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Resos vs. Access Apps vs. Tix: More Than You’d Ever Care to Know

Ticketing for restaurants has been in the news a lot lately.  Here are just a few articles:

Ticket to dine – the restaurant reservation revolution

Are restaurant tickets the new reservations

Alinea’s ticketing system soon commercially available

It took a while for the media to catch up – and for start-ups to get in the game – but in fairness it was reported a while back as well:

Business Week

How Nick Kokonas is shaking up fine dining

New York Times

It’s been interesting to field the recent influx of emails and calls from the press, app developers, established software companies, and a handful of VCs.  Ticketing for restaurants – and more generally variable and/or dynamic pricing – is something that we’ve been wrestling with for years.

And the press articles have been frustrating to read, simply because they never include real data and they miss the differences between ‘tickets’, ‘reservations’, and ‘pay-for-access apps’… all of which are very different and have different implications for restaurants and customers alike.

This is my attempt to outline exactly what we’ve done with restaurant tickets, why it’s interesting, and the results of the experiment… along with real data from our restaurants.  People tend to treat business data as something that shouldn’t be shared, but I don’t really see the harm in openly examining the data.  So the numbers provided are the real numbers from Alinea, Next and the Aviary.

First, some background and psychology.

The Background Story – Warning:  Long

We began selling tickets right when Next opened in 2011.  It seemed, at the time, risky and speculative to open a restaurant and at the same time pioneer a new way of booking customers.  But after watching the absurdity that was the Alinea reservation telephone lines day after day for years it seemed worth the risk.  There were massive problems with the traditional methods of taking reservations over the phone:

  • A high volume of calls, especially around the days we would open a month’s reservations book, meant that callers often could not get through.  One time so many people called that the entire 312-867 exchange went down.  AT&T asked us if we were running a Groupon.  Ha!
  • 3 full time employees answering phones, mostly to say ‘no’ to potential customers since 70% of people request the same times:  Friday and Saturday prime times.  This was costly payroll, costly phone lines, and, most importantly, frustrating to the callers.  Saying ‘no’ to a potential customer is never a good thing.
  • No shows running at around 8% or more, depending on the time of year, meant that both potential customers on the wait-list and the restaurant itself were unfairly penalized by a small and thoughtless minority of diners.  This cost the restaurant several hundred thousand dollars per year in revenue.  And unlike an airline a restaurant cannot double book a table (or should not, some of course do just that).
  • Voicemail boxes with 100+ messages meant that it was a full-time job just to retrieve and call back customers… often to say that nothing was available or to play phone tag for days.
  • Customers felt like they were being lied to.  How could you be booked 2 months out on a Thursday?  There was no transparency to the system.

As an outsider to the restaurant industry this seemed to me a very antiquated way of doing business.  There were of course software programs to address the management of information about a customer and their booking, most notably OpenTable but also some small, less known start-ups.  Back in 2004 the process of purchasing the software, setting up the system, leasing hardware (!), training staff, and using the system felt very much stuck in the 1990’s – today it feels even worse!  It was a bit like an IBM salesman from an 80’s movie coming to sell you enterprise software complete with the sales brochure, your ‘package’ options, a wink and smile.  And of course these systems were ‘sticky’ in the sense that once you became a user you tended to stick with the system you bought – after all, your customer information and reservations for the next several months, as well as your customer history, are already in that system.  That bodes well for the business selling the software, but very poorly for any future innovation or features, an open API option, extensibility, or adoption of new hardware such as tablet computers.  Change would be slow to come and would only happen if the business itself were threatened.

There was also friction from within our own company.  Alinea was the first restaurant I was ever involved in and our own managers viewed me as an outsider to hospitality – and in many ways rightly so.  When I said, “We should just sell tickets,” it was mostly laughed off completely.  The attitude was – that’s not fine dining, that’s not hospitality, that’s not soigné.

The concept of Next was so far afield of a normal restaurant that it was an opportunity to do something very different with the booking process.  Though I hadn’t the faintest idea how we would sell tickets, Grant and I included the line:  “Tickets, yes tickets, go on sale soon…”  in the announcement ‘trailer’ for Next.  That was meant to do three things:  1) gauge the reaction from potential customers; 2) create interest and controversy; 3) force us to actually follow through.

(see  the 1:17 mark for the ticket announcement, in full vaporware form)

I assumed at the time, about a year before we opened, that I would simply adopt the ticketing software from a theater system, sports ticketing software, or event tickets to use at Next.  But it was immediately clear that none of these would work.  Restaurants have a very different type of seating template than a theater show or sporting event.  None of the ticket software systems met even half of our needs.

I then contacted a number of the existing reservations software companies to ask if they wanted to either open their API to us, or partner on creating a ticketing extension to their system.  All said no.  Actually, no is too kind a word.  Dismissive is far more accurate.  One of the big players told me, “We studied that years ago and concluded no one wants or needs it.”

Finally, I contacted several developers I knew personally.  They all found it to be an ‘interesting problem’ but also a difficult and expensive one to solve without a clear business plan.

About six months before Next was due to open I hired a single programmer and laid out visually, as a flow chart, what the system needed to do.  Talk about a lean start up model!

Fast-forward to a few days before Next’s opening night and we still hadn’t fully tested the system.  Building the software proved to be far more involved than either of us had imagined.  As well, 18,946 people had signed up to be notified when tickets went on sale, the press was hounding us about the opening, the usual pressures of building the restaurant and the opening night (just like the TV shows depict!) were on our shoulders, and one really important guy – chef Grant Achatz – kept calling me to ask how many people were going to show up for our first service.  All I could say was “Plan for a full house,” but really I had no idea.  When Grant pointed out to me that we didn’t even know if anyone would buy a ticket, ever, for a restaurant all I could say was, “What do we have to lose?  If no one buys a ticket we just open the phone lines and take reservations.”  That we had no phone lines ready was something we neglected to talk about.

Despite bugs, website propagation issues, and everything else that could possibly go wrong on a software launch – on the very day of the Next opening – tickets went on sale.  So many people logged on and bought tickets so quickly that I simply couldn’t believe it.  The table codes would turn from GREEN (unsold) to RED (sold) on a page refresh literally the instant I ‘unlocked’ a table.  I immediately called Grant:  “You have to come to my house, now.”  Grant responded, “We’re opening a restaurant tonight, I can’t.”  “Please come now.”  “No.”  “You must.”  He did.

I showed Grant how to click on a table on the calendar page to ‘turn on’ a ticket for a table.  He did and it turned from YELLOW to GREEN.  I then refreshed the page and it was RED.  “What happened,” he asked?  “It sold.”  He did it again, this time 2 months out on a Wednesday night at 9:30 PM.  Same result, instant sale.  “There are 8,432 people on the system hitting the refresh button right now chef.  As soon as you unlock one, it sells.  Here, look.”  I opened another window with our credit card processing transactions listed.  $ 57,293  in sales in the first hour of the system.  $ 358,483 in the first 24-hours.  Two days later $563,874 of revenue was in our bank.

It seemed that patrons would indeed buy tickets to a restaurant.  A few months later I took this video of 72 tables being sold for the last few weeks of our Paris 1906 menu.

(There is no way anyone could ever do that over a phone.  It would take an army of reservationists and a totally new kind of reservations software.)

Alinea moved to ticket sales in August of 2012.  Aviary, essentially an a la carte restaurant for cocktails, began selling tickets in November, 2013.  Trois Mec in Los Angeles and Elizabeth Restaurant here in Chicago have been beta testers for over a year each.

About our system and what it does right

That background story is important to understand because it illustrates the problems we are trying to solve and the process of getting there over many years.  As I’ll show below, the current batch of ‘tickets for restaurants’ apps attempt to solve only the customer-access-to-busy-venues issue.  That’s important to keep in mind as it does little to nothing for the restaurants themselves and it feels ‘off’ to the customers.  And the way to get tickets right for restaurants and patrons has as much to do with human psychology as it does with economic practice.

Here’s what our ticketing system does right:

1.  It creates transparency of process for customers and builds trust and loyalty.

I like to say that traditional restaurant reservations are predicated on two people lying to each other.  The restaurant says to the customer, ‘you’re all set for 8 PM for 4 people this Saturday night’ knowing full well that they won’t have turned the 6 PM table by 8 PM… at which time the arriving customer is told to wait at the bar (as depicted so well in the Sex and the City episode below).  In fact, this is actually a strategy for many restaurants.  Let the customer buy a drink before being seated – it’s an upsell and everyone has experienced it.  The customer, having been lied to so often doesn’t feel terrible about not showing up.  After all, there are plenty of people to ‘fill that table’ anyways.  This creates a cycle of subtle mistrust and becomes a problem for both the customer (bad service) and the restaurant (no shows, partial no shows, bad service).

That mistrust continues to the online booking process.  When you go to most traditional reservation systems online to book a table you are met with a default which represents the most popular choice:

DATE  /  7:00 PM /  2 People   :   Find a Table

More often than not when you hit that button the reply is:

There are no tables within 2 hours of your requested time.

<or>

The time you requested is not available.  9:30 / 2 People.

As a customer you see that and do what?  Almost every time I ask that question everyone immediately answers:  I call the restaurant. 

Why?

Clearly, customers have figured out that:  1) the entire ‘book’ is not in the online reservation system;  2)  a host on the phone can be cajoled into giving up a table;  3)  there may be no-shows;  4) restaurants don’t put prime-time tables online using the system to book shoulder times…early and late.

Here’s a typical example.  No tables within 2.5 hours of the standard request.  But even more interesting is the fact that for the whole week only the shoulder tables are available to a standard OpenTable user.  VIP users might see some prime time tables, but more often than not restaurants hold back the prime time for phone reservations so they do not need to pay the money to OpenTable for reservations that they know will for sure sell. (I use Girl and the Goat as an example because it is a popular, hugely successful restaurant and because I like Kevin and Rob… not to pick on them).

A ticketed system that shows the entire evening’s available tables and let’s a user select a table to purchase completely upends these trust problems.  Customers can see the seating template, understand which tables are already sold and which are available, and decide how to act.  They are not asked a question – ‘what is your desired time?’ – and then told “nope… you can have this instead.”  Saying no to potential customers over and over is a terrible thing – just really bad business.

From a restaurant’s perspective it is of course important to ‘hold back’ a few tables.  Inevitably there will be requests from visiting people in the industry, truly regular customers, press, personal friends, and relatives.  Or simply the delivery of xyz product did not arrive this morning and so we can’t service as many people this evening.  When every night is show time you need some pressure valves.  However, I argue that this too should be transparent.  We’ve always said that we hold a few tables back – and then like a theater we sell them as same-night or next-night tickets via social media.  This also allows for out of town guests and spontaneous diners to purchase tickets.

As well, eliminating that follow up call when there is nothing available saves a restaurant time, labor dollars, and yet another moment of distrust – the ‘gatekeeper’ syndrome.

2. It acknowledges that there are better / worse table times, and shifts demands accordingly.

Saturday at 8 PM is by far the most in demand table.  Tuesday at 9:45 PM is definitely not.  Is this at all surprising?  Why don’t restaurants acknowledge this and price accordingly?

