Get Ready to Start Paying for Dinner Upfront

Photo (cc) by Jamie McCaffrey

What would happen if arranging to eat out was more like going out to the movies?

It would cost you — upfront.

That prospect of paying for a meal before you dine is now becoming reality, thanks to technology. First came OpenTable, a service that allows diners to make restaurant reservations online through its website or app.

Now, ticketed reservation systems are emerging, allowing restaurants to charge a deposit or require a meal to be paid for in advance before a diner can make a reservation.

Northwestern University microeconomic theorist Jeffrey Ely tells CBS MoneyWatch that the technology transfers all the risk to diners:

The main issue is trying to manage risk, trying to incentivize patrons to keep their reservations …

These are things that have always been goals or needs of the restaurant market. The only reason they’re now manifesting themselves is that the technology is there to make it possible.

Nick Kokonas, co-owner of a trio of Chicago restaurants who helped pioneer the ticketed reservation model, tells CBS he estimates that about 90 percent of people who make unpaid reservations show up. People who make a deposit or purchase a ticket “show up at a much greater rate,” he says.

Kokonas uses a software program called Tock and expects to launch a commercial version this summer.

Mathew Freid, general manager of Bogie’s Place in Boston, tells CBS that the 16-seat steakhouse’s no-show rate drops to zero when reservations are paired with a technology called Reserve.

Launched in public beta by startup Expa last year, Reserve is a self-described “digital concierge” that charges a $5 fee to book a reservation.

Other restaurateurs say apps like Resy and Table8 also drop no-show rates to essentially zero.

Technology can backfire, though.

According to the National Restaurant Association, credit card reservations can deter some potential customers:

If you require a deposit on a reservation, be sure to seat guests promptly when they arrive, or you could lose valuable repeat business.

When the restaurant Volver opened in Philadelphia last year, its prepaid ticketing system became the first for that city. However, the effort was short-lived, abandoned for a traditional reservations system.

Scott Steenrod, vice president of operations for the Garces Group of restaurants, which includes Volver, tells CBS that Philly’s market wasn’t ready for it:

But it’s a movement that is very real… As ticketing gains awareness in the general public consciousness, combined with a platform that’s simple and easier to do, it will become more accepted.

Disclosure: The information you read here is always objective. However, we sometimes receive compensation when you click links within our stories.

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