarce resource?

[+] steveBK123|2 years ago|reply
Maybe the market bifurcates into this willing to pay in money for tables like this vs those willing to pay in time (waitlist, walk in and convoluted reservation systems with small windows).
[+] well_actulily|2 years ago|reply
Jesus. Dorsia? On a Friday night?
[+] renewiltord|2 years ago|reply
That’s pretty cool. If it were an auction it could do price discovery even better.
[+] hn72774|2 years ago|reply
> It also sparked the idea of adding the admission charge to the food bill, so customers would not be asked for money at the door. (In his early years, Dimitriou had encountered profound resistance to a cover charge and he often operated Jazz Alley without one, feeling it set the wrong tone for the kind of fine dining establishment he was trying to create.) It worked, and music lovers in general began to view the club as an upscale destination for special occasions. By 2015, the Alley was taking in more than $3 million in admissions.

This is about Jazz Alley, in Seattle WA.

https://www.seattletimes.com/entertainment/music/how-seattle...

[+] jrockway|2 years ago|reply
So, there are a lot of comments saying that reservations should charge an up-front fee and apply that to the food, but I don't think that will work. First off, plenty of restaurants in New York do that and the problem persists. The underlying problem is that with scalpers buying reservations, they are proving that the market will bear a higher price. People that buy scalped reservations are paying the scalper a fee which WILL NOT be applied to their bill. That means the restaurant is undercharging.

The solution to this problem is to handle restaurant reservations like airline reservations. They check your ID before you can board the plane. No reason that restaurants can't do the same. People would be mad, of course, but that's the only way you can prevent a secondary market from setting the price. (They should do this for concert tickets and things like that as well. Artists intentionally sell tickets below market price so that their fans don't get mad at them, but economics simply doesn't all this to exist; someone will always step in to take the profit that you left on the table. By requiring ID, you can prevent the market from stepping in, because the pool of buyers goes down; only people that can get a government ID with your name on it can buy your ticket on the secondary market. John Smith is probably out of luck, but everyone else is fin.)

Overall, I don't think the restaurants have a particularly strong incentive to solve this problem. At the end of the day, they are made or broken based on filling up their tables. They do fill all their tables with the current system. So the next remaining hurdle is increasing "fairness". There isn't a way to do this without annoying someone. If they check IDs, someone will be mad that they had their ID checked. If they charge an entrance fee (i.e. a cost for the reservation that isn't applied to your meal), then someone is going to be mad. (The staff will also probably be mad; if you pay $100 for your seat, that's $100 less to tip with.) At the end of the day, I think charging market price on everything is the most fair. If people will pay $100 just to get in the door, they should take the $100. I would definitely pay it for special occasions; you can do it 6 times a year and still pay less than the annual fee on your Amex Plat card!

[+] justinlkarr|2 years ago|reply
Overall, I don't think the restaurants have a particularly strong incentive to solve this problem.

This is the identical to early perspective on the secondary market in event ticketing: a sale is a sale, our work is done.

That means the restaurant is undercharging.

Then you realize how much money you are losing to arbitrage and the work begins.

A couple of decades later, you have variable pricing, dynamic pricing, distribution to expedia, official secondary market partnerships, conferences, niche-y saas products, competing enterprise products, revenue managers, specialized masters' degrees, papers at INFORMs, revenue directors, VPs of sales and revenue,

and a bunch of people who just want to cook and eat

[+] standardUser|2 years ago|reply
I don't dine at places expensive enough to have encountered this issue. But I do like to dine frequently at high-demand restaurants. The issue I've noticed in NY is that the online reservation platforms have made it trivial for restaurants to require a credit card and charge massive cancellation fees. I've seen mid-range places with $50 fees per person if the reservation is cancelled with less than 24 hours notice.

The solution to the above shitshow is the same as the solution to these scalpers. The telephone. Few places will collect your credit card information over the phone for a reservation. And places dealing with scalpers can take names and inform guests that they will need to present ID on arrival. Not an entirely frictionless solution, but I think most people won't mind showing their ID if they are given advanced notice.

[+] tlonny|2 years ago|reply
On the subject of scalping, I've never understood why tickets can't be bound to a particular identity. I.e. if you buy tickets as "John Smith", only someone who can prove they are "John Smith" is let through the door.

In my head, this completely decapitates scalping as a business. Why can't this also be applied in other sectors (i.e. restaurant reservations)

[+] fwungy|2 years ago|reply
Charge a reservation fee that is can be refunded as a credit that can only be used at the restaurant. It will be deducted from your bill or can be used at a later date. Real customers won't object to that.
[+] karaterobot|2 years ago|reply
This doesn't seem like an unsolvable problem, they'd just have to bite one of a number of bullets to verify that the person who made the reservation is the person who showed up to the restaurant: restaurants insisting on strict identity verification for the reservation systems they use, or a rule that says the name on your credit card or driver's license must match the name of the person who made the reservation in order to be seated. People would naturally complain, but if the reservations are going for up to $300, I assume the restaurants have some leverage.