Of course, the blue-plate-early-bird-special is nothing new.  Nor is the time restricted Groupon, 10% off Mondays, 1/2 priced bottle of wine on Tuesdays, and a myriad of other promotions designed to get diners in on a slow day of the week.

But such promotions are one-offs and are not a systematic, measurable way of moving demand in the long term or increasing demand slowly over time.  They also do nothing to address the busy times, the need to overbook Friday’s and Saturday’s to ‘make up’ for other days of the week, nor the stress on both staff and customers on those nights.

3.  It moves pricing in TWO directions, which is key.

Discounted nights feel like a desperation move by a potentially failing restaurant and that carries a stigma with the promotion all the way through to the customer.  The “early bird” special is used as a pejorative for dining early with the ‘senior citizens.’  The Groupon for a restaurant is often indicative of ‘soon to close’. Both promotions will get you on the death-pool list quickly.

Conversely… and even more importantly…

Charging a premium simply to get into a restaurant feels wrong as well.  Saying – “we’re so busy on Saturday nights that you can buy your way in” – is a throwback to slipping the old maitre d’ a $50 bill for a table.  Sure you can do that now on an iPhone app but it’s still the same – it feels schmarmy to me (is that a real word?).  You’re forcing a customer to pay for access…. And that’s my big problem with a host of new ‘ticketing’ apps that purport to give you access to the hard to get tables (see below).

Having either static or dynamically variably priced tables by day of week and time – in a fully transparent manner – simply gives customers the option of paying a bit more for a prime time table or saving a bit of money for an off-prime table.  It acknowledges the obvious.

No one pays $ 275 for a good seat at a Cubs game, looks up at the nose bleed seats and complains that it’s not fair that those guys up there only paid $ 25.  People accept the difference so long as the choice to buy either was their own.

4.  It supports the notion that table management should be visually simple for the restaurant managers and the customer alike. And ticket systems need table management!

Here’s a screenshot of our admin-side table management page for Alinea.  It’s so visually simple and informative that I won’t even bother to explain it:

If you want to block a table for any reason, just click on a GREEN table.  Want to unblock, click on the YELLOW tables.  Want to see the pricing matrix?  Just click View Prices.

Here’s the table sales page that a customer sees:

Pretty easy to see what’s available, the price of each, and the dates.  It’s also easy to see what IS NO LONGER available, which is equally important.  In the next version of the software we will keep every sold table and it’s price as an ‘x’ on this page.

And here’s the thing:  easy clear table management, simple template creation, and ticket sales and pricing management is precisely what all of the old reservations systems and new ‘access’ apps lack.  If you try to create templates for a restaurant using a leading system you know how frustrating that can be.  I’ll post a video of doing a whole year of template creation on our system soon.

5.  It creates a direct connection between restaurant and patron.

The ‘network effect’ of OpenTable and other reservation systems that aggregate restaurant reservations on a common network is on its way out.  I don’t see the advantage of joining such a network or the disadvantage of not being included for one simple reason:  Google owns search.

At one time it was definitely the case that if I were looking for an Italian restaurant in a certain neighborhood I would consult OpenTable, read the reviews, and book directly. Now I just use Google or Google Maps.  Google of course knows this and that’s why they bought Zagat.  I’d bet Google will soon begin the reservations game as part of Zagat ratings.

As a customer I get a broader overview of ALL restaurants by not using ANY ONE SYSTEM or APP.   Embedding within one of those systems AND paying the ‘toll’ of a per reservation referral charge is no longer necessary or desirable.  I also don’t want to crowd my phone with 10 different restaurant reservation or access apps.

What is critical is having a direct and AUTHENTIC connection with customers.  This is better accomplished through social media as people can opt-in to following or ‘liking’ your restaurant – and then you exist passively in their social media stream.  This is why for the past 3 years our content for Next has been posted to Facebook and Twitter rather than to our own website.  It is a strategy that has resulted in nearly 100,000 aggregate unique followers who are engaged and passionate about what we do.

The new Apps coming out such as Resy, Table8, FoodForAll, Killer Rezzy, and others (those are just the ones mentioned in the WSJ article) exist as yet another layer between the customer and the restaurant.  They are essentially yet another gatekeeper even though they ‘get you in’ for a fee.  As a customer I’d rather just deal directly with the restaurant – I’m then known to the restaurant personally, get better service, and the restaurant and not a third party app receives the benefit of my spending.  As a restaurant I can better engage with customers, do not have to pay yet another third-party service, receive 100% of the proceeds, and can better control both my image and sales pricing.  The restaurant also should not need to enter information on customers into multiple systems, resulting in increased labor costs for only marginal dollar gains.  I mean, selling a table for $ 20 on an app doesn’t get me much but could incur bad will, extra labor, and an unknown customer.

 

6. It does not penalize success

Most reservation and ticketing systems charge by the number of customer transactions, the number of restaurant admin users, for equipment, or a combination of all three.  The more business a restaurant does, the more they end up paying.

As a business owner I hate such models.  Adding an incremental user on my end costs a software company nothing – especially one that has a cloud based system.  Leasing touch-screen equipment in the age of the iPad seems downright stupid.

Our system is hardware agnostic.  The only thing we are biased against is Internet Explorer.  Other than that, you can use any platform as a customer or restaurant owner.  And you can have as many tickets sold or users as you wish.

 

The Results from our Restaurants – And Real Data

I hear a great deal from restaurateurs that “Sure it worked at Next because you’re changing the restaurant every 4 months.  And yes, sure it worked at Alinea because, well, you have so much demand.  But my restaurant is totally different.  We’re not Alinea.”

That’s definitely true.  It’s obvious now, in hindsight, that tickets will work for a certain kind of restaurant – small, chef driven, limited seating per night, high demand, etc.  Next, Alinea, Trois Mec, and Elizabeth are all of that type.

And that’s why we did tickets for the Aviary.

The Aviary

The Aviary is a cocktail lounge… but at its core it runs more like a restaurant for drinks – in fact that’s how our business plan framed the concept.  We have a kitchen not a bar.  The service team runs just like a restaurant.  We can do upwards of 330 covers on a busy Saturday night while doing about 150 on a typical Wednesday.  And the menu is predominately a la carte.

We ran the Aviary for nearly two years without tickets and so we have a ton of data on what our nights looked like before we offered tickets.  And now we’ve got thousands and thousands of tickets sold so we can compare both the guest experience and the restaurant operations in a statistically meaningful manner.

Before Tickets:

  • System was walk-ins, emailed / phoned reservations.
  • Percentage of customer no shows:  11.8%
  • Percentage of customers ordering prix fixe menus:  8%
  • Common complaint:  I have no idea how long the wait is on a weeknight so I’m reluctant to go all the way to the west loop only to find out it’s an hour.

Ticket Implementation strategy:

  • offer tickets as a DEPOSIT against the cost of the check.  This will allow the customer to know for sure they have a table at the desired time.  This will let the restaurant know that the customer will indeed show up, so we can more tightly manage our seating templates and confidently handle walk-ins.
  • offer tickets for our 5-course and 3-course tasting menus.  We consider this the best way to experience the Aviary.  By highlighting them on the ticketing site people can consider the experience before arriving instead of being confronted by the idea on a menu or from a server.  If all regular tickets are sold out, this is another way to get in without waiting.
  • keep 50% of all seating as walk-ins.  We want people to feel free to arrive and have a drink or two whenever they wish.  We have lots of capacity every evening and it’s far different than a small restaurant like Alinea where things need to be tightly controlled.

Ticketing Results:

  • Percentage of customer no shows:  < 1%.
  • Average per customer check: up 13.8% year over year by month.
  • We implemented the ticketing system in November of 2013 and the results were instantaneous.
  • Our customers liked the ease by which they could book a table.
  • Far more customers become aware of our premium tasting menus and ordered them.
  • We have almost zero no-shows every night.  Basically, if people buy a ticket to a show they go see the show, even if the deposit is only $20 per person.  This allows us to hold a table for them and eliminate any potential wait they may have had with a traditional reservation.  Thus we can serve them better.  We can also more confidently template the night of service delivering better experiences to every customer while maximizing the potential number of covers and revenue to the restaurant.
  • Number of customers has gone up 18% in aggregate and far more than that on weekdays when we had excess supply to demand.
  • Revenue is up 22%.  And as anyone who owns a restaurant knows, incremental revenue gains on the ‘back end’ fall to the bottom line more readily than the first money through the door.

Here are some interesting stats:

As you can see our 3-course, 5-course menus year over year have skyrocketed. This is largely because it is easier for people to read about the choices and decide ahead of time.

We’ve had so much success that we’ve begun tweaking the system to charge a larger deposit on Friday’s and Saturday’s and increase the percentage of tickets vs walk ins for those nights.  Note that this is a deposit not paying for access !  People commit to spending at least $20, $35, or $50 but they get that at the same price as any other customer.  They are committing to showing up… but not paying a premium for access.

And that’s one area where the economists, VC’s and access-App creators are wrong.

It is incredibly important for any business, no matter how great the demand, not to charge a customer more than the good or service is worth – even if the customer is willing to pay more.

Economists looked at our demand for Next shortly after we opened and concluded that we should auction tables.  I’m convinced we’d be doing terribly now if we had done that.  All of those early customers would have had a great experience, but would in my opinion have been willing to pay too much… they would have left Next thinking – yeah that was great but it wasn’t worth $ 2,000 – even if they were the ones who chose to pay it.  The same goes for paying directly for access but getting no other good or service in return.

http://cheaptalk.org/2014/01/06/nick-kokonas-is-still-wrong-about-not-using-auctions-at-next/

I really, really disagree with those guys even though I like their blog and thought process.

Variable pricing within a range of value is fair and accepted by a consumer… as illustrated by every form of live entertainment selling tickets or premium seating for travel.  But paying for access alone is not because the discretionary dollar does nothing to improve the overall guest experience, and people know that intuitively.

Alinea

Alinea moved from 7+ years of traditional reservations to tickets roundly 2 years ago.

Every year from April 14 until our Christmas break in December we were 96% booked – in case you’re wondering that’s the exact moment the busy season starts in Chicago, largely due to tourists returning to the city after a long, cold winter.  The waitlists for Thursday through Sunday often exceeded 150 requests even though we told people that they were so far down the list.  We spent roundly $ 140,000 per year on payroll simply to answer phones, enter customer information into a reservation system, and attempt to manage a wait list.

We also lost over $260,000 per year, on average, on no shows alone… with most of those being partial no-shows – so called “Short-Sat Tables”.  A party of 4 that books not knowing who they’ll be bringing along… then brings no other couple is just as bad for a restaurant as a party of 2 that does not show up at all.   That customer doesn’t feel ‘guilty’ because they showed up.  But they don’t realize that we held a table of four instead of a table of 2… and that we can’t simply call one of the 100 people on the waitlist with 10 minutes notice and expect them to show up.

