that's smart, that way you get tricked into including yet another line item in your tip
Out of curiosity, how does that work? When making a reservation do you have to provide your credit card? I highly doubt that given that it's Germany :) Seriously though, how do they make people pay?
In my experience, restaurants taking deposits will actually charge the deposit to the card at the time you are making the reservation and credit it towards the final check amount if you do show up.
“My work has an excellent and free cafeteria. I just eat there and stuff my pockets with things for the company bus ride to my apartment in the hive my company developed.”
“I’m kind of creeped out by restaurants because of the whole power dynamics of someone there to ‘serve’ me. And on top of that they want to know all kinds of stuff about what I want to eat. I think they are collecting all that information and then targeting me with advertising.”
I'm not aware that there is variable or dynamic pricing component to it, however. That's a great idea and something I bet they are considering.
In practice, dynamic pricing it is not a panacea. You still need to beat the arbitrage market. Charge too much: customers don't reserve. Charge too little: brokers snap it up.
I bet there are some eager GMs thinking about it.
A couple reasons restaurants don't do this:
1) Loss of quality control over customer experience. For example they provide a $100 dinner, but the client expects a $200 dinner. That creates bad experience
2) Desire to maintain accessibility on price point (same reasons artists don't charge more for tickets) and perceived inequities of charging extra for reservations
3) Rewarding loyal customers who value the food / brand / hospitality rather than the highest bidder which tends to bring in out-of-towners, Amex centurion card holders, wannabe influencers -- people that don't help create loyalty
There are many other reasons I'm sure as well. Most chefs/GMs/owners I talked to at the time emphasized that they sincerely are not in this for the money, and yes, they like to make a living, but being able to build a community of food lovers who are passionate about their brand is what they really care about. I ended up pivoting to try to build a shift management app soon thereafter...didn't work out but a good entrepreneurship lesson!
[0]https://techcrunch.com/2014/07/03/everyone-seems-mad-at-rese...
Could only charging for peak times cause these downsides?
I agree for places like doctors visit though. Everyone should stand in queue rather than a limited reservation.
What if my work schedule isn't flexible? Having a queue and no option for an appointment time means that I'll essentially never be able to guarantee a doctor's visit. I'll just have to schedule time off and pray that the line isn't too long.
But I do agree with your point ;)
It would certainly help get people to consume less during major events and many assume it to be a necessity to make a fully renewable grid work. On the other hand, I struggle with the relentless need to complicate daily life (e.g. being prodded to have an app for everything that doesn't need one).
Time-of-use rates (peak vs off peak hours) have been around forever. Power users (huh, pun…) like ev owners do it, or new construction sometimes isn’t given an option, but that’s hardly foaming at the mouth.
I heard it tossed around in places like Texas, but most people realize it’s risky AF cause one high-demand day, eg from a polar vortex gone unusually far south, could easily wipe you right out.
Is it like a group of off-grid enthusiasts who can go a day or two off generators or batteries that make all this foam?
Residential users ussally don't have direct access to the wholesale market and will contract with a provider for a fixed rate plan or a variable rate plan where the rate only changes every month or so. (Their can be other plan structures like, peak vs off peak rates or 'free nights', etc)
Commercial/Large industrial users will buy on the wholesale market, some manufacturers will get a subsidized rate for having remote controlled breakers installed so the grid operator can shed lead when demand is high.
Texas definitely went too far with this model. It encourages the development of natural gas peaker plants that sit ideal all day and only spin up for a few hours when the price isn he highest. (There's also a whole corrupt saga with the natural gas monopoly in the state from the early 00's when the GOP finally got hegemonic control of the state)
I shouldn't have used "foaming at the mouth" as the connotation is pretty negative. I should have said extremely committed or something like that. These are all smart and good people trying to solve a major problem that's been ongoing for decades. The economist in me agrees with them, but part of me also has an aversion to the constant complexity creep in our lives as well as risk.
The reason why less-well-off folks are more likely to support a command economy is exactly because they are at the bottom of the demand curve, thus, receive almost no consumer surplus ever… it’s like they have dynamic pricing for almost every item they buy.