Or just go back to telephone reservations. If you hear the same voice calling over and over, you tell them there aren't any more reservations available. Imperfect, yes, but cheap.

[+] mmanfrin|2 years ago|reply
I worked at OpenTable and this was a problem we also encountered, and it was one of my own projects that was an attempt to combat this. This is one of those posts where I feel like I might actually be an expert but I also feel I can't really talk about specifics of projects for fomer employers :(
[+] dfxm12|2 years ago|reply
Instead of relying on these services like Resy, these places can go back to having to call for a reservation. I'm not a restaurant owner, so I'm sure what this tradeoff entails. You can also charge for a reservation, but not every place will be able to get away with that, as it will turn off legitimate diners, too.
[+] grumple|2 years ago|reply
High end restaurants in my city and a few European cities I've been to recently required reservations with payment up front. At worst, the restaurant still gets the money if someone (like a bot account) no shows. This would be a pretty high risk endeavor to use a bot to reserve at these restaurants.

Maybe restaurants should go back to requiring reservations over the phone or in person. Or require an ID to match the name on the reservation.

[+] MrThoughtful|2 years ago|reply
Are there others like me, who never reserve a table at a restaurant?

I find it much more fun to meet friends at a restaurant without a reservation. Less obligation to follow through. If one of us has a last minute idea to do something else, we go with the flow. If none of the available tables are to our liking, we go with the flow and go elsewhere. If there is no available table, we go with the flow and go elsewhere. So much more serendipity and freedom.

One time, we arrived at a restaurant and were told that there is no available table. Since I just read in a book that you usually can bribe the waiter, I jumped over my shadow, said "Maybe we can wait a few minutes and see if something becomes available?" and put a €20 note into the hand of the waiter. Pointed at the best table at the window and said "That one would be perfect of course". 5 minutes later, we were sitting at the table at the window. I was a nerve wreck and felt like a king :)

[+] forthwall|2 years ago|reply
I wonder if this can be resolved with:

* Real names on restaurant, just verify their ID. Then ban them from opentable/resy (might be harsh, but will disincentivize behavior)

* No transferring reservations, if rez is cancelled, hold the rez and release at a random time later

I know for ticketmaster, they have no incentive to put these guards up because they take a % cut for every resale, but for these apps; I think you can put some reasonable defenses, especially since most of the restaurants that face these issues have bills of a few hundred dollars anyway.

[+] justinlkarr|2 years ago|reply
From your friends in event ticketing: welcome to the struggle, and we're sorry.

I hope Resy figures this out, and I hope we're able to learn from (or license) their solution.

I expect their approach will look similar to our path: fight the secondary market with every legal tool, work with them when you can't, improve pricing algorithms to reduce arbitrage opportunity.

Customers on both sides of their market will probably be frustrated with each effort. They want to cook and eat, not "be in a marketplace". They will probably blame Resy.

The secondary market will probably engage legislative resources, attempting to tailor the law to protect their practices. They will probably do this "in the interest of diners". It will probably become illegal to restrict transfer of reservations, among other things.

Good luck y'all. Reach out if you need support. Love, Broadway

[+] alexpotato|2 years ago|reply
I remember a popular restaurant in NYC in the late 2000's had a "in person request for reservation only" policy.

The thought was that if you lived in the neighborhood, you would walk down to the restaurant around 4pm, make your reservation, go home and then come back for dinner.

In practice, this meant that if you wanted a spontaneous "let's go eat there" type of evening and you didn't live in the neighborhood, you wouldn't be eating dinner till after midnight.

[+] SergeAx|2 years ago|reply
Before the escalation of the Russian-Ukranian war in 2022, the Moscow and St.Petersburg restaurant scene was quite vibrant. Some places were challenging to book, etc. These were their ideas for making reservations still accessible:

+ Accept reservations by phone or in person only and ask for the patron's phone number. Then call back 1 hour before to confirm the reservation.

+ Make the most popular times non-bookable. You have to come in person and check how many guests are in a queue and how long you should wait for the table. Some people are okay to wait at the bar, others will head to less busy places.

+++ Open a spin-off of a popular place, and redirect the clients' stream there.

[+] mettamage|2 years ago|reply
Wait, is this even legal? I made a bot one time for a group of people I know to go to Noma. They invited me to come with them out of gratitude. They told me I could resell that. Other than personally finding it unethical, I also thought it'd be illegal to do so.

In any case, writing such a bot for a one time use-case (and just one reservation of which I was a part of) was fun!

[+] matteoraso|2 years ago|reply
I want to say that you can easily solve the problem by requiring a phone call, but with audio deepfakes, that might actually be really easy to circumvent with automated chatbots.
[+] CraigRo|2 years ago|reply
What I don't understand is why you can't require the holder of the reservation to show up or lose it. Destroys the incentive to resell it