Our ticket implementation strategy at Alinea was to create a “higher-touch” system than we had previously used at Next.  Every customer buying a ticket at Alinea must include a cell phone number where we can reach them.  About a week before they dine with us we call every customer to thank them for buying a ticket to Alinea, ask if they have any dietary restrictions or special needs, and generally get a feel for their expectations and whether it is a special occasion.  We can, in fact, spend more time (not less) with every single one of our customers because we are only speaking with the customers we know are coming to dine with us.  Previously, we answered thousands of calls from people we had to say ‘no’ to.  Now we can take far more time to say ‘yes’.

The results on Alinea’s business are staggering.  Bottom line EBITDA profits are up 38% from previous average years.  No shows of full tables are almost non-existent and while partial no-shows still occur they are only a handful of people per week at most.  That allows us to run at a far greater capacity with less food waste and more revenue.

Here are the numbers of no shows for 2013:

20,050 diners served for the year.

302 No shows or 1.48%.  Almost all of those were ‘partial no shows’.  And of course as the restaurant we collected that payment for the food up front.

And here’s the resulting chart that shows the CHANGE in the number of Short-Sat no-shows at Alinea

Definitely a dramatic improvement at the very moment we switched to tickets.

These are remarkably similar to Next’s numbers:

  • 23,288 dined
  • 364 no shows, or 1.54%.  Again, very few full table no shows… only 5 on the year.

The restaurant was losing hundreds of thousands of dollars simply from people not showing up.  We’d far rather people come, eat and enjoy and this system encourages that.  Keep in mind that we can actually charge everyone less and create a better experience through this efficiency.

And if you think that pricing variability does not matter on the high end you’d be wrong.

During January – April the percentage of out-of-town diners goes way down in Chicago and along with it demand plummets.  It’s pretty miserable here in February and dining at 9:30 on a Wednesday night when it’s -22F outside is not really on anyone’s bucket list.  That’s when we move our pricing downward to inch demand upwards.  Doing so has resulted in the best Q1’s we’ve ever had by far… in fact, I can’t give you a percentage because a typical January for us was break even at best.  Now it’s not July, but it’s running 12% to 15% to the bottom line each month of Q1.

Finally, Super Bowl Sunday.

This past year we had 28 diners booked on Super Bowl Sunday.  Makes sense.  There are always a few days per year when dining at Alinea is not a priority for people.  Oscar’s Sunday.  July 4th.  And the Super Bowl.

As of noon that day it looked like a losing day for us.  We still have about 30 chefs in the kitchen working, and the front of house is doing their side work and cleaning up.  Our costs have not changed.

At about noon I tweeted “Don’t care about football tonight?  Come eat at Alinea instead.  $ 165 super bowl special.”  We re-priced the tickets at roundly 35% off and did 74 covers that evening.  $ 23,800 of incremental revenue, after food and beverage sales, and service.  Not a normal night, but not a disaster.

And here’s what most restaurateurs and chefs don’t think about.

There’s an old saying that you don’t take percentages to the bank.  Most restaurants look at food costs as a percentage of gross revenue.  And that can be useful so long as you don’t bog yourself down in it.  Our food costs run far higher when we lower ticket pricing, but our revenue and bottom line go way up.  Incremental revenue increases are far more important than running a constant or low food cost percentage.

So if this is so great why is no one else implementing the idea?

I fully expected OpenTable to copy the tickets once I saw how readily people adapted to them and how beneficial it was for our restaurants.  And I knew that they could crush us… tons of developers, multi-billion dollar market cap, and a huge install base.  So we built it for our own restaurants and concentrated on servicing our customers and making our money that way, not through software.

When that didn’t happen I started to think about it more critically.  And I looked at their Annual Report.

Here’s all you need to know – 2012 Year End:

  • Total revenue:  $161.6 million
  • Revenue from Reservations, North America:  $ 78.9 million.
  • Revenue from Reservations, International: $ 12.1 million.

If OpenTable changes its model they miss out on roundly $ 91 million in revenue… or put another way, about 56% of their revenue stems from charging restaurants for booking reservations.

It is very much NOT in their interest to have restaurants connect directly with customers through social media.  It is not in their interest to have tickets reduce the number of no shows.  And with about another $15 million in revenue (from what I can tell, it’s not specific) from equipment leases they won’t be selling iPads independent of old servers and touch screens any time soon.

As for the rest of the start-ups they are trying to carve out a niche to add a layer on top of OpenTable rather than compete directly with them.  A few have created new and better systems that touch on the ticketing concept… I’d put SeatMe on that list – and that’s why they recently got bought by Yelp.  But for the most part the reservation systems that try to compete directly with OpenTable lose.  So the VC’s back companies and apps that try to layer on top of OpenTable.  And as a restaurant owner it strikes me that very few of these people have ever owned and operated a restaurant because if they did they’d be concentrating on a different method entirely.

It also strikes me that they’re only trying to solve their own problem of ‘access’.  The thought is:  yeah, I’d pay $ 50 extra to go to Per Se on short notice this Saturday night.  And certainly a lot of people are willing to do that.  But that’s only applicable to a minority of restaurants and their willingness to share that incremental revenue.  I’m not so sure why, other than convenience and a few extra dollars, they’re willing to do that.  Perhaps no other good option yet exists?

So what’s our strategy?

Too much software suffers from feature bloat and too broad a focus.  We’re going to be offering restaurants a narrow, powerful, and affordable system that measurably decreases their labor expense line while increasing overall revenue in immediate and measurable ways.  It will be:

  • web based, hardware agnostic system to quickly template restaurant reservations that offer a mix of sales options ranging from traditional, no cost reservations for customers, to deposit-based tickets like we use at the Aviary, to full-on tickets for daily reservations or only private events – or any mix thereof.
  • CRM is a mess on most reservations systems.  On many it’s just a glorified post-it note for info about customers.  We’ll have that if that’s all you need, but will also be able to ‘off load’ ticket sales data and customer information to other CRM’s.  In our mind CRM is a totally different problem to be solved than reservations.  At our restaurants we’ve built a custom Salesforce App that integrates with our ticketing system to handle CRM across all 3 (soon to be 4!) of our restaurants.  See addendum below.
  • Several methods and tools to automatically or manually dynamically price tickets and analyze the results.
  • Social media integration for customers and the restaurant.
  • No central network branded by us.  The ticket system is yours to use and you can promote your restaurant as you wish… but you won’t be lumped in our App or limited to our network of affiliate restaurants.
  • Flat monthly fee regardless of use, charged by restaurant location – one fee per restaurant.
  • Pass through web-hosting costs.  You pay exactly what it costs to host your traffic and data in the cloud on AWS.

Over the next several months we have several amazing restaurants that will begin using the current version of our software.   They include restaurants across the US as well as in Europe and Asia.  Most of them you’ll recognize and a few are switching from other ‘ticketing’ software… while one is giving the middle finger to no-shows in the best possible way instead of their usual way!

Concurrently we are rebuilding the entire system from scratch using what we’ve learned by selling over $ 60 million of restaurant tickets to patrons, having dozens of our staff members use the system, and feedback from our beta restaurants and our customers.  I won’t give a date (I’ve learned that lesson) but when we launch our platform a restaurant will be able to integrate our ticketing and table management software with their web site, on their own, in just an hour or two.

We welcome questions, analysis, and feedback of all types and will do our best to provide more information.

171 Comments

  • Jeff says:

    White and black (small) type on a grey background? C’mon. You’ve made this a chore to read.

    That said, I have no problem with tickets (I’ve never bailed on a reservation), but I wish the ticketing system would accommodate solo diners. I like to eat out alone and don’t want to put up the cash and then scramble to find a companion.

    • Jen says:

      Agreed with Jeff, but I’m guessing if the ticketing system is meant to maximize efficiency, seating singleton diners at two-tops loses half the value of the table for that turn. And for many fine dining restaurants, the market for solo diners is very small that they don’t set their restaurants up with tables exacted for 1-tops. Having worked at the host stand for many years at many different restaurants, the percentage of diners coming in solo was very small. It obviously works out great in certain setups with bar or counter seating, but not always for fine dining establishments.

      • maryam says:

        Mr. Kokanas first your system is very interesting from a business perspective. It eliminates a lot of the risk of operating a restaurant. I find it interesting that you are distributing the custom developed software as software management is a different animal from the restaurant business. Will you be providing service support and infrastructure for the system? Is the system priced with a licensing agreement and terms? How are you addressing like disaster recovery data security etc.?

    • Peter Cooper says:

      As a regular solo diner, and once at Alinea, I too am disappointed at the impossibility to dine alone. I’ve got to say that Alinea was hands-down the most delightful solo dining experience I ever had, and I’m sad that it’s not possible any more without taking a fairly significant hit – I’d be happy to pay a surcharge to cover missed profit, but not 100%!

      • nick kokonas says:

        we still take solo diners who email a request in and are flexible. But having a solo diner in at 7 PM costs the restaurant simply too much opportunity cost over the course of a year. We lose money serving a solo diner during peek times… an actual loss. But at 9 PM weeknights it’s usually not an issue. I realize that sounds harsh but it’s the truth that small restaurants do not want to admit.

        • Kevin Prigge says:

          An interesting idea might be to have a couple of tables set aside to pair up single diners. It might not be worth the hassle, but the nice thing about building your own system is it allows you to experiment.

          • nick kokonas says:

            in fact people do that all the time via Facebook… usually for tables of 6. We’ve had many tables that are 3 parties of 2 that met for the first time via social media in order to get a Next or Alinea table… and amazingly these are usually the tables that are the most fun!

        • Mr. Kokanas firstly your system is very interesting from a business perspective. It eliminates a lot of the risk of operating a restaurant. I find it interesting that you are distributing the custom developed software, as software management is a different animal from the restaurant business. Will you be providing service, support and infrastructure for the system? Is the system priced with a licensing agreement and terms? How are you addressing issues like disaster recovery data security etc.?

  • Jason says:

    Thanks for this, Nick. It’s a fascinating read and the commitment to transparency is laudable.

  • DJ Fernandes says:

    Nick,

    I am a restaurateur in Phoenix and I feel like our small neighborhood place would benefit by a ticket system. we have had incredible success over the years and I feel like recently our customers have stayed away due to the long waits we would go on. I had the pleasure of dining at alinea about 6 years ago and found it to be extraordinary. I would love to know more about your system and how I might be able to transition my business in a similar way. check us out on the web or yelp. any help you would be able to give would be a lifesaver.

    cheers, DJ.

  • Jordan Shields says:

    Nick, you make Chicago proud!

  • Chris says:

    Nick,
    Knowing your background as a trader and being in the industry myself I have always been fascinated by the problem of supply and demand on the reservation side for a successful restaurant and figured you were a good guy to take that problem on. I have followed the Next ticketing and remember that Tribune article regarding the auctioning, I thought the same thing in regards to repeat customers. Congrats to you and your team for figuring out how it would all tie together. Looks to me like you have just set up a new business that will be incredibly successful. Congrats

  • Yuri Chumak says:

    Interesting read (my perspective is that of a computer scientist and patent attorney). Thanks for posting. I will try to make it to Alinea or a sister restaurant on my next trip to Chicago.

