Oh hey, reservations services. U OK?
I was too optimistic thinking big changes would come to the way we book restaurants.
It’s been over a year since I wrote an Eater piece detailing how, exactly, reservations services planned to get through the pandemic. In the short term there were price breaks for restaurants and pivots to the products; consumer campaigns and the backing of relief legislation. If there was ever a time to reset with different priorities and features and a new sort of social contract, this was it!
Instead, the industry sort of flipped upside down. Tock sold itself to website provider Squarespace for $400 million, the valuation pegged to the rapid growth and potential of Tock’s to-go product.
Amex bought Resy in 2019 for an undisclosed sum, though I’ve heard it’s in the same ballpark. (Or maybe in the same football stadium, I guess it depends how big of a ballpark we’re talking about.) The outlier of course was OpenTable, which was acquired by Booking Holdings for $2.6 billion in 2014, but whose value was later cut down by a $900 million write-down by its parent company. Now, these companies are moving beyond basic reservations into things like bar bookings, takeout, and special chef collaborations and offers.
How much does the Wall Street valuation of a large restaurant tech company matter to the restaurants and consumers it serves? Maybe not much, at least not directly, but those dollar amounts are an indication of future promise. I thought maybe the pandemic would prove reservations and table management software to be indispensable — they could aid in contact tracing, planning, some sort of social contract between diners and restaurants… something. This was, perhaps, quarantine-induced rosy thinking.
For all the promise of a new beginning we’ve landed back to where we were in 2019, before living through a pandemic that beat us down and zapped much of our faith in our fellow humans. (Just me? Can’t be.)
OpenTable released some survey data last week including this kind of insane statistic: 28 percent of people surveyed copped to ghosting on a restaurant reservation in the last year. Yes, in the last year, over a quarter of people who took time out of their day to answer a brief survey couldn’t be bothered to, you know, cancel their restaurant reservation.
OpenTable shared this number as part of a larger initiative aimed to reduce no-shows and a new tool that lets restaurateurs label guests as potential ghosting risks based on past activity. (The kind marketing implication here is that a restaurant can take extra steps to confirm a guest’s attendance but maybe it’s best used to plan for occupancy and availability during any given service.) OpenTable also maintains a generous four-strikes-you’re-out policy, which suspends someone who skips out on four reservations, an alarmingly kind offering for a platform that makes it super easy to cancel or adjust a booking — or to contest one that you’ve actually shown up for but wasn’t marked as such. (Been there!)
Data shows restaurants appear to be recovering. In some numbers released Wednesday morning, Yelp says the restaurant business has returned to 86 percent of 2019 interest levels in its most recent report. (That is, consumer interest in restaurant businesses on Yelp is almost where it was before this whole thing started.) A few weeks ago, Yelp said its own reservations service sat an all-time high number of diners in May, up 48 percent from May 2019.
That’s the good news. The bad news is that even after over a year of operation in some of the most dire conditions in history, some restaurant customers can’t be bothered to modify their economically harmful behavior. On Twitter, industry site Restaurant Manifesto described a reservation as a “breakable contract” between diner and restaurant in what is essentially a rehashing of the same problem restaurants have had forever and ever.
Of course, anyone who’s spent any time reading about reservations knows that Tock founder and CEO Nick Kokonas pushes prepaid bookings and nonrefundable deposits for this reason. In his latest here’s-how-to-do-it tweetstorm, he mentions (again) that just a $5 deposit is more effective than holding a credit card number in reducing no-shows. It’s different than it used to be — reservations as a slightly-less-breakable contract, but it makes it a little more fair.
It’s sort of the same point I’m getting to here. If it’s nice things we’re after, changing the nature of a contract between business and patron that’s too often broken is the only way to go. Reservations tech is but one tiny piece of the way restaurants will move into the future, but unless it evolves to something immediately useful and profitable it risks becoming obsolete.
San Francisco is about to permanently cap delivery fees
The city’s board of supervisors unanimously voted in favor of a permanent fee cap of 15 percent, though some details are still being worked out as it heads to the mayor’s desk. Those details include specifics on marketing and other fees companies can charge.
For its part, DoorDash’s executives have said that this sort of legislation and regulatory behavior didn’t influence the company’s new tiered pricing options, buuuut if you take a look at them they’re a pretty good hedge against the type of regulation the city of San Francisco is likely to set in motion in municipalities across the country.
What else is happening?
Wix adds direct ordering and reservations functionality with a mobile app. Wix, the website development platform, released Dine by Wix, a mobile app for customers to “engage and transact” with restaurants through direct orders and reservations booking. Earlier this year, Wix acquired a company called SpeedETab to integrate point of sale and other technology into its own system, and the new offering facilitates all-important direct ordering for businesses. It also means that restaurants can tie existing vendors like OpenTable to their Wix sites. (Real big Squarespace-buys-Tock energy here, have to say.)
Heads up, drone delivery is here. Fast food chains are turning to once-futuristic drones and robots as a cost-effective, efficient and environmentally friendly alternative to traditional delivery services. California-based El Pollo Loco plans to launch drone delivery this Thursday, becoming the first national chain to do so. The company, which has partnered with Israel-based logistics company Flytrex, will expand drone delivery to at least 10 more locations later this summer, leaving its competition likely to follow suit. Flytrex CEO Yariv Bash questioned the idea of paying someone to drive a few pounds worth of food: “Once drones become a reality, then there’s no turning back.” (Walmart also invested in a drone startup last week.)
- Danielle Hyams
The thigh’s the limit! Wingstop is the latest brand to join the explosive virtual brand trend with its new concept, Thighstop, which offers bone-in and breaded boneless thighs in Wingstop’s signature flavors and will operate inside 1,400 of the restaurant's locations.
‘Tis the week of chain restaurant loyalty programs. McDonald’s finally unveiled its loyalty program after months and months of testing — the chain’s first (!) in the U.S. It’s a fairly simple points-for-dollars-spent operation, underscored by the chain’s investment in digital technology. Popeyes unveiled its own loyalty program, too, with a similar structure. And Chipotle introduced some tweaks to its nearly 23 million customer-strong program, making it easier for program members to earn free food. Go get those points!
Uber Eats will add a price disclosure in some markets. Following requests from attorneys general in Pennsylvania and Washington, D.C., Uber Eats will add a disclosure that the cost of food in a third-party app might be higher than those at the restaurants. The disclosure will only appear in those markets — for now.
Sweetgreen will IPO this year. The tech company that happens to be a restaurant (or maybe the restaurant that’s really a tech company) has filed paperwork for an initial public offering. It has around 120 locations including a soon-to-open drive-thru concept in Colorado.