It big data is allowed to defeat the consumer surplus, don’t be surprised when the political winds quickly move toward price controls.
Taking this further, if big data can eradicate the consumer surplus, then maybe big data could make price controls more feasible. Maybe big data actually could make a command economy kinda work.
Yep, but ironically it would destroy even more of their surplus, so, at least for now, they're still benefiting.
But also, why shouldn't surplus be destroyed? You don't see people complaining when business surplus is destroyed, and it is because it benefits one party (ours) over the other (theirs), it's simply hypocrisy to think so. For a truly efficient market, surplus on either side should not exist.
No one who is excluded from affording a service due to dynamic pricing going higher than their budget is "benefiting".
I'm having trouble interpreting the boundaries between individuals and groups here in your comment, the language seems to freely and fluidly move between referring to one or the other.
> No one who is excluded from affording a service due to dynamic pricing going higher than their budget is "benefiting".
If everyone cannot afford a service, then that means there is limited supply. Any option other than increasing the simply simple favors one party over another for some reason. For example, if price is kept lower than the highest bidder, then it favors whoever was first (which is unfair too). Or you can do a lottery system, which is “fair”, but not necessarily desirable for a society of every limited service is distributed via lottery and hence removing all incentive for competition.
What is your angle, why are you so adamant to defend this behavior?
> than increasing the simply simple favors one party over another for some reason
This comment chain is about dynamic pricing, which does not necessarily involve third parties (assuming you mean scalpers).
> That happens anyway in a market
What happens anyway? Price discovery? Dynamic pricing allows for better price discovery, that is obvious. Whether it is done by sellers or resellers is irrelevant.
Obviously, different businesses have different mechanics, so the cost of that price discovery may not be worth the inconvenience. For example, a restaurant might want to eliminate scalpers so they can require IDs, but still increase their price with every 20% of capacity they sell.
You'll have to clarify your definition of "discovery". Your attempt to keep it vague is suspicious to say the least.
What dynamic pricing actually does is define and enforce pricing according to unilaterally controlled procedural structures. It is basically a capture of the pricing mechanism. Price discovery already happens in the market as the result of people buying and selling things, this is what's already obvious and is understood from Finance 101 by literally everyone.
Traditionally, how price discovery occurs in goods and services (excepting speculation) is 1) market research and 2) adjusting offered prices in cases of massive recognized disparity between supply and demand to maximize the revenue. As an example of 2, if a restaurant wants to start charging for reservations they first set a price, eg $20, and if they book solid they raise the price after a couple weeks or if they can't get any revenue from this they lower the price. That's the extent of "dynamics" that are necessary here.
You don't need to create some additional service that adjusts these things on the fly, first there is no value for the manager who's already watching and synthesizing this activity as part of their understanding of the operations, and also, it costs more for everyone involved compared to the baseline in order to, what, create one job in the economy?
A seller cannot “enforce” any price, buyers have to choose to buy at a price. That is the price discovery.
Price discovery already happens in the market as the result of people buying and selling things, this is what's already obvious and is understood from Finance 101 by literally everyone.
Correct.
> You don't need to create some additional service that adjusts these things on the fly, first there is no value for the manager who's already watching and synthesizing this activity as part of their understanding of the operations, and also, it costs more for everyone involved compared to the baseline in order to, what, create one job in the economy?
With computers, this is not even a job. Lots of businesses like airlines and hotels already use programs that use data from previous years’ trends as well as searches and accrued reservations statistics to forecast demand and constantly update the price.
As I wrote in my previous comment, a simple program can raise prices as supply decreases, a slightly more advanced one can keep track of the pace of reservations and reduce prices if the pace drops, or if it gets too close to the expiration date for an expiring good.
In the case of a single restaurant like here, I don't see a huge issue though.
Capitalism is a tool, not a law of nature. Perhaps we quite simply do not want to eliminate all surplus, because we like the result of a system with surplus.
