Reserve: New dining app with innovative value capture model
Reserve is a new mobile-only dining reservation app backed by co-founders of Uber and Foursquare that recently launched in New York, Los Angeles, and Boston. Reserve aims to compete with OpenTable, the well established incumbent, by creating greater value for the customer which, the Reserve management team believes, entitles them to charge the customer instead of the restaurant, which are arguably running their business on a razor thin margin.
Value Creation: Reserve is a mobile-only reservation app that works similar to OpenTable in that it allows users to search for available tables at a restaurant by specifying date, time, party size, and cuisine. Where it adds additional value for the customer is that, unlike OpenTable, it provides curated editorial content for the restaurants on its platform, and the killer feature is a seamless, Uber-like payment system which charges the customer automatically at the end of the meal. Integration with Facebook API means that waiting staff of the restaurant know what you look like and greets you by your name when you arrive, making you feel like a regular even if it's your first time dining there. Reserve claims itself to be a concierge service, rather than just a reservation app.
For the restaurants, the automatic payment through the Reserve app has immense value as it shaves off time at the end of a customer's visit and hence improves throughput during busy times. Moreover, unlike OpenTable, Reserve does not charge the restaurant any amount at all to provide them with customers.
Value Capture: Reserve charges customers a $5 flat fee for making the reservation, and is currently the only revenue source. Given that majority of restaurants on the platform are high-end fine dining, it's a small addition to the customer's final ticket for the value created. There are rumors that the management teams subscribes to Uber philosophy of surge pricing, and in the future might allow customers willing to pay a premium for a prime time reservation at the hottest new restaurant to pay more to secure the table. While most customers might protest, this model can have huge ramifications for restaurants who are currently not able to monetize the demand they generate.
While philosophically this notion of surge pricing might bother some, thinking like a true economist, it makes sense to allow supply and demand forces to dictate what price the customer should pay. The concern is, that unlike transportation apps like Uber and Lyft offering a time-critical service, would the notion of surge pricing translate to fine dining reservations - where the customer has numerous alternatives and no time constraints.
I used the app this weekend to book a restaurant for a date night. I found a restaurant through the editorial content that I would not have otherwise found, and maître d' greeting us by name was very welcomed. The payment was seamless at the end, but the app does not show you an itemized receipt so we had to ask the server for the check anyway, hence not saving us or the restaurant any time. The app does need some product tweaks, but it does have the potential to become a true restaurant partner and create, and capture, value for a certain subset of customers. Uber for dining indeed.
dc are you behind this app or this is just a post about it?
Entrepreneur in ad/marketing tech and generative media AI. Tokyo and San Francisco Bay Area.
9yVery interesting. But a key differences with something that makes Uber successful is that customer doesn't care and can't easily control which driver picks them up (at a minimum level of quality), Uber owns the relationship with the drivers, and the drivers are mobile and fairly random so the drivers and customers cannot efficiently disintermediate Uber, and prices are set by Uber not the drivers. However, past ease of booking, the restaurants and customers can easily disintermediate Uber after the initial reservation, the restaurants control the pricing and Uber would be hard pressed to pressure price decreases or increases in service past occasional promotions (because of the disintermediation capabilities). And since pricing isn't standardized like it is for any driver type that you get, I nearly always want to double check that the waiter didn't screw up my order, so this "seamless" payment function actually creates a pain point because, as you did, I'll have to ask for a receipt when the restaurants and Reserve system may move away from receipts. Not sure if it'll make it any further than OpenTable, but I'm interested to see where it goes!
Executive Director at Boston Ballet
9yI also think the pain points it addresses are too limited for widespread adoption.
Product Manager at Google
9yInteresting app Dhruv Chopra. Thanks for sharing. Doesn't look like this is something that will scale like uber though, since it seems to be focused on high end dining, and is targeting customers willing to tack on $5 to their dinner bill. Doesn't sound like a big customer base to me.