  • Tim says:

    Thanks for doing this blog post with so much data and explanation. I think you guys have applied technology and analytics to create a truly innovative concept.

    At first, I hated the ticketing system because I could not get a ticket. Now, I love the ticketing system because I lucked out on season tickets.

    Next is not just my favorite restaurant in Chicago…it is my favorite in the world. You guys rock!

  • David says:

    Love the post, it was super insightful. Selling tickets to Next and Alinea isn’t that big a stretch for me to see, but them working at The Aviary is really surprising. Thanks for the info!

    Are you looking for developers to help build the next version of the system? I’d be interested in helping out.

  • Eileen says:

    Did your children attend creative world Montessori?

  • Tim says:

    Great article Nick. Although I’m wondering how the words ‘soon to be 4!’ hasn’t caused a stir yet.

  • Adam says:

    Purely for curiosity’s sake, wondering in what language the ticketing system is written? i.e., Java, Ruby, PHP ….

    Also, why can’t I remove a reservation once I click on it? I don’t see a cancel button so I just have to wait for it to time out … Or am I missing something obvious?

    Love the concern you have for both the restaurant staff and patrons.

    Eating at NEXT for the first time in a couple weeks … one of those less coveted Wed at 930 spots, but still can’t wait.

    • nick kokonas says:

      You don’t need to wait for it to time out — just select a different date on the calendar or a different table. Or go back to step 1 if you are on step 2.

      mainly PHP.

      Glad you’re coming! The Chinese menu is wonderful… you’ll definitely enjoy. And thanks for the comments.

      • Adam says:

        … just select a different date on the calendar or a different table.

        Duh. That makes sense. Never occured to me … :)

        Thanks

  • Michael K says:

    Software developer from Chicago currently in the SF bay area – reading this was a great reminder that you don’t have to be in the bay area or even be working at a tech company to do something truly innovative. Went to Alinea this past January, and appreciated the ability to buy tickets instead of having to search/call for reservations.

  • Uzma says:

    I’m from a totally different industry but one that is shifting to a variable rate structure based on supply and demand–electricity. I just came here to say that there are some commonalities in the world of energy use- people shift behavior in response to variable rates and respond positively to data transparency. The biggest barrier it seems is to get them to adopt to a new business model but those that are advanced users and know they stand to benefit have already adopted changes in how and when they use energy. The utilities don’t profit as much but as the industry is changing they are now reevaluating their business model and finding other ways to make money as variable pricing structure and other energy efficiency programs increase.

    Thanks very much for opening up our data and providing this analysis. As a Chicagoan this makes me proud on many levels.

  • Maddy Shannon says:

    I’m a student at Northwestern University studying Economics and Psychology and want to do my senior thesis on restaurant reservations and ticketing. I’d love to get my hands on some of this raw data–no harm in openly sharing, right? Let me know your thoughts!

    • nick kokonas says:

      you’ve got your hands on it already… I’ve shared the stuff I can share. And frankly the rest is pretty easy to infer. We’ve had lots of requests from HBS case studies, Wharton, etc. and I’ve found it to be painfully slow to share and gather and not worth the time. I quit both studies. So while I encourage your paper I only want to sort the data that I want to sort… if that makes sense.

  • Elliott Papineau says:

    Nick,

    Have you considered add on experiences along with off-peak reservation time? An example would be a special course for the 5:30 reservation that is not available to the prime-time reservation. This would keep the price even (buyers choice) across the times, but increase revenue and demand at the decreased rate reservation times. Thanks for keeping the business transparent.

    Elliott

    • nick kokonas says:

      yes we’ve thought of that but then you are creating two different *experiences* for diners… and inevitably that means that the people who pay more on a weekend actually GET less. That’s no good. I’d rather come up with one awesome experience at a restaurant… keep that great… and simply vary the pricing.

  • […] owner Nick Kokonas wrote a thorough explanation of the thinking behind the ticketing system that he created for his restaurants. I agree with […]

  • Matt Stern says:

    What do you think about the restaurants that actually need to get people in on their off days–the restaurants offering 1/2 off a bottle of wine on Tuesdays? I can see how ticketing helps restaurants with a certain level of demand (the Aviary is included in that category). But are you advocating this for universal use? I think it clearly helps the relatively rich get richer (which isn’t a bad thing), but I don’t know about the guys actually struggling.

    • nick kokonas says:

      I address that in the article above, citing 1/2 bottle wine nights. I think moving pricing in two directions is key. So that means that if a typical place has a $ 28 check average overall, they should shoot for $ 35 on weekends and charge less on weekdays to move demand there. 1/2 bottle of wine is fine — if you drink wine. Putting down a $10 deposit that gets you $15 worth of stuff is even better, because 1) you’ll show up 2) you can apply your dollars to food or beverage… more flexible for the consumer 3) very transparent and easy to understand 4) no stigma if it moves both ways.

      • Matt Stern says:

        Right, I was citing you. I guess a better question is, will asking for even $10 up front (despite the good deal, the transperancy, etc.) be enough to disincentivize customers?
        It seems to me that the ticketing would only work when there is an additional added benefit to consumers–a secure spot. I, as a consumer, get utility knowing that my spot at the Aviary is secure and my plans for that night are set.
        With a restaurant that is struggling to fill seats on slow nights, however, I have no need to secure this spot. I can make a tentative plan to go there as a walk-in and see what the wait is like, getting the same deal without the upfront money spent. In this way, the restaurants actually struggling may get even less reservations once they implement ticketing than they did when customers were faced with no disutility if they didn’t show–a likely event at a restaurant that isn’t past this demand threshold.

  • David Pickett says:

    Fantastic read, thanks for sharing your story and data!
    “it feels schmarmy to me (is that a real word?)” – Indeed! It’s a fantastic word, and you deployed it well. It’s spelled “smarmy” for future reference.

  • […] 4. Tickets for restaurants, what have we learned? […]

  • Sam says:

    Nick,
    Great article, interesting concept. This certainly helps the restaurants running at full capacity. How would it help a restaurant that runs at full capacity on weekends but struggling on weekdays. Do you really think that the guests will be willing to pay upfront when they know that they can walk in and the tables will be waiting for them?

  • Rod Bauer says:

    Hey Nick,
    I am really excited to discover your article, as I have been obsessing about this problem for a while. I am a tech guy (Microsoft, Adobe, Autodesk, several startups) in San Francisco. I grew up in the restaurant business–both my parents were chefs, and I am now a partner in a local restaurant. I have been really frustrated with the reservation systems, and have talked (ranted) with OpenTable, Seatme and other providers about how their systems are basically lose-lose when what I want is a win-win solution for restaurants and patrons.
    Cut to the chase is that if you are looking for someone to join your effort who understands the restaurant business, software development, marketing, customer acquisition, and is really connected in both tech and the restaurant business, please contact me. I would love to be involved in this. Cheers, Rod
    http://about.me/rodbauer

  • Doug says:

    Mr. Kokonas,
    Thank you for sharing so much. I’ve been in the restaurant business 20 years and I have never read anything like this before.
    I now live in south Florida and I am interested in the age of those that bought tickets and how you think a ticket system could be implemented in a seasonal environment.

    Thanks Again,
    Doug

  • Mike Kelly says:

    Any thoughts on addressing parties with odd numbers of people? Is there no alternative to having, say, a party of 5 book a table for 6, thereby increasing the cost per diner by 20%? Or else offering the seat to total stranger via Twitter or Facebook, which might make for an awkward evening if the five of you are celebrating a special occasion. I can see the thinking: if you have a restaurant that can sell out every seat, then why lose the revenue? But could adjustments be made on the rare occasion when you haven’t sold all your tables for 6? Or does that never happen?

    • nick kokonas says:

      That’s totally up to the individual restaurant. If it is a high-capacity or casual restaurant then serving 5 on a squished in 4-top or on a 6-top is fine. Smaller restaurants should try to manage maximum capacity by utilizing every seat during peak times.

  • Jen says:

    As a current software developer who has worked at many a host stand using Open Table whilst simultaneously wondering how their monopoly continues to expand, I appreciate the innovation.

  • Derrick Tung says:

    Thank you for sharing… ingenious approach to reservations, and glad that you’re stirring up the industry!

    I’m curious, do you really attribute all the increased sales at Aviary around the 3-course and 5-course to the ticketing system? I would think that a significant portion would be to just increased popularity/natural growth… or have you adjusted for that somehow?

    Seriously good stuff…

    • nick kokonas says:

      The 3-course and 5-course sales went up 40% *instantly* when we began selling tickets without any other changes in pricing or offering. As well, the prix fixe menus are available to walk-ins but far fewer percentage order it. Therefore, it is attributable to the tickets sales…

  • Jessica says:

    I’ve been a season ticket holder at Next for the past three years. We happily fly in three times a year to enjoy the Next experience. Why? Both the food and the service are incredible. True. But Nick gets it right — even the process of getting the tickets makes me, the customer, feel like a valued guest. Since we’re traveling to Chicago, I’m happy to pay a little more for a Saturday night reservation so that I don’t have to worry about flight delays or getting stuck at the office. And, I’m not jumping through some ridiculous hoops to get a prime reservation as you have to do here in NYC. Just log in and click away. Thanks, Nick! We’ll be back in July!

  • R. Vaughan says:

    Great analysis. But it leaves me with the same questions that I have had for a while now. What is in it for the customer? You want the customer to part with the full cost of a meal at the time of booking, but what do you offer the customer in return? As with any innovation, if you want customers to adopt it, the benefits of the innovation must be real to the customer as well at the innovator

    Take other disruptive innovations for example, such as digital music, e-books, or maybe the most apt, in this case, Expedia. All resulted in huge benefits for the customer in terms of pricing. Essentially, the middleperson (record stores, bookstores, travel agents) was eliminated, and the cost savings were shared between the producer and the customer. Some could argue with reasonable accuracy, that the cost savings went disproportionately to the customers exactly BECAUSE of the increased transparency. All required some early adopters to ‘get on the Internet’ and go find their own music/books/flights, without the aid of a knowledgeable customer service representative to assist them. But the cost savings and transparency were enough of an incentive for those early adopters to help push it to critical mass.

    In this ticketing model, one clear benefit you propose is the cutting out the middleperson (i.e.Open Table) between the customer and the restaurant, similar to the above examples. But that isn’t really the ticketing system that has done that. It is social media in general. As a customer I can (and do) interact directly with “traditional, non-ticketed” restaurants on social media just as well as with “ticketed” restaurants. Those places may not have as many followers as you, but they still interact with me. And as a customer, I do not care how many followers they have, as long as they engage me in a positive manner. So that brings us to the traditional benefit from cutting out the middleperson – price.

