There’s no such thing as a free lunch (or dinner). But should you pay up just to get a table at a popular restaurant?
A new wave of restaurant reservations apps suspects you might—particularly for the chance at a last-minute dinner at a hot spot that normally books up months in advance, or doesn’t take any reservations, generating long waits during prime dinner hours. Most are currently limited to New York City, with plans to expand.
“We think the opportunity here is to improve upon the overall experience of booking a table,” said Ben Leventhal, co-founder of new app Resy, which began signing on New York diners for beta tests last week. He likened the idea of paid restaurant reservations to last-minute access for a sporting event or concert, where prices fluctuate with demand. “This is something that diners have been waiting for, for quite a long time,” he said.
How much you’ll pay varies by site, and in some cases, just how in-demand a table is. Zurvu charges a flat $5 per person for a reservation, when available, at partner restaurants including Dirt Candy and Gotham Bar and Grill. At Killer Rezzy, the going rate is $25, with Friday night reservations available at popular spots including Nobu Fifty Seven, The Fat Radish and Red Rooster.
Resy plans to let its partner restaurants—including Minetta Tavern and Balthazar—set the fee, which is likely to vary based on menu prices, said Leventhal. Then there’s Shout, an app that lets consumers buy or sell their “spot” for restaurant reservations, theater tickets and other lines, setting whatever price they deem fair. Recent offerings included $30 for an 8:30 p.m. Friday reservation for two at The Spotted Pig.
Pay-to-book restaurant apps have popped up occasionally over the years, with limited success, said independent restaurant consultant Aaron Allen. “We’ll see more of these kinds of apps, but I don’t think there’s a very successful model that works well in the long term,” he said. It’s a tough proposition to sell to most consumers, who would rather visit one of the dozens of other restaurants in a neighborhood that do have open tables.
Plus, companies can find it hard to retain paying customers once a restaurant’s popularity has waned—to continue building the business, they need to always be on the lookout for the next “it” spot, said Brad Spirrison, managing editor for review site Appolicious. “Not every restaurant will be coveted, that you’re going to have this secondary market for reservations,” he said.
There’s also some risk of industry backlash for sites that scalp reservations at restaurants that aren’t partners, giving buyers an assumed name to use when checking in with the hostess. Partnerships generate more traffic, but they’re harder to come by, he said. Another reservation app, Food for All, shuttered after just a few months of selling reservations. According to a post on the site, “We had hopes of partnering with restaurants but have found that they are very resistant to the idea of selling reservations.”
Paying for a reservation may be an even harder sell for consumers with several sites and apps already offering to help them save money or cut their wait to dine at popular restaurants.
Groupon Reserve (formerly Savored.com) offers discounts of up to 40 percent for reservations at partner restaurants in 13 cities and regions; on Tuesday evening, its New York tables included Le Cirque and Delmonico’s, both 20 percent off. GDine.com, in Chicago and New York, lets diners book tables and access exclusive fixed-price menu deals. They can (but are not required to) pay for the meal in advance.
OpenTable.com users earn 100 points—and in some cases, 1,000—for each free reservation, with rewards starting at 2,000 points, for a $20 dining check. The company is also running a pilot program called “Hot Tables,” which sends text alerts to would-be diners if the reservation they want at a booked-up restaurant becomes available. Currently, it’s available to select users in Houston, Los Angeles and New York.
On the time-saving side, there’s the app NoWait, which works with 1,000-plus restaurants nationwide, none of which take reservations. “We like to think of ourselves as the anti-reservation app,” said chief executive Ware Sykes. Users can virtually add themselves to the waitlist for a table and track their place in line. They’ll also receive a text message when their table is ready, if they don’t want to wait within earshot to hear the hostess holler their name.
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Of course, there’s little overlap on restaurants available through pay-to-reserve apps and those via free or discount booking sites—and when there is, those free tables are often hard to get. At some hot spots, the next freely bookable prime-time table might be literally weeks or months out. (Hence the appeal of paying.)
For example, Killer Rezzy has an 8:30 p.m. table at Nobu Fifty Seven for four people on Friday, June 20. OpenTable.com, meanwhile, only had an opening for a party of that size at 11 p.m.
At least some pay-to-book apps aren’t ruling out discounts down the line. “If the model is going to be truly efficient and the economics are going to work, then there will be some tables that are valued at plus-$200 and some that are valued at minus $50,” Leventhal said.
—By CNBC’s Kelli B. Grant