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The risks and rewards of selling dinner reservations

Tracey Samuelson May 28, 2015
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The risks and rewards of selling dinner reservations

Tracey Samuelson May 28, 2015
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The Eddy, in New York’s East Village, is the kind of place that manages to make tater tots feel fancy — they’re made with bacon and topped with an English pea puree. The décor is modern, but also a bit rustic, and since its dining room only has 30 seats, reservations tend to book up.

Nearly every week, owner Jason Soloway says he gets an inquiry from some startup hoping to help The Eddy solve problems, both real and imagined. The restaurant industry, like many others, is in the midst of a tech makeover. Tablets are replacing waiters at some restaurants, startups want to streamline tasks from hiring staff or ordering food. Restaurant goers have long been able to book reservations online, but a handful of apps and services now offer up often difficult reservations for a price.

The Eddy has partnered with Resy, an app that sells reservations in New York, Los Angeles, Miami and Washington D.C. Soloway sets aside a table or two at peak hours for the app to sell for $5 per person, a fee he splits with Resy. On a $10 reservation, after the Resy’s cut and fees, Soloway estimates he’ll take home $4 or $5. That additional revenue is part of the appeal, as is the marketing and promotion he gets from being on the app.

“The risk is we have to hold that table for [Resy] up until usually 6 o’clock the day of the reservation,” Soloway says.

If the reservation doesn’t sell, he then scrambles to fill the table or lose money.

Interactive graphic by Tony Wagner

But Resy’s not the only app selling reservations at The Eddy. Unbeknowst to Soloway, tables at The Eddy are also listed for sale on Shout, a marketplace for many of different things, including restaurant reservations in New York City, in-demand sneakers, and event tickets.

Unlike Resy, Shout doesn’t work directly with restaurants. Rather, an individual user makes a reservation they then sell to other users on the app. Shout runs basic background checks on its users, processes payments and holds their funds in escrow until after the time of the reservation to ensure their legitimacy.

“It’s entirely peer-to-peer,” says Zachariah Reitano, one of Shout’s founders. Some users are just looking to sell a reservation they made and now can’t use, while others, “the power sellers, sort of see themselves as personal concierges.”

The same way powerful executives might have their assistants book reservations for them, Reitano says, for a small fee, other people can get a similar service. If restaurants don’t want to be on the platform, Shout won’t remove them, but it’ll let users know they’re going against the restaurant’s wishes. They also ban buyers who no-show.

“We really don’t want facilitate new types of exchange that hurt other people’s business,” Reitano says, adding that there is a market here; people are willing to pay for these reservations.

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