    You mention the off-peak pricing, but ticket prices at both Next and Alinea have steadily risen, at least in line with industry norms, if not much faster in the case of Next. It is not clear that either restaurant is less expensive than their competitors, even at off peak times. A meal at Next is roughly in line with most two Michelin starred Chicago tasting menus, if not slightly more, and some menus are more expensive than Chicago’s two Michelin star restaurants. Many of these other Michelin star restaurants also carry 4-star Tibune reviews. And even the cheapeast ticket at Alinea (Wednesday at 5PM) is still more expensive than the tasting menus at 3 Michelin star venues such as Le Bernardin, Daniel and Jean-Georges. Wednesday at 5PM is only $20pp less than a premium, Saturday night 7pm reservation at The French Laundry, and by Thursday Alinea has ecplipsed a Saturday at Per Se. Yes, kitchen counter seating restaurants in New York, D.C., Vegas and San Francisco/Napa can run higher than even your Saturday prices, but these are highly limited seats that offer unique access to the kitchen and the cooking in those kitchens (i.e. they are not the same product).

    But, in general, it is not clear that the customer gets to benefit in the cost savings of the ticketing system through lower pricing. One could argue that instead they get a better product at the same price, but that is a subjective debate from diner to diner, so it is best left untouched. One very notable exception is how Elizabeth restaurant uses your ticketing system to create special sale prices, but that is more about old-school supply & demand economics than it is about driving a dispruptive innovation to the point where you change the industry forever. And demand exceeds supply in peak hours at many “traditional” restaurants, so for it to “win-out” in a larger economic framework, the price advantage needs to be clear accross the board, and not just on off-peak times.

    As for the points about transparancy and about simplicity, I agree with those wholeheartedly. But is that transparency and simplicity worth parting with a large amount of money well in advance of of a customer’s reservation? And doing so knowing that if the customer’s plans change outside of the typical 24 – 48 hour advance notice time, that customer will be short the full value of the meal? What is the opportunity cost of buying a ticket today? Every customer can quantify it in their own way, but make no mistake, there is an opportunity cost. Further, requiring a customer to pay an opportunity cost does not create customer loyalty. It may in fact be destructive to it, in the case of customers who may have been, or may be in the future, stuck holding the bag on tickets they cannot sell or use.

    You have done an excellent job at illustrating the benefits to the restaurants – eliminating no shows, realizing revenues before costs are due, saving money through eliminating reservationists and open table fees, and allowing the restaurant to charge premium prices for premium nights, and premium packages in the case of Aviary.

    The benefits to the customer are less visible, especially now that the secondary market is no longer thriving. If none of the cost savings are passed on to the consumer in an obvious way, then there must be another way to convince customers, on a mass scale, to part with their money in advance of their meal. During the first couple of years at Next, the secondary market was strong enough that even the non-monetary benefit of transparency and simplicity could somewhat offset the inconvenience of paying for a meal in advance. But without the thriving secondary market, the incentives for customers to adopt a ticketing system on a mass scale are much weaker than the incentives for restaurants to adopt them. And with disruptive technologies, if the customer feels the benefits of dispruption are not being shared enough, then it becomes difficult to reach the critical mass necessary to overthrow the existing status quo.

    So I would respectfully suggest, that for this to become truly disruptive as a technology, and by that I mean convincing customers to change their behaviour on a mass scale, then a thriving secondary market needs to exist (as did over the first two years of Next’s existence), and a clear price advantage needs to exist over restaurants that do not adopt the potentially disruptive ticketing technology. As someone who was a fervent supporter of the ticket system in the beginning, and much less supportive of such a system now – for the reasons I have outlined above – I urge you to think more about the points raised from the customer’s perspective.

    Respectfully,
    R. Vaughan

    • R. Vaughan says:

      The line “A meal at Next is roughly in line with most two Michelin starred Chicago tasting menus, if not slightly more, and some menus are more expensive than Chicago’s two Michelin star restaurants.”, should read, “A meal at Next is roughly in line with most Michelin starred Chicago tasting menus, if not slightly more, and some menus are more expensive than Chicago’s two Michelin star restaurants.”

      Apologies.

    • nick kokonas says:

      Rupert,

      Here’s one non-obvious reason why Next’s pricing was so attractive when we opened in 2011…. offering a 12+ course French meal for around $ 85… a true bargain in my opinion:

      A restaurant’s expense line is never lower than the day it opens. This is never considered by the public. But it’s true. All employees are new… and therefore at their base wages before raises, benefits, etc. Healthcare costs are at their lowest. The lease is at its low point. Every item in the place — from stove to HVAC to pots and pans — is brand new. Three years later our costs of doing business — hard, fixed costs — are up 20% plus. I could cite a litany of other expenses.

      Alinea is more expensive than some of the places you cite because we never (with the exception of truffle season) have any upcharges or upsells on courses. Every one of the places you mention have multiple menu choices, and even within their prix fixe menus they have courses like real Kobe, Foie Gras, Caviar, etc. that are significant upcharges. Our approach is that every menu served at Alinea is a VIP menu… and I’ll say that for the past two months food costs at Alinea have run north of 40%. Thus I feel like it is a value… and clearly other people do as well because we are sold out for about the next 6 weeks at the moment. I can also name 6 restaurants in the US that are more expensive off the top of my head… and pretty much every Michelin starred restaurant in France.

      Regarding 2 Michelin star restaurants in Chicago — there is only one and it is Grace. Next pricing only is at that level once per year during our ‘grand menu’ (elBulli, Bocuse, and this year’s Trio menu which will be priced identically to Alinea for non season ticket holders).

      I assure you that we analyze all of these and other data points when pricing our menus and feel very comfortable that we are indeed offering a value to customers.

      • solon says:

        You didn’t seriously address his question about benefits to the customer.

        Or rather, I don’t see how the ticketing system itself has driven prices down for the customer, if that’s the point you’re making in saying you yourself try to price things competitively.

        • R. Vaughan says:

          Yes exactly what Solon said. For this to become a disruptive force in the marketplace, the customer’s opportunity cost of the inherent risk of advance payment in full, as well as the simple time value of money equation, must be addressed. Essentially you are downloading the risk of no-show on to the customer, without offering the customer compensation to take on that risk. In essence, you are asking for free insurance.

          In the classical marketplace where supply always rises to equal demand, this system would always fail, because the restaurant who is willing to shoulder the risk of no-show, or the restaurant who is willing to put a price on that risk and pay the customer for it in the form of a discount, would always win out. You are fortunate not to exist in a classical marketplace. But rolled out across multiple restaurants throughout the land, supply would begin to approach demand, and the market would not bear the price of the no-show risk and the opportunity cost of advance payment (without pricing the risk and opportunity cost and discounting to what the market will bear).

          • nick kokonas says:

            How does supply equal demand across all restaurants? Absurd. If you want to get Mexican food you’re not going to Next or Alinea…. there are thousands of restaurants in Chicago alone. Our system can serve the low end as well as the high end, with the flexibility in charging a premium or discount being the key to moving demand within a single restaurant. These are not the ‘widgets’ of an identical nature of classical economics. I’m always blown away when people utilize economic theory for business practice… macro econ is for an economy, not an individual business.

        • Earl says:

          Beyond the transparency, the customer benefits in a very real way.

          The reduction of food waste that results from the ticket system doesn’t just mean more profitability for the restaurant; it means customers receive more food (and/or a higher quality of food) for the same dollar spent due to the increased efficiency in food inventory management. Even the most well run restaurants have to grapple with optimal food inventory management, and the ticket system is the single best way I know to solve the problem (especially with a locked-in menu like Alinea or Next). Instead of the customer subsidizing the restaurant for wasted food, more of that customer’s dollar goes directly towards that diner’s plate.

          If there are two restaurants that are otherwise identical (revenue, gross food cost as % of revenue, etc), the one selling pre-paid tickets will be able to translate more of that diner’s dollar into food on the plate (either in quantity or quality, or both) because of the leaner, more efficient pulling strategy. The customer isn’t subsidizing the food waste that results from no-shows and unordered items.

          Respectfully yours,
          A finance student who’d love to work at Alinea one day

  • collin says:

    I’ve been to every Next menu and have had season tickets since they’ve been available, so have been along the ‘tickets to restaurants’ ride from the start. As a concept, it makes a ton of sense for certain places as you mention, and I’m happy to be a part of it. I’m also happy to see you have found tickets a boon to profitability- it seems a great innovation in that regard, given the pricing and margin dynamics of high end food in the US, compared to, say, France where – to an outsider – the system seems much more sustainable

    In practice however, far from being a system that keeps you from saying no to your customer, my experience says tickets are a tool (or crutch) that you use to say no to customers after they’ve already given you their money. I can provide recent, specific examples by email, but suffice it to say, being told no in these circumstances has proved to be more frustrating — in part because of the transparency you provide — and far more alienating than simply being told, “sorry sir, we don’t have any availability that day.” Partly because of this, it’s doubtful we will renew our season tickets to Next after this year (if you were to put them up for renewal right now, we would decline), and Alinea is no longer on our list of special occasion restaurants- each can be far more bother than they’re worth, which is to say, even a little bit of bother can be far too much given the prices.

    While our business will have no noticeable impact to your bottom line given how over subscribed you are, I hope other restaurants which adopt tickets understand that making connections with their diners is much more about going the extra mile when the diners need it the most than it is about who owns what software interface or offering same night tickets on Facebook. Then, they’ll get the best of both worlds- loyal diners and higher margins.

    • nick kokonas says:

      Collin,

      The very core of doing non-refundable, full entry (meaning you pay for everything in advance) tickets is to prevent no shows and people who make reservations well in advance only to cancel them a few days or even weeks ahead. While a person cannot plan for every contingency nor can a restaurant or any business. If we were a sporting event, concert, or opera this would be a non-issue because the normative behavior of both parties is the knowledge that the show goes on regardless. Certainly I’ve had it happen that I owned tickets that went unused. It stinks, but it was my own issue (note: not fault) that caused the absence.

      In fact, a few customers have lately simply ‘forgotten’ that they had tickets, but wanted to dine on a later evening after noticing they missed their date. Since their table went empty that night, I have already incurred the expense of feeding them, even if they did not enjoy the food.

      In ANY case where the restaurant is at fault we do our best to rectify the situation, going so far as to refund the tickets AND get them in on a different night for free. It is rare, but when it happens we make it right. But it should be a two way street for any business, not just restaurants.

      • collin says:

        This is the disconnect- in my experience, the box office at the opera or a theater will do their best to accommodate their patrons when an issue arises. If a week or two before a show, I learn I have to be out of town that evening, I know I can call the box office and reasonably expect to be able to change my tickets to another day. Maybe my new seats won’t be as good and I’m not entitled to a refund of the difference in price because ticket sales are final. Or maybe all the cheap seats are sold out and I have to cough up a bit more to pay for a better seat. And if the entire run is sold out, that’s life, and I move on. Regardless, I expect the staff to be helpful and look for a solution.

        Why should I not expect the same at a restaurant where I have tickets?

        At Next when this has happened to us (it’s rare, but given we buy tickets months in advance, it’s bound to happen occasionally), the first response was, ‘No,’ even when there were plenty of tickets left for the run. It’s that inflexibility I’ve found frustrating and at odds with my expectations of the normative behaviors of the party selling the tickets.

