Tock’s leader talks competition
Tock’s leader talks competition
“Writing a check to my prospect? That works pretty well!” — Matt Tucker, on sales
Competing reservations apps spent the last decade highlighting their differences, but during that time they’ve actually become more alike.
The biggest services — OpenTable, Tock, and Resy — hooked a reservations-hungry public on the convenience of booking online. They sold restaurants on the power of their networks, technology, and marketing support. Now that they have the functionality down, they’re looking to expand the quality and quantity of restaurants that use their services, and the stakes have never been higher.
That’s a dramatic line for Expedite, but it’s an eventful time for the reservations business. Last month, OpenTable announced a huge partnership with Visa that will grant some Visa cardholders exclusive access to reservations and special events. It also debuted a new top-tier designation for some restaurants on its platform, granting them ‘icon’ status, a nod that comes with extra perks. A few weeks earlier, American Express, already the parent company of booking app Resy, announced its plans to acquire Tock, a Resy competitor, for $400 million.
This — all of this — is the backdrop for a conversation with Matt Tucker, the CEO of Tock, on the latest edition of my podcast, The Simmer. Consider this newsletter additional context to that recording.
During the interview, Tucker wasted no time punching up at Tock’s biggest competitor, offering particular details of OpenTable’s latest pitch to restaurants. After we recorded the episode, I reached out to both OpenTable and Visa for confirmation, but didn’t get it. Reps for both companies declined to comment on the details of their partnership or Tucker’s comments; a representative for Visa did add that the Visa Dining Collection and OpenTable Icons are different programs, and not all restaurants are part of both. (Here’s my coverage of the initial announcement.)
Tucker said that he’s spoken to restaurant owners who have been offered free or reduced-price OpenTable software subscriptions, in some cases covering years of the service. (OpenTable charges restaurants $499 per month for its top-tier Pro plan.) Additionally, Tucker said restaurant owners told him they’ve been offered cash payments — as much as $250,000, he’s heard from restaurants — to sign on to OpenTable and hold tables for guests who book through the Visa partnership. A pitch deck sent by OpenTable to one restaurant and later shown to me confirms this pitch, though the figures included in that particular deck were lower than Tucker claimed.
“I don't know how restaurants would say no to an offer like that,” Tucker said. (It’s worth mentioning again that both Visa and OpenTable declined to confirm or comment on the details of their partnership.)
In the decade-plus I’ve spent on the restaurant tech beat, I have heard so many whispers and rumors and assertions that restaurant technology companies give away their products to restaurant customers in order to grow.
Sometimes (like this time), those assertions come from competitors. Sometimes, the information comes from restaurants who’ve said yes to the deal but don’t want to talk about it. I don’t always report them because they’re (in my opinion) relatively common and tricky to confirm on the record. You’ve probably heard these whispers, too. Maybe you know more about this tactic than I do!
As we started to record this episode, I decided my podcast co-host, Brandon Barton, former head of sales at Resy, definitely knows more than I do. So I asked: Did he give restaurants free access to Resy in its early days in an effort to grow faster?
“We didn’t,” Barton answered, “but we charged so much less than OpenTable that the decision was very much about price. So if they decided to neutralize our price advantage… we would’ve been screwed.”
Or, as Tock’s Tucker said later: “Writing a check to my prospect? That works pretty well!”
I didn’t interview the top Tock executive solely for his thoughts on the competitive market, though he has plenty.
But as we talked, I realized that the game has changed. Or, more accurately, the players have. Two years ago, at about the time Tucker took over at Tock, the New York Times ran a reservations apps explainer. It began with an analogy: OpenTable is economy. Resy is premium economy. Tock is business class.
The crude airline comparison was a nod to the apps’ respective market shares and to how diners perceived the services. OpenTable has always had more restaurant customers than its competitors. (Think: bookings for the masses.) Resy launched by sidling up to new, notable, and otherwise trendy restaurants, starting in the center of the dining universe New York City. And Tock was born at Chicago fine-dining stalwart Alinea, initially targeting high-end, mostly prix-fixe restaurants that could sell out a dining room like a Chappell Roan concert, weeks or even months in advance.
These early distinctions are no longer serving reservations companies, Tock included. During our interview, Tucker admitted that Tock’s initial value proposition, its focus on prepayment at a certain type of restaurant in order to combat diner no-shows, limited the company’s early growth. Over time, Tock branched out from its prepaid ticketing model to support small reservation deposits, which the company says also dramatically reduced no-shows. (Tock, in particular, loved attacking this no-show rate, but every bookings service claims to improve this metric.) Eventually — and begrudgingly if I remember correctly — Tock started to support free, so-called ‘standard’ reservations, too. But it was slow to add others, like credit card holds, which Tucker says Tock introduced “very recently.”
“We had a religious perspective that that was not something that was going to help the restaurateur and was not going to solve the no-show problem,” he said. But when Tucker arrived at Tock, he said this was the number-one reason restaurants left the platform for a competing service.
Now, the largest reservations companies have, more or less, the same functionality.
Instead of competing for segments of the market, they’re competing for restaurants to add to their platform. And, as I wrote a few weeks ago, restaurants bounce between booking services for plenty of reasons, potential perks, recognitions, financial incentives, and big-deal partnerships among them.
Tucker said he’s excited for Tock’s future with Amex, though declined to speculate on exactly what it might look like when two of the most prominent booking apps join forces. Together, he points out, Resy and Tock are still smaller than OpenTable.
He’s also confident about Tock’s ability to stave off the booking bots and other upstart reservations ventures vying for a slice of Tock’s business. Take, for example, a startup that charges diners to pick a specific table for their reservation, a service that appeals to a certain type of restaurant with a particular type of diner.
“That’s a feature,” Tucker said confidently, “Not a company.”
This is just a small part of my conversation with Matt Tucker. Listen to the full version — and come deep, deep in the reservations weeds with us — on Spotify.