WHEN CUSTOMERS PAY UP FRONT, BUT NOT TO YOU

WHEN CUSTOMERS PAY UP FRONT, BUT NOT TO YOU

The roster of Internet-based restaurant reservation services has been stable over the last few years, with sites like DinnerBroker.com and SavvyDiner.com continuing to roll along. The segment leader is OpenTable.com, whose reservation management software also provides operators with a robust customer database. OpenTable, which seated its first millionth diner in 2002, now seats them at the rate of more than one million a month.

All three services make it easy for potential customers to book a reservation online. Their existence aids operators in attracting more customers, too, particularly for those hard-to-fill slots that occur very early and very late in the serving period. The cost of these reservation services is borne by the operator and the per-reservation fee operators pay is nominal. Both customers and operators seem to agree that gaining and managing restaurant reservations is one thing the Internet does well.

PrimeTimeTables.com, which opened for business earlier this month, works differently. Its charge for snagging a reservation off its list of New York City’s finest restaurants is sizable, and customers pay it, not operators.

No upfront fee is required for a basic membership. However, users have to pay:

• $35 for reservations purchased up to 48 hours prior to the reservation date/time;
• $40 for reservations purchased the day before expiration; or
• $45 for reservations purchased the same day before 1 p.m.

Premium memberships require a $450 annual fee up front, with the following fee schedule in effect:

• $35 for reservations purchased up to $48 hours prior;
• $25 for reservations purchased the day before expiration; or
• FREE for reservations purchased the same day before 1 p.m.

Can the purchaser cancel a reservation if his or her plans change? Sure, but that happens between the buyer and the restaurant. PrimeTimeTables won’t give the reservation holder his or her money back. "Once the reservation is purchased it is considered sold and there will be no refund," says the fine print on the PrimeTimeTables.com site.

Can the site deliver on its "Specializing in Impossible Reservations" promise? Oh yeah. A recent Friday night’s listing included choice 8 or 8:30 p.m. slots at Gramercy Tavern, Le Bernardin, Jean-Georges Vongerichten’s Spice Market and Mario Batali’s Lupa.

PrimeTimeTables isn’t saying what they do to get the reservations they sell to others. But the company released a statement saying "We are NOT selling tables at restaurants, we are selling the service of providing reservations for the most desired time."

That statement comes from Karine Bakhoum, whose well-connected KB Network News public relations firm counts many of New York City’s high-profile restaurants as clients. She’s married to PrimeTimeTables’ owner, Pascal Riffaud, although she is careful to note that the two companies are separate and that she does not represent PTT.

Nevertheless, Bakhoum gave an interview about PTT to foodie website eater.com. The reporter asked her, "To be direct, how is PTT not a reservation scalper?

Here’s how Bakhoum replied.

"It’s simply not. The business is not scalping tables. In New York people outsource everything from walking their dogs to doing their laundry. Clients of of PTT don’t have the time or patience to call a month in advance for their reservations, nor do they want their personal assistants on the phone all day with restaurants. PTT charges their customers for the service of providing reservations. It is so hard to get a reservation in New York between 7 and 9 p.m. Sure, anyone can go to dinner on their own at 5 or 10, but who wants to?

"The people who use the service are very busy and often don’t know 30 days ahead of time where they’ll be eating," Bakhoum continued. "These are executives at Sony, Citigroup, Bear Stearns and Deutsche Bank. Let’s say Mr. Yamaguchi is in town for a $19 billion deal. He’s not going to worry about where the deal-making meal is going to be."

Look at it this way and PTT is a brilliant idea. But why should operators play along and let someone else profit from their business, not to mention tying up prime time tables operators might wish to dole out to favored guests?

Here’s how Bakhoum answers that question:

"I think restaurants should be saying ’thank you.’ The PTT client is well-heeled. It’s the type of client restaurants should want. These are tables that are going to be ordering expensive wine and not worrying about the bill: real diners, business executives with real income. The bottom line is that the restaurateurs he’s Pascal has spoken to don’t mind at all. Plus he doesn’t book huge blocks of tables. He books to anticipate his demand and any tables he doesn’t use are canceled by noon, day-of. If he tried to get a table back at 12:05, it’d be gone."

Well-reasoned answers indeed, especially if all the prime tables PTT tie up in advance really do get filled up when PTT can’t get rid of them. Then the only downside lurking for operators is that they will be the ones who have to straighten out any problems that occur on site. Good luck explaining to someone who has already forked over $45 for a table at your restaurant that it’s not ready.

And then there’s the question of who’s creating the value versus who’s keeping the revenue. On that front, you’ve got to admire the sheer nerve of the PTT scheme. It’s in the business of selling something restaurant operators now give away for free-restaurant reservations-by interjecting itself as an uninvited middleman between the operator and his or her customers, and then keeping the sizable proceeds for itself. How sizable? Keep in mind that the scalping profession is built around special or quasi-special events-the Super Bowl, a Barbra Streisand or U2 concert, regular season NBA games in some markets, etc. Eight o’clock reservations at Le Bernardin and other great restaurants in New York City are in high demand 365 days a year. This could be a wildly lucrative gig for Mr. Pascal Riffaud.

If, that is, New York City restaurant operators play along. We’ll give them a few months experience with the PTT system and do a follow-up story on how they react.