You need only look at the difference between catering/decor for a wedding and catering/decor for any other event to see how much wealth extraction... how much poorer we would all be, if we lose the consumer surplus.
That is almost always the case anyway. Things are priced at the point that one would pay. To lament that on behalf of the consumer and not of the business is hypocritical, or more concretely, self-interested, as of course we all are.
> how much poorer we would all be, if we lose the consumer surplus.
To summarize my point, imagine how richer we would all be if we didn't have to pay anything at all. Unfortunately, that is a false world; production depends on consumers paying what they can and businesses charging what they must.
No, things are priced at the point that the market, as a whole, is willing to pay.
Most purchases you make don't start with the merchant checking how much money you have in your savings account.
>That is almost always the case anyway. Things are priced at the point that one would pay.
No... not at all. When you need to fly home for a funeral of a close friend, suddenly plane tickets cost $10,000 for you and only you. Your neighbor could get the same flight for $200, but would not be allowed to transfer the ticket to you, because, well, them's the rules in a no-consumer-surplus world.
The vast, vast, vast majority of the time, most people are paying far less than the would pay for things if the companies they bought them from could use dynamic pricing. This is what the consumer surplus is, and is why markets generally worth for both consumer and seller.
No? How can the neighbor get a different deal than one you are looking for in the case of plane tickets? It's not like the airline knows that you are flying for a funeral. Even if they did, as you mention in a non-surplus world, well, yeah, that's how markets work, people have different needs and pay for that privilege. There are business and first class tickets for a reason, as well as prices being more expensive during holidays and summers. Of all of the examples, you chose one of the worst as flight prices are inherently dynamic.
This is literally how dynamic pricing works, and it happens all the time.
>It's not like the airline knows that you are flying for a funeral.
Yes, they could. A company armed with the biggest of big data could scrape that information fairly trivially. This is my entire point. The more companies know about us, they more they can use dynamic pricing to extract the highest price we'd probably be willing to pay... personally.
>There are business and first class tickets for a reason, as well as prices being more expensive during holidays and summers.
These are different products. Dynamic pricing is different pricing for the exact same product depending on the who the customer is... typically their demographics data.
since when where there not different prices for tickets based on seating? if a concert is only one or two nights, then the nose bleed seats could be the same as eating at the restaurant on a Tuesday night, while the front row seats would be eating on Friday nights.
Ticketmaster as well is offering “Platinum” tickets which are just more expensive tickets with no better views or perks.
I don't think most people mind when a restaurant sells the moral equivalent of tickets to dining slots ahead of time. I've visited restaurants that do that, and had no problem with it.
The issue is that you were taking something that was free (open reservation slots), and then forcing people to pay for them if they wanted to dine there... when they could have just made a reservation -- perhaps farther in advance -- for free.
I agree that most people in the restaurant business aren't in it for the money (if they are, they've picked the wrong industry). But scalping reservations to their restaurants is making things worse, not better.
"market maker" ?
That's pretty strong. I won't name all the people doing much worse, but lots of people do jobs that are only about profit, such as much of the finance industry, tech industry, etc. If she was a developer for Google's ad system, would you do the same?
So first come first serve is an okay way of allocating resources, but charging a higher price is not?
But all of this is sideways to when and whether scalping is moral or, at least, preferable in society. Not all actions which increase allocative efficiency are things we actually want in society.
Otherwise, kidnapping and ransoming children back to their parents would be a boon industry.
And your last two paragraphs are nonsensical, you are comparing the right to eat at a top end restaurant with the right to not have your kids kidnapped it’s downright laughable that you’d see such a moral equivalence.
> This is by definition increasing economic efficiency
Bespoke markets are by definition economically inefficient. There's a reason most people buy mass-manufactured cars, and it's not just the cost, it's that bespoke car production cannot make enough cars to meet demand.
