Big changes in the reservations biz
A little Tock vs. OpenTable rift highlights some interesting evolution.
Maybe it’s not a ‘rift.’ But it is different.
When we talked in August, OpenTable CEO Debby Soo described her company’s latest effort to win top restaurants by re-explaining the reservations business. The stakes have changed, she said.
During a recent episode of my podcast, The Simmer, Soo gave a candid look at how OpenTable, which has been around for over a quarter century, is evolving — particularly via a partnership with Visa. Tl;dr: OpenTable knows that it needs to attract popular and big-name restaurants on its platform in order to stay relevant.
ICYMI, Tock CEO Matt Tucker lit a match a few weeks earlier when he described OpenTable’s newest partner effort as paying restaurants to join its platform. (Soo said that OpenTable does not pay restaurants to sign on but would not comment on any element of the Visa partnership.)
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Exact, hair-splitting details aside, this felt like an important moment in restaurant technology: the way reservations companies operate has changed. They’re going after restaurant customers with force to ensure the diners follow.
American Express acquired OpenTable competitor Resy in 2019. At the time, Amex said it planned to use Resy’s inventory and technology to give its cardmembers more benefits and experiences… which it has. But this deal also changed the industry calculus.
“We are playing a very different game than some of our competitors,” Soo said. “We are playing a restaurant reservations, table management software game. Our customer is the restaurant. The restaurants are the ones who pay us.”
With Resy in its purview, Amex makes money from restaurants offering reservations, too. But it also makes money also from diners-as-Amex-cardholders. And with a great roster of restaurants on its own platform, Amex can encourage access and spending by those cardholders at restaurants and special and exclusive events. That makes having the most desirable restaurants on the platform even more desirable.
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Back to OpenTable:
“So we decided, okay, well, to level the playing field, we’ve got to get in the credit card game to attract this segment of restaurants — and perhaps this segment of diners,” Soo said. (Her logic here was very clear: a great restaurant roster, not a great reservations app, brings diners to the platform.)
In fact, credit cards have become a serious force in the restaurant tech business.
Online ordering and delivery service DoorDash recently expanded a partnership with Chase, effectively boxing out its biggest competitor in the grocery business, Instacart. Credit card perks for things like takeout and grocery shopping have become almost as common as airline miles, in part thanks to the pandemic disrupting business as usual.
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As our dining tastes and needs have evolved, so have the cards. The earliest days of the Covid-19 pandemic left card issuers scrambling to add rewards and perks that represented our new stuck-in-quarantine lifestyles. Cards rewarded spending on groceries, on restaurant delivery. When I covered this four years ago for Eater, Benét Wilson, then credit cards editor for travel and loyalty site The Points Guy, predicted that card companies would struggle to roll back the pandemic-era rewards.
Four years later, this has proven true. We’re in a new era of card perks and points as these massive financial companies work to broker access to the restaurant experiences we love.
Another big change: now you can pay to get in the door.
Ah yes, the bots.
In early June, the New York State Legislature passed the ‘Restaurant Reservations Anti-Piracy Act,’ which fines third-parties who sell restaurant reservations without written permission from the restaurant. Rule-breakers can be fined up to $1,000 per restaurant listing per day, though it’s unclear how this would be enforced. The measure needs the governor’s signature before becoming law.
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The bill was introduced about a month after the New Yorker published an article highlighting the opaque world of nabbing a prime table, and how services built to score the bookings (and then resell them) can hurt some of the city’s most iconic restaurants. It explains how they’ve co-opted decades-long booking norms, boosted by new tech. (“What the actual F—?” asked one San Francisco restaurateur when confronted with such technology.)
There are likely some unfriendly consequences, even for those of us that don’t play with bots. Thanks to this newest crop of booking platforms — most operating without consent from restaurants and reservations services — are making it clear that the days of anonymous dining are probably over.
