by Mitch Kokai
Senior Political Analyst, John Locke Foundation
… [C]harging extra for tables at busy times should ultimately benefit almost everyone.
This is because the status quo is wasteful. A restaurant that could earn revenue from charging you for a reservation earns nothing from making you wait in line, but you bear a cost either way. And although “first come, first served” may seem fair, the idea takes no account of customers’ willingness to pay. I may be desperate to try a new restaurant, while you chose it at random, but if you called the restaurant first, you have the reservation. Everybody could be better off, but only if we’re willing to violate the taboos against buying and selling reservations and against the peak pricing of meals.
How might reservation apps and peak pricing make us better off, especially those of us on a budget? Restaurateurs will make more money in the short run. In the long run, this means more restaurants, more tables, and keener competition for customers. That, in turn, means that even if prices rise at peak times, prices at other times should fall. Richer customers will get convenience, while thriftier customers will pay less than they did before.
The coldly rational vision offered by the reservation apps, in other words, makes some social sense. It’s a vision of a world in which anyone can pay extra to get a table for a special occasion, yet everyone has more choices and more opportunities to save money by choosing an off-peak sitting.
Harford believes this process will continue, even if restaurants attempt to steer clear of the reservation resale apps.
So will reservation apps survive? Probably. Market logic demands that scarce commodities be traded in such a way that they reach the people most willing to pay, even though our gut tells us that this is no way for our favorite restaurant (or band, or sports team) to behave.
The obvious way to resolve the tension is by outsourcing the blame, which may explain why tech start-ups have taken the step of selling reservations while restaurants themselves maintain a dignified distance. Sasha Tcherevkoff of Killer Rezzy says that some restaurants refuse their share of the revenue that would come with a partnership, yet cooperate willingly with his efforts to prebook reservations for resale. They’re happy to fill their tables with high-rolling customers who reliably show up, but they don’t want to be associated with the sale of their reservations.
Annoying as it may be, the reservation market will help the restaurant industry work better. Just don’t expect many restaurateurs to say so publicly.