  • Epiphyte says:

    Correctly deciding whether to enter/exit from a relationship depends on accurate information…so tables should always accurately reflect, in real time, what people are willing to pay for them.

    Imagine you just sit down at the best table in the house…and you check your phone to discover that somebody is willing to pay $10,000 for your table. Would you sell your table?

    http://redd.it/27i3ae

  • Jordan Shields says:

    Nick, one feature I’d like to see would be a clearinghouse for sold tickets on your site. I’ve transferred both Next and Alinea tickets and the “transfer” worked fine, but the process of finding someone to sell my tickets to was difficult. I’d love to be able to offer tickets and see available resale tickets from others on your site. It could be a different screen and you wouldn’t have to process the payments, but it would create a much cleaner market for resale tickets.

    • nick kokonas says:

      We may well do that in the future.

    • solon says:

      why? theaters and sports teams don’t make it there business for you to transfer your tickets? why should a restaurant.

      I wouldn’t even bother with a transfer system at all. But maybe a system to cancel tickets less than 2-3 (?) weeks out at $50 cost, something like that. That would make scalpers nervous too.

      • R. Vaughan says:

        Not true. Our Broadway in Chicago subscription has a feature where you can trade tickets back in for other nights. And our Blackhawks season tickets have a feature where I can sell my tickets at well over face value through the official Blackhawks ticketmaster portal.

  • Meg Koh says:

    Hi Nick.

    Very interesting and honest explanation of your ticketing system.

    I’m from the Philippines and have plans of visiting Alinea during my next visit to Chicago. If I buy a tickets way way in advance and my travel plans change, is there a way for me to change the dates for the tickets I bought online/

    Thanks.

    • Anonymous says:

      No Meg.

      That is the whole point if tickets. You are commiting to them regardless if your plans or how they may change. This is an obvious advantage to the restaurant and perhaps a strained advantage to the customers should things happen to work out for you.

      On two occasions unforeseeable circumstances caused great stress on us as we tried to meet our Next ticket times. While Nick will be happy to know that in both cases we managed to make the ticket times it was extremely stressful for us.

      It is quite true that with normal reservations we likely would have cancelled, even if it meant losing a deposit. So Nick’s system worked… for him that is. For us the customer we need to seriously consider if being locked into tickets purchased months in advance makes sense for us. As season ticket holders we are purchasing tickets in some cases nearly a year in the future!

      I respect what Nick has done greatly but I must agree that there can be a downside here and that downside is felt by the customer. If enough customers feel it then there will be fewer customers as time goes on.

      • tkw says:

        why do you think that restaurants should bear the cost of “unforeseen circumstances”, rather than the patrons? patrons have much more control over their own lives.

        i might also suggest that circumstances that have happened to you (at least) twice in the past three years should no longer be considered “unforeseen”.

        • Anonymous says:

          Fair enough about patrons being responsible for their situations instead of a restaurant bearing the burdon, but that was not my point. I never said restaurants should or should not bear this burdon, simply that patrons may no longer wish to take the risk.

          In the case of Alinea and Next (even though supply appears to be catching up to demand, or rather demand is lowering to meet supply) there may be enough patrons willing to “risk it” that it does not matter. However few establishments share this type of success. Yes, tickets would work well for Girl and the Goat to use Nick’s example… I’m not sure how well they would work at the average place that is not turning customers away every day. I doubt dynamic pricing brings people in to less hyped places.

          As an aside we eat out probably 4-5 times a week, that’s roughly 650 times over the past 3 years. If those twice and only twice have we had “unforeseen” situations arise. These were unrelated and different circumstances each time that just oddly lined up with tickets to Next. Why? I have no idea…. Fate I guess. Regardless there is no reason for you to be cynical even if you happen to disagree.

          Skepticism is great, cynicism rarely is.

  • tkw says:

    hi nick, i’m a fan of your work and writing. my favorite part of life on the line is the middle section about the business aspects, investor email, etc.

    some questions…

    1. you mention that no-shows have plummeted. but how much do you really care, since the meal is already paid for?

    2. i (think i) understand and agree with the philosophy that you shouldn’t overcharge customers even if they’re willing. but would a few auctions or double priced tables (maybe 1 or 2 tables on fri/sat) be a violation? might it be the case that there are customers who place real value on bypassing the ticket chase/facebooking? (i am definitely not speaking for myself… someone i discussed this with said he’d rather just pay extra $. i imagine there are more like him. then again maybe you’d rather not have them as customers.)

    • solon says:

      no shows would actually be great! you can then resell the same table to a walk in. At worst you have a paid but empty looking table.

  • Meg Koh says:

    I think there should be a way to change the date after a ticket has been bought. To avoid burden on the restaurant, they could give a lead time acceptable to them. Let’s say, you can change your ticket at least 1 month before ticket date. if this is all computerized, then no manpower is wasted. 1 month is long enough for that table to be sold again.

    • nick kokonas says:

      I agree that I’d like to see a way, automatically, to swap tickets to a similarly priced date/time more than a month out. That’s something that makes sense and costs nothing to the restaurant or the patron. The only issue is if people continually do that (holding, as it were, a table). Concierges at hotels, scalpers, and such could abuse it — and we’re trying to figure out the best way to implement a simple system while limiting its abuse.

  • Jerry says:

    Thanks for sharing the data and your thoughtful insights. As an investor and someone who enjoys unique dining experiences, I applaud your use of technology to bring the relationship of the restaurant and the customer closer, in contrast to opentable. While it may appeal to b-school spreadsheet jocks, the model is not one that has the customer, the restaurant and the relationship between the two as its primary focus. You clearly have many faithful regulars, and you touch upon the fact that you do reserve some tables at alinea for industry people and regulars. Do you have a formal process of identifying regulars and giving them a different method of making reservations? It seems like an interesting way to maintain transparency and at the same time “reward” and develop the relationship with regular customers.

    Touching on a broader subject, what do you feel the role of your restaurants are in relation to the customer experience? We know places like Rao’s, where there are never any reservations except for those who “own” a table and their friends. Some restaurants close off a certain number of table to concierge services which for a fee can give patrons access to “fully booked” restaurants. There are private restaurants where prospective members must go through an application process. Each of these sends a different message. What’s yours?

    thanks

    • nick kokonas says:

      We track the guest visits and details of their visit for every person eating at Alinea, Next and the Aviary. We get nightly manager reports as well. It becomes very easy to identify regulars for us… but very difficult to tell someone they are *not* a regular. We have patrons that have been to Alinea 50-60 times… Next 35-45… Aviary weekly. Then we have someone that’s been in to our places 3 times in 4 years and feel like they should be able to call ownership to get a table on 2 days notice. It’s a very tricky situation!

      All of our investors, including me and Grant, pay a reduced charge — but do pay — if our families visit the restaurants. That way it is fair to everyone, employees and other investors. Similarly, visiting chefs and restaurateurs are well treated and we try to have access for them… but if our held tables are gone they are gone… and that’s true for everyone.

      Our message is, if anything, egalitarian. Celebs, VIPs, etc. are treated the same as anyone else buying a ticket — with of course small exceptions (artists we personally love, heads of state, great personal friends — we are human).

      • Jerry says:

        Thanks for the response. Its a good the are human. Otherwise as the sage Cosmo Kramer once retorted to a cynical George Costanza : “Well, why go to a fine restaurant, when you can just stick something in the microwave? Why go to the park and fly a kite, when you can just pop a pill?”

        The human condition aside, I wanted to follow up with how you think about reserving specific tables- and more generally how you think about the layout and table placement in the restaurant. What size tables to place next to each other? How far apart should they be spaced? In your restaurants do you perceive certain tables to be “more desirable” than others?

        As you know there are some restaurants that have “prize tables” which are more coveted than other tables and restaurants that also have rooms or areas that are often referred to as “Siberia” where patrons begrudgingly accept to be seated. Even worse some restaurants will cram tables or even place tables in awkward locations on busy nights to “pack ‘em in”. Customers will make some comment to the host in passing, but will eventually accept to be seated there. Would you ever consider putting a floor plan on the reservation site and have customers select their own tables?

  • […] Kokonas / Alinea:Inside the development of Alinea’s restaurant ticketing system built to replace reservations — Tickets for Restaurants — Resos vs. Access Apps vs. Tix: More Than You’d Ever Care to […]

  • […] More here: Inside the development of Alinea's restaurant ticketing system built to replace reservations (Nick K… […]

  • […] Kokonas was motivated by the enormous overhead of phone reservations — he  had to employ three full-time receptionists to handle the requests for reservations, changes, and calling people on the waiting list to cover last-minute cancellations. And the phone overhead was only part of the problem. Worst was the lack of transparency. As Kokonas puts it in a great and detailed post on the topic, […]

  • Royal Lichter says:

    Nick,

    Thanks for sharing some of the restaurant’s most intimate data. It’s pretty amazing to see the improvements that have resulted from implementing ticketing at Alinea and The Aviary.

    You mention that several amazing restaurants will be adopting the alinextiary software. Do you have one at say, the level of Publican, (a-la carte, lots of seats, two or three turns, jeans/casual, a moderately difficult 7pm Sat reso.) that will adopt the system? I see this as an important step in wide(r) spread adoption. No need to mention names, but curious minds want to know whether it is $, $$, $$$, or $$$$ restaurants that will be early adopters.

    I’m dying for the day that I can make a reservation to a place like that and I can arrive and be seated within a few minutes of my arrival.

    Lastly, do you intend to brand the software at all? It sounds like not, but this is pure curiosity. Our company is building a piece of software for property management and we’re really building it for ourselves…but wrestling with how to brand it if at all, if we ever feel it is ready to commercialize.

    Best in rolling out,
    Royal

    • nick kokonas says:

      Rupert,

      Yes… more casual places will benefit even more as they can easily experiment with various pricing ideas, menu specials, a deposits for tables during busy times. We have a few lined up.

      And yes, we will be rolling out the software as a full commercial product.

  • Jake says:

    Hi Nick, how are you addressing “scalping” as it applies to your ticketing system? To the comment earlier about transferring tickets, it seems the system allows for a secondary market where the restaurants don’t get to participate in the upside.

    Cheers,
    Jake

    • nick kokonas says:

      Jake,

      We discourage scalping in several ways that I’d rather not illuminate so that they cannot work around our methods. Unfortunately some legal ticket resellers also bought tickets and resold them — and there is nothing we can do about that.

      If a restaurant has a secondary market that builds up they could simply raise prices. But I suggest above that doing so too greatly causes long-term harm to the business. We always told people — don’t buy through scalpers. But inevitably it can happen. And frankly, that’s what these new access apps feel like to me…

  • solon says:

    I think it’s a great idea. Few points on implementation, having just tried it for the first time:

    1) colors/readability (i.e., usability) are very poor. (Same as this blog, almost unreadable, I had to use a readability extension to extract the text and read this clearly.)