At absolute best a bespoke market may sell a few more of a limited set of dining opportunities to others through the additional marketing medium. At better what bespoke markets do is maximize profit taking. At bad this maximization of profit taking channels money to the middleman that otherwise would have gone to the merchant (as there will be people who pay for a reservation and then order the cheapest meal at the restaurant, as they can't afford more). And at worst this makes it inconvenient for people to frequent the restaurant, resulting in an overall reduction of customers. The bad and worst circumstances can result in fewer operating restaurants. And artificial resource scarcity is the opposite of economically efficient.
The restaurant cares about increasing people's utility, not about only serving a the wealthiest fraction of people who can afford their food (those with the highest ability to pay).
Edit: The reservations also weren't free. For several restaurants I've had to figure out at what time new reservation open up, set an alarm and then still sometimes not get a seat because it's already booked out. When I traveled to Spain we had one place we called late at night our time to get a reservation. None of that is free. I'd happily paid extra to avoid this trouble and beer certain that I can go to the restaurants for which I'm traveling to another continent.
I used to do consulting for a extremely high-end hotel where a single night could easily cost $3k+. Every employee got to spend a night for free every year and they got a number of friends and family discounts that were 90% off.
Restaurant reservations are fundamentally different compared to, say, Taylor Swift concert tickets. Loyalty to an artist is multi-channel (concert tickets, merchandise, CD, streaming) and thus difficult to track and reward. Restaurant reservations occur at a single point of sale. It is much simpler, conceptually, to first offer up Friday 7pm reservations to people who have dined with you in the past, at a lower price, then open them up for a higher price to the general public if they haven't sold within a reasonable time frame.
If you facilitated the restaurants adjusting prices for prime bookings, then maybe it would have come across differently.
Also nearly 10 years later, the world is a much worse place. I wouldn't be surprised if blatant booking scalping didn't really raise any eyebrows.
At least for ultra-fine dining like El Buli, Noma or Central 1) should be irrelevant. I've had this argument with restaurateurs before and it seems that they are a lot more concerned about some magical "fair" prices than much of the customer base. I've looked several times into traveling to Copenhagen to eat at Noma. At that point, who gives a shit if the meal is $300 or $1,000?! It all pales compared to the travel cost. If people aren't willing to pay it, the auction won't go that high. Easy peasy!
And then I keep hearing that fine dining isn't sustainable. Just charge more!
Essentially, they’ll bill you 50€ per person and you’ll get it back (aka the authorization is cancelled) when you show up, but the transaction is executed when you don’t.
A few years back there were many empty tables during prime time because of the reservations, and now there’s barely any table unused.
It seems to work and I’m absolutely happy to reassure the restaurant with money that I’ll be there.
Maybe make a FakeryBakery pay kids a commission to collect grocery story Kids Club Cookies and resell them.as half-price boxes.
Far worse ideas sprout everyday and many get positive attention as well. Judge the process along with the idea.
With the context in this thread I would implement it as dynamic cancellation fees. You pay to reserve, but 100% reedeemable on bills. If you cancel, you lose a clearly notified percentage based on how popular the time slot is. Might work while still staying true to the idea of fairness.
If the spot itself is actually worth $200 then the restaurant was forgoing that per seat and suddenly made $5000+ per day. No restaurant is going to pass up $1.8M of “free” revenue.
Either the seats are worth the price or they’re not.
Restaurants should of course disclose -- very clearly -- at reservation time that the deposit and slot are not transferable, and that IDs will be checked at the door. If you choose to make that reservation, knowing that, and then show up without an ID, that's on you.
> ... but didn’t notice I would have to bring my ID
That would fall under the category of "that's on you".
Regardless, I would hope that a restaurant would try to find another way to verify you are who you say you are, like perhaps asking for the credit/debit card you used to make the reservation, or even just asking to see something on your person that looks vaguely difficult to forge and has your name on it. We're not talking about a high-security situation here.
I’m not from the US, and I don’t live there. I was talking about generally in the world, not about the US.
Also are there other options for ID? Eg in UK, Australia, NZ you can get identity cards that prove your age. Australian one costs $77 AUD.
No. In my country there is a requirement to have a certain amount of training with a professional driving instructor. For most people here the cost of that will amount to about $3000 USD. And it takes a lot of time too.
