Our Future, Reserved
This originally appeared in the April 30, 2020 edition of Expedite. Subscribe here.
Some recent changes from reservations services could be giving us a look at what to expect from full service restaurants as they begin to reopen.
Today, Resy announced a new set of features for restaurants, including a digital waitlist (available May 13) and a capacity monitor to help control the flow of diners and reduce crowding. It’s the latest example of how restaurants might use technology to adjust to operations as restrictions are eased in coming weeks and months. In an email sent to restaurant partners, Resy said that, according to its own recent survey, 52 percent of diners would return to a restaurant in the month after its opening.
Reservations services have recently pivoted offerings to stay relevant amid big changes. Now that it looks like some of these big changes will stay with us for a while, they’re adjusting further. In the near term, at least, it looks like bookings will be more than just a useful way to gauge business; they’ll be a way to manage dining room flow and traffic, and understand who, exactly, is dining in a restaurant. They will help as restaurants grapple with new floor plans, reduced occupancy, and the responsibility of needing to get back in touch with diners after a meal for any reason.
Still, a return to dining doesn’t mean a return to business as usual for these companies. Kayak and OpenTable, part of Booking Holdings, reportedly laid off, furloughed, or reduced the hours of 400 of its workers (it’s so far unclear which parts of the companies are the most affected.)
Last week, OpenTable announced new pricing for its product. The company had said it was testing a new pricing strategy for a while. New pricing is in line with OpenTable’s previous strategy: a monthly fee plus a per-diner charge. Plans start at $29 per month plus $1.50 per diner ($39 per month for a month-to-month contract). Restaurants that sign on to the new pricing strategies pay no subscription fees through the end of 2020 and no per-diner fees until October, though they’ll have to commit to a contract through the end of 2021. The new structure is also more in line with its competitors, offering three tiers of features. The most expensive plan, integrating customer relationship management, robust guest profiles, and automated email campaigns costs $449 per month plus $1 per “network cover.”
The company is also circulating a survey asking about current takeout and grocery shopping habits, future restaurant usage, and about what restaurants could do to make diners feel safe. (Some of those options sound kind of unappealing: assess the conviviality of “hygiene-wrap table settings.”)
Tock, which started as a ticketing service for restaurants, and later, events, might particularly well-positioned to flex for future changes. By its nature, ticketing requires diners to commit to a meal by paying for it up front. Restaurants know who to expect and when to expect them, and can manage demand accordingly. (Tock also offers free reservations, and, most recently, a to-go offering that’s taken off in popularity, especially at restaurants that didn’t offer takeout previously.) Prepaid deposits — also a Tock hallmark — could also up a diner’s commitment to a dine-in restaurant meal, giving a business even more indication of who to expect, and when.
I’m curious if this will also lead restaurants, especially those with good walk-in business, to promote reservations more. Included in Resy’s new announcement is complete fee relief until the end of the year, including new customers looking to take advantage of the new features that might make it easier to manage guests.
It’s sad to think that casual dining culture — dropping in somewhere to sit at the bar, down a plate of oysters and a crisp white wine (or, maybe more realistically, a few IPAs and some mozzarella sticks, but I’m dreaming big right now) — might be put on hold. It feels like everything is going to have to get a little bit more formal — at least for a little while. The good news is that we have the technology to be able to manage this, and the better news is that these companies are making it more accessible for any business to use.
Restaurant Loyalty in a Pandemic
If those free sandwich punch cards were headed out of fashion a few months ago, they’re almost certainly gone forever as we embrace our contactless future. With many restaurants closed or seriously limiting operations, customer loyalty already looks a lot different. Los Angeles-based ChowNow is offering its restaurant customers another way to engage with loyal guests, and it’s a way that they’re hoping will help to carry these businesses through the tough month, and probably years, ahead.
Today, the company formally announced a new loyalty initiative: a program that invites guests to purchase a one-year “membership” at a restaurant in exchange for an ongoing discount of up to 25 percent per order. All of the money collected from membership fees goes directly to the restaurant immediately, according to the company. 650 restaurants have signed up so far, with 20 piloting the program. This blog post explains more.
ChowNow has already seen huge growth in its online ordering platform for restaurants. (On a recent weekend, according to Christopher Webb, the company’s CEO, ChowNow processed 700,000 orders.) It’s positioned itself as the anti-Grubhub, charging restaurants a monthly fee to accept digital orders instead of the per-order commission rate.
What else is happening?
Remember Congress questioning Amazon about whether or not it used data from third-party sellers on its platform to inform its own product development decisions? The Wall Street Journal reported last week that several Amazon workers said that yes, in fact, the company did use this information. That’s… not good for small business. Now think about how this could translate to restaurant food delivery. The big platforms have huge amounts of data on what customers want, what they’re searching for in any given location, and what they’re ordering. It’s even been a selling point for these services: “Hey, local restaurant! You should think about doing a second, delivery-only fried chicken concept because so many people in your area are searching for fried chicken.” Now consider these services potentially investing in or opening up their own concepts based on consumer demand. Is it really that different from Amazon competing against smaller sellers using a small business’s own data against itself?
No surprise here: as publicly held restaurant companies begin releasing first quarter earnings, they’ve noticed upticks in digital ordering and sales. Larger chains have been chasing this metric for some time. Chipotle, which I consider one of the prime examples of digital success, said that its digital sales made up over a third of sales in March. At Taco Bell, digital orders make up 10 percent of sales. KFC said that a quarter of sales could come through digital channels by the end of the year. There’s still so much more to come on digital adoption rates, impacts on sales performance, and any shift in consumer behavior that looks to be permanent. The first quarter ended in March, so second quarter earnings reports might paint a more realistic picture of this future, both short- and long-term. I don’t like to traffic in hypotheticals, but as delivery platforms see unprecedented interest and growth, it’s worth thinking through where all this information will point in the future.
Here’s a weird sentence: TikTok donated $2 million to the James Beard Foundation Food and Beverage Industry Relief Fund. Definitely not bad weird. Good weird! Would be nice to see other well-funded tech companies follow suit. (The JBF fund is still accepting donations, large and small. Here’s the link to donate.)