    2) requires an account with personal email info just to see what tables are open – that should only come after when booking – and it doesn’t even do a basic check to see if the email entered is real. I used “gggg” for an email and it worked so now you have an email in your system that will fail when you email people. Html5 even has a dead-simple email tag with auto-validation with no javascript that any site can implement. Your developer really missed the ball there. Would take 10 seconds to fix that.

    3) your system is NOT transparent about what I’m paying $200+ for. Only AFTER i book it says I’m paying for a tasting menu. Well, what is that? Where is that detailed? I don’t see it up front in the ticket system, nor after in the ticketing system, nor do I even see it on your website. So, I have no idea what the ticket is for. A few bites? Will I need to order a meal as well on top of the $200? No clue.
    As a new user, I won’t even understand what’s going on. For most people expecting a reservation, that is a huge fail. Now I have to phone the restaurant to find out what the heck the deal is just to eat there. You need to educate people clearly and simply up front about what they’re doing and paying for. One line about differential pricing at the beginning is not enough.

    4) going back to your system I see I have a reservation. I haven’t paid – how long does it last? Again, no clue, no info. How do I cancel this ticket? Again, no clue, no info or button to do that obvious task. All I can see is how to transfer it – yet I haven’t even paid, why can I transfer it already??? – and I can enter cc info, assumably to pay, though it doesn’t say anything like “continue to pay for your ticket” so maybe you’re just collecting cc info for later? Who knows, again, not clear.

    5) no way to search by time and show days available. That would be very helpful. Otherwise people have to keep clicking thru days to find a desired time. Even better would be a monthly view so you can scan for a good time/day in one go.

    That was 5 minutes using your system as a first time user who is very web savvy.

    Hope the info helps. Good luck with it.

    • solon says:

      As you can see, I used the same gggg for an email here, your site isn’t doing a basic check for validity. Use input type=”email” as the simplest way. (iphone will even switch the keyboard to enter an email address more easily.)

    • solon says:

      Sorry, I had one question: how long does a ticket last in the restaurant? I’m not required to leave by a certain time am I? Same as anywhere, until I’m done?

      What do you do if we just keep sitting there sipping wine and your next paid ticket is up?

      Bit of a conflict with the free system there vs theater like ticket for a specific show.

      • nick kokonas says:

        Actually the ‘time to leave’ is not much of an issue with set menus. When we serve you coffee / tea / or an aperitif it becomes obvious that the show is over. On those rare occasions when a customer is just not budging we are honest with them and let them know that we’re done serving… and we try to move them over to the Aviary. It’s rarely an issue.

    • nick kokonas says:

      1. the colors / readability issue is something I disagree with. yes, I know, it’s not great web design. but Alinea has dealt with that criticism for our menus, website, and Alinea book for 10 years. It’s an intentional act of defiance in a way. And forces people to focus attention. We were told by many publishers not to use this color scheme… and we did, have sold 100,00+ books, and won a communications arts award. Go figure. But yes, I know… and agree with you. But it won’t change.

      2. agree regarding validation. do not agree about looking for tables before signing in. that was done intentionally because early on we had far too many users on the site… sometimes as many as 7,000+ at once. We have different issues than most restaurants….

      3. no one is going to buy a ticket to Alinea or Next, given the cost, without knowing what it is we do. the types of customers we have are intimately familiar with our menus prior to coming to our website to purchase… and in fact demand generally exceeds supply. you arrived there due I think to this post… which is very different than wanting to dine. In fact, you can’t even call the restaurant… we don’t answer the phones. Strange marketing, I know.

      4. There is a 15:00 minute ticker upper right. Navigating around is fine and the clock resets.

      5. Day / Time search is already in the works as: find me the next available table for 2. find me the next available saturday for 4 etc.

  • […] Tickets for Restaurants: Nick Kokonas, the co-founder of Alinea and Next, talks about their decision to replace the […]

  • […] A deep dive into the scheduling opportunity for restaurant reservations. […]

  • […] standouts Alinea and Next with acclaimed chef Grant Achatz, offered what Eater rightfully dubbed a 6,000-word “manifesto” explaining how the unique ticketing system pioneered at his restaurants has made a tremendous […]

  • ADog says:

    The real advantage of Opentable is the network effect whereby a diner can view an enormous amount of restaurants all at once. The Next system, while perhaps better operationally, is not a “one-stop shop” for a diner. And, it won’t pose a threat to Opentable until enough restaurants defect from Opentable that you can search for table availability across all restaurants using the system and not just one at a time..

    • nick kokonas says:

      ADog — apparently you didn’t see the comment about that in the blog post? That is getting less and less important. Who goes to opentable.com instead of just googling a restaurant or cuisine type? Not as many people as before that’s for sure. I’d much rather be imbedded in the restaurant’s own website and social media stream.

      • Josh Steinfeld says:

        Hi Nick,

        Curious about where you’re getting your information re: not as many people going to OpenTable anymore. As I look at their most recent 10K, they experienced double digit growth in revenues (18%), net income (39%), installed restaurants (15%), and seated diners (29%). Their revenues from reservations alone grew by 24% in North America.

        This doesn’t mean that OpenTable is the best way, or the way it has to be forever, but I’m curious why you think it’s in decline.

        Thanks,
        Josh

        • nick kokonas says:

          What I mean is not that they are not ‘growing’ in the sense of revenue. What I mean is that I believe that fewer people consult OpenTable organically (directly) in order to find out information about nearby restaurants. It is completely a personal, anecdotal observation based on how I personally find new restaurants: Google. So I think the decline is in two things: consumer search behavior on the web / mobile; and in their business model of charging a restaurant per reservation. Importantly, $ 1 per person does not seem like much but for a $20 check average restaurant that’s 5%!!!

  • […] standouts Alinea and Next with acclaimed chef Grant Achatz, offered what Eater rightfully dubbed a 6,000-word “manifesto” explaining how the unique ticketing system pioneered at his restaurants has made a tremendous […]

  • […] standouts Alinea and Next with acclaimed chef Grant Achatz, offered what Eater rightfully dubbed a 6,000-word “manifesto” explaining how the unique ticketing system pioneered at his restaurants has made a tremendous […]

  • […] standouts Alinea and Next with acclaimed chef Grant Achatz, offered what Eater rightfully dubbed a 6,000-word “manifesto” explaining how the unique ticketing system pioneered at his restaurants has made a tremendous […]

  • […] standouts Alinea and Next with acclaimed chef Grant Achatz, offered what Eater rightfully dubbed a 6,000-word “manifesto” explaining how the unique ticketing system pioneered at his restaurants has made a tremendous […]

  • […] standouts Alinea and Next with acclaimed chef Grant Achatz, offered what Eater rightfully dubbed a 6,000-word “manifesto” explaining how the unique ticketing system pioneered at his restaurants has made a tremendous […]

  • […] standouts Alinea and Next with acclaimed chef Grant Achatz, offered what Eater rightfully dubbed a 6,000-word “manifesto” explaining how the unique ticketing system pioneered at his restaurants has made a tremendous […]

  • Sam Turtletaub says:

    “It is incredibly important for any business, no matter how great the demand, not to charge a customer more than the good or service is worth – even if the customer is willing to pay more.”

    This was my favorite sentence. Can you please explain this to higher education? We are doomed.

  • […] standouts Alinea and Next with acclaimed chef Grant Achatz, offered what Eater rightfully dubbed a 6,000-word “manifesto” explaining how the unique ticketing system pioneered at his restaurants has made a tremendous […]

  • […] to ticket sales for restaurants by Nick Kokonas, partner at the restaurant Alinea in Chicago: Tickets for Restaurants. This is really about product design…designing the product experience around attending a […]

  • Larry says:

    Your ticketing system is brilliant for a chef based restaurant that typically sells out the dinner service. I have dined many times at Alinea and Next and the ticketing system has actually made it easier and less time consuming to get reservations at Alinea. It was very painful before the ticketing system to get a reservation into Alinea. I like the social media approach of posting when the tickets are being released. This has enabled me to get tickets multiple times to Alinea, basically whenever i want to dine there, along with each of the menus at Next I wished to try. In fact, we visited next for Koyoto twice. And the same day tickets is fun. When you post availability on Facebook, I check with my wife on if we have the availability to dine, and email back. If we get the email back, its all good. I think the ticketing system is brilliant from a frequent diner perspective.

  • Pei-Chin says:

    Love this article. Great writeup, really detailed analysis. Thanks for sharing.

    I’m curious how you handle tips when diners pre-pay the whole meal in advance. From what I read, it seems it’s all inclusive at ticket purchase time? Makes sense from the simplicity perspective, but curious how your staff and customers think about this.

  • Thomas Hillard says:

    Hi Nick,

    Forgive me if this was already commented/noted/replied to, after reading (*mostly*) the entire post and 108+ comments at time the time of writing this one, my short term memory and reading abilities ran low!

    I lived in Chicago for 2 years with my girlfriend, we ate at Alinea (before the ticketing system), also at Next, and went to Aviary a couple times. They were great experiences, all of them, worth every penny and I tell people that around the world.

    But, when Next opened we abhorred the ticketing system.

    All that time and money that was saved on the business was basically outsourced to the diners.

    Kudos for having so much success and demand that you can do that, but really it was painful. We spent hours and hours, and days and days trying to get tickets to Next. We gave up on the tickets. Finally on a rainy Sunday evening we strolled into Aviary (no tickets needed then) had some cocktails and politely asked if Next had some last minute availability. We had to have a couple drinks, but eventually we got a table and had a wonderful time. How ridiculous we had wasted so much time with that (still buggy) website, and writing comments on the Next Facebook page, and sending emails, and reading scammy craigslist posts from people selling the tickets at 3x and 4x!

    When Grant tweeted about plans to switch on the system with Alinea I was again furious. I understand that was only a sign that it’s working, but I remember calling Alinea at 2pm on Thursday and getting a great reservation for just 3 weeks away and that was a pick of multiple options. It sounds like I was lucky on that one call with Alinea, that usually it isn’t that way, but the ticket system for all of my time of trying to use it (4 different turns on the menu at Next) was impossible and I told people to avoid it, try just walking in instead on what can be expected to be a slow night.

    I hope all the crazy hustle bustle has smoothed out, and Chicago + the Achatz fans of the world can now buy tickets for your restaurants the same as anyone can for a hotel or theatre.

    The solution seems to have saved money, time, and frustration on your side; but at least in those early years after it launched, I think all of those savings were really just offset to your patrons. If that’s still the case, please keep innovating, it’s an improvement, but not a complete solution.

    • nick kokonas says:

      You can, right now, go on to our sites and buy tickets to both Alinea and Next. Alinea in late July — in the summer it’s always 6 weeks out or so –, Next for this menu is serving upwards of 124 people per night so we have some availability during the weeknights about a week out. And we’ll open July reservations — 70 per night — later this week.

      Early on at Next we had demand exceeding supply by 10x to 15x I’d estimate. So yes, it was frustrating for customers. However, 8,000 people calling a phone line would have been just as ‘bad’. Demand like that is unusual for a restaurant and therefore not really the showcase for the system. More typical is the Aviary set up where supply always exceeds demand since we can do 400+ people in a given night.