Just because I don’t have $3000 USD to shell out for that currently, nor the time for those lessons and self-study, does not mean I cannot afford to go to a restaurant.
Yes there are other options, but I have no use for a National ID card really when I already have a passport. Having to show ID only happens in two cases for me most of the time:
- border control when I am traveling, in which case my passport is required anyways in many countries
- retrieving packages that were too big to be delivered in my mail box. And even then most times I don’t have to show ID
It also used to be the case that I had to show ID when buying alcohol and tobacco. But being 32 years old now I usually don’t get asked for ID in the store in my country anymore.
Sounds like what the parent said, "that's on you" to fix that, then. In the aggregate, your (as well as those similar to you's) business is simply irrelevant to the vast majority of businesses that need to check IDs. Just because you don't want to get such a driver's license does not mean that a restaurant must honor your choice.
The US issues passport cards you can stick in your wallet, as well as the books. I carry mine because my state ID isn't "REAL ID" compliant, which is amazingly a thing that starts to matter before my ID expires.
Trouble is, I keep forgetting to change it back so now we never know what name a reservation will be under.
Just commit and don’t change plans.
Tell everything else this time is already booked and paid for.
"When guests drop $100 or more just to walk in the door, “people have [the] wrong expectation when they come” he says because those expectations might be unreasonably high."
Some do charge something like $50 for the reservation. And if you can't come because there is a major blizzard in the city, tough luck ...
Tablz from Toronto does dynamic pricing.
On the other hand if it gets more granular... there may be no winning. Budget-conscious will feel they're being priced-out, and the fancy-rich will not go to a restaurant that nickle-and-dimes / seems desperate for every last cent.
I have to check every Tuesday at midnight for the 5 minutes that the next weeks tables open up before they are booked. Then I have to put down a credit card. Next I get bombarded with push notifications and texts with increasing urgency leading up to dinner that I must show up on time or forfeit money. When I show up on time they don’t seat me but suggest I go wait at bar and buy drinks. Finally they seat me and remind me I only have the table 90 minutes.
You know what, just charge me for seats. Let’s just go completely nakedly economic because you’re already 90% there with extra steps in the way.
It is called the hospitality industry but you’d never know it given what the dining experience has turned into.
As someone that lives in Mexico City where dinners (and lunches!) easily last 3, 4 or even 5 hours this sounds horrifically demeaning.
Because they are already raping you on the price of their food and dont give them any more ideas.
It isn’t a new idea. Free outside hours, booking fee with credit during prime time.
Restaurants could pick how much they charged for reservations, whether that cost could be applied to a portion of the bill, or whether it was a straight up auction for spots.
They thought there would be pushback from customers, but the customer feedback was excellent.
The friction mostly came from the restaurants. They either had antiquated reservation systems (many on pen and paper) and didn't like the idea of letting software control their table planning (since free reservations could be cancelled on the spot on the whim by the serving staff but cancelling a paid slot really irked everyone). Or poor accounting practices that made it really hard for them to accept that a customer already prepaid $500 for a meal in another system that'll all be bundled in a big check later. Or that they couldn't be sketchy about customer tips if it's being tracked.
It was also difficult to scale the business quickly because every restaurant had to be trained and onboarded individually, and every restaurant had an unicorn of an operation that the software had to be able to handle.
That way they create a situation where you SEE how popular a place is. A line is much easier to see than a date dropdown that is booked out for 2 months.
It's also easier to keep the restaurant full. A full reservation where not everybody shows up might cause empty tables.
A long line fixes that.
Because let's be honest -- dining at certain highly exclusive restaurants on a Friday night is just as much of an event as going to the theater. These aren't neighborhood restaurants with average food that are meant for locals that we're talking about here. These are fancy. If you want to eat at 7 pm on Friday, why shouldn't it be more expensive than Tuesday at 5 pm?
And if restaurant owners don't want to take advantage, they can always offset it by lowering the food and drink prices slightly the whole week long. (Not that they're obligated to -- making a profit is already hard enough as is.)