      • Thomas Hillard says:

        I’d hoped as much. That’s great news that I’ll keep in mind and pass along.

        Now if only you could get TK to adopt the system.
        :)

  • […] across an interesting article, with a lot of numbers and inisght, from Nick Kokonas co-owner of Alenia and other restaurants with […]

  • […] instead purchase a ticket for a specific day and time. You pay up front, usually $200+ per person. Nick shared a long post on the results of their system, and lots of lessons learned in the process. (Hat-tip to Jason Kottke on finding […]

  • […] You Need to Hear This Extremely Rare Recording – Tickets for Restaurants – Killing a Patient to Save His Life – Apparently South Korean Elections Broadcast are Awesome – […]

  • […] You Need to Hear This Extremely Rare Recording – Tickets for Restaurants – Killing a Patient to Save His Life – Apparently South Korean Elections Broadcast are Awesome – […]

  • […] to the payment of the bill, and completely changed the way Next (and later Alinea) does business. He detailed his process with a fascinating blog post. It’s clear when reading it that on one hand Mr. Kokonas isn’t a seasoned technical product […]

  • Jock Macdonald says:

    Wow, what a brilliant solution! My hat is off to you, sir! And my admiration for the courage to actually work it out and do it. Live long and prosper.

    Loved the article, too. As Spock would say, “fascinating”.

    Jock

  • […] You Need to Hear This Extremely Rare Recording- Tickets for Restaurants- Killing a Patient to Save His Life- Apparently South Korean Elections Broadcast are Awesome- Tesla […]

  • itai says:

    Hi Nick,
    A very interesting article. If you don’t mind, I have a few questions.
    1. You say that in a traditional reservations model the restaurant has an incentive to lie to costumers about the time when they should arrive – when the costumers arrive a table is not yet available and they’re told to wait at the bar. But doesn’t a restaurant selling tickets also have this incentive?
    2. In a reply to a comment above you say that “time to leave” is not an issue with set menus. What about à la carte? And what do you if a group shows up half an hour late for its ticket (and you know that they will not finish eating by the time the next group arrives for the table)?
    3. You say you prefer charging a deposit against the cost of the meal rather than an entrance fee. But doesn’t this provide perverse incentives to the costumer? Doesn’t this mean a costumer would feel compelled to order more expensive items (so as to use his deposit in full) rather than the items he prefers?

    • nick kokonas says:

      1. no. the check average and average revenue per minute at a table is far higher than that of a bar. The real issue is that the restaurants ‘lie’ to the customer by telling them to come at 8 PM when they know the table won’t be available until 9 PM. With transparent inventory and price incentives you simply move that demand to 9 PM (by giving a ‘discount’ price) and still generate more revenue than at a bar… and MORE importantly the customer is treated more hospitably which is best for the restaurant and the customer in the long run.

      2. Table templates assume a percentage of people late / early and always have a ‘check valve’ for the imperfections of arrivals and departures.

      3. It depends how much the deposit is. At Aviary, a $20 deposit means that you can order the cheapest drink on the menu and with service and tax you are at more than $20. So it doesn’t require ordering more expensive items. On busier nights we move that up to $40 or $50 knowing that non-walk ins will likely stay longer on a Saturday night… and yes, we are trying to encourage the people who want to come and spend some time and money to have the reserved tables.

  • […] Friday I was so enamored with the bold changes made by Alinea and Next in the restaurant reservation model that I almost ignored the specter of scalping. Almost as an […]

  • […] to ticket sales for restaurants by Nick Kokonas, partner at the restaurant Alinea in Chicago: Tickets for Restaurants. This is really about product design…designing the product experience around attending a […]

  • […] is another restaurant that is experimenting with it’s business model, aiming to replace reservations with a ticketing system. They are not the only ones who are experimenting with a ticketing system though. As the benefits […]

  • […] points in the dining process: Restauranteur Nick Kokonas’s soon-to-be commercially available  ticketing system at Alinea and Next; Apps and products for food delivery, like Sprig and Munchery; […]

  • […] points in the dining process: Restauranteur Nick Kokonas’s soon-to-be commercially available  ticketing system at Alinea and Next; Apps and products for food delivery, like Sprig and Munchery; […]

  • […] points in the dining process: Restauranteur Nick Kokonas’s soon-to-be commercially available  ticketing system at Alinea and Next; Apps and products for food delivery, like Sprig and Munchery; […]

  • […] points in the dining process: Restauranteur Nick Kokonas’s soon-to-be commercially available  ticketing system at Alinea and Next; Apps and products for food delivery, like Sprig and Munchery; […]

  • […] Tickets for Restaurants (Nick Kokonas, Alinea) […]

  • […] Tickets for Restaurants (Nick Kokonas, Alinea) […]

  • […] Tickets for Restaurants (Nick Kokonas, Alinea) […]

  • […] no todo es cocinar, pocas veces vi un análisis de un mercado tan interesante como este de Alinea sobre el mercado de reservas online de restaurantes… desde variable pricing hasta ventajas de […]

  • […] Tickets for Restaurants (Nick Kokonas, Alinea) […]

  • […] Tickets for Restaurants (Nick Kokonas, Alinea) […]

  • […] Tickets for Restaurants (Nick Kokonas, Alinea) […]

  • […] Tickets for Restaurants (Nick Kokonas, Alinea) […]

  • Karen Piazza says:

    I am a “lifer foodie”. I started with Thomas Keller and found Grant on my journey for the most creative well presented food in the world. One of my closest friend’s husband was just diagnosed with cancer of the tongue. I have told her all about Chef Grant’s story. I collect signed cookbooks and somehow I loaned my Life on the Line book to someone who did not return it. It is REALLY important to me that I somehow get a copy of Grant’ story personalized for them before he starts chemo. Please help me! I’ve been calling for days. Please contact me with a contact and number of someone I can work with to make this happen. Does it count that I think he is a genius? Help!

  • […] Tickets for Restaurants (Nick Kokonas, Alinea) […]

  • Rodrigo says:

    Thank you for sharing your thoughts. I really appreciate your efforts
    and I will be waiting for your next write ups thank you
    once again.

  • […] to other startups like Zurvu and Killer Rezzy that do something similar and to restaurants like Alinea that offer pre-paid tickets. He also said that he’s open to working directly with restaurants (which should help avoid one of […]

  • […] to other startups like Zurvu and Killer Rezzy that do something similar and to restaurants like Alinea that offer pre-paid tickets. He also said that he’s open to working directly with restaurants (which should help avoid […]

  • […] to other startups like Zurvu and Killer Rezzy that do something similar and to restaurants like Alinea that offer pre-paid tickets. He also said that he’s open to working directly with restaurants (which should help avoid one of […]

  • […] startups like Zurvu[10] and Killer Rezzy[11] that do something similar and to restaurants like Alinea that offer pre-paid tickets[12]. He also said that he’s open to working directly with restaurants (which should help avoid […]

  • […] to other startups like Zurvu and Killer Rezzy that do something similar and to restaurants like Alinea that offer pre-paid tickets. He also said that he’s open to working directly with restaurants (which should help avoid one of […]

  • […] to other startups like Zurvu and Killer Rezzy that do something similar and to restaurants like Alinea that offer pre-paid tickets. He also said that he’s open to working directly with restaurants (which should help avoid one of […]

  • […] to other startups like Zurvu and Killer Rezzy that do something similar and to restaurants like Alinea that offer pre-paid tickets. He also said that he’s open to working directly with restaurants (which should help avoid one of […]

  • […] 酷評を浴びたMayerは、コンセプトを擁護している。レストラン自身が、ZurvuやKiller Rezzyなんか同じようなことをしてるし、Alineaはプリペイドのチケットを売ってる、と彼は言う。彼曰く、偽名を使ったりしないし、レストランには最初から堂々と目的を正直に話しているそうだ。偽名という、厄介な問題がないのは良いと思うが。 […]

  • […] in Chicago (Next, Alinea, and Aviary) has been using a ticketed reservation system. In this epic piece, Kokonas details why they started using tickets and what the effect has been (emphasis […]

  • […] to other startups like Zurvu and Killer Rezzy that do something similar and to restaurants like Alinea that offer pre-paid tickets. He also said that he’s open to working directly with restaurants (which should help avoid one of […]

  • […] to other startups like Zurvu and Killer Rezzy that do something similar and to restaurants like Alinea that offer pre-paid tickets. He also said that he’s open to working directly with restaurants (which should help avoid one of […]

  • […] to other startups like Zurvu and Killer Rezzy that do something similar and to restaurants like Alinea that offer pre-paid tickets. He also said that he’s open to working directly with restaurants (which should help avoid one of […]

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  • […] to other startups like Zurvu and Killer Rezzy that do something identical and to restaurants like Alinea that offer pre-paid tickets. He also pronounced that he’s open to operative directly with restaurants (which should […]

  • […] no-shows by a paid reservation system, though putting tables during risk.” They indicate to the ticketing system now being used during Grant Achatz’s Chicago restaurants Next and Alinea, and how they were […]

  • […] that we can reduce no-shows through a paid reservation system, without putting tables at risk. Alinea did it and dropped no-shows 75%. So let’s meet and talk about […]

  • Linda royer says:

    I like the idea of your ticketing system except that I cannot figure out how to book a table. I want to dine on sun Aug. 3,2014. Please can you help me book it.

  • […] TechCrunch, Gawker, Eater, startups like Priceonomics, niche sites like Collectors Weekly… even Alinea restaurant in […]

  • […] Nick Kokonas: Tickets for Restaurants – Alinea Restaurant […]

  • […] Nick Kokonas: Tickets for Restaurants – Alinea Restaurant […]

  • […] Alinea – Tickets for Restaurants – Turns out that creating a great user experience can make you more money and make your customers happier. […]

  • […] other startups like Zurvu and Killer Rezzy that do something similar and to restaurants like Alinea that offer pre-paid tickets. He also said that he’s open to working directly with restaurants (which should help avoid one of […]

  • […] der komplette Preis für das Menü bei Reservierung berechnet wird) funktionieren kann, zeigt sich am Beispiel von Next und Alinea. Beide Restaurants werden von Nick Kokonas gemeinsam mit Grant Achatz […]

  • […] Tickets for Restaurants (Nick Kokonas, Alinea) […]

  • […] restaurant Next, adjust the menu prices higher to coincide with peak demand times (check out this Big Data blog from Nick Kakonas of Alinea). For others, there reservation scalpers have emerged, much to the […]

  • Frank says:

    We live in the boonies but go to destination restaurants a couple times a year. I for one would love a ticket system. This last winter we called the French Laundry, and got a table after being on the wait list. It was great, but we had to come directly from SFO in traffic. A ticket system would have been easier.

    There really should be a secondary market for tickets (like if our plane had been stuck in Albequerque, or something). Do you have a tribe of locals who can pick up the no-shows on a particular night?

  • […] trying to cope with demand of all the guests desiring to score a reservation. Here is the blog post detailing creation of this restaurant ticket system, which is quite sophisticated. Warning – […]

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