image description February 24, 2016

5 Questions: Nick Kokonas

5 Questions: Nick Kokonas

The Future of Restaurant Reservations

Chicago restaurateur Nick Kokonas co-owns Alinea, Next and The Aviary with chef Grant Achatz. After recognizing the downfalls of traditional restaurant reservations, Kokonas set out to transform the industry with his ticketing system Tock. Similar to buying tickets for a concert or sporting event, Tock creates a transparent and seamless booking experience. Using a ticketing system cuts down on no-shows, allowing for better planning, a reduction in food costs, and for a restaurant to investment more in creative opportunities and hospitality. It’s a win-win for everyone. Kokonas tested the system at his restaurants before making it commercially available last year. Since Alinea switched to tickets, profits are up 38 percent. It’s the future of restaurant reservations, and many restaurant owners are jumping on board. Below, Kokonas talks about the inspiration for Tock, what’s wrong with OpenTable, and how Tock improves the experience for customers. What initially inspired this ticket idea? Was it difficult to get your business partners onboard with the idea?

Nick Kokonas: For many years, I listened to our reservations team at Alinea answering the phones and telling customers, “I’m sorry, but we are full that evening.” Seventy percent of people ask for the same thing, a Friday or Saturday night at 7PM. We’d have a lengthy conversation with callers explaining that we were truly fully-booked and they’d rarely believe us. Saying ‘no’ to customers is never good hospitality, even when you have no choice. I started thinking that there must be a better, more transparent way of booking our restaurant. When we came up the idea for Next, which changes the menu and cuisine every 4 months completely, it felt like an opportunity to take the risk of pre-selling our bookings. Indeed, most people in our company thought this was a terrible idea—simply because, I think, no one had ever done it. Restaurants are risky undertakings at any level and this just added another variable. However, after building a rickety system with just one programmer and myself, we sold over $500,000 in bookings in the first 24 hours. Then, over the next few years I began to refine the ideas and the system to work with a la carte restaurants and more casual places. I wrote this blog post, which detailed the ideas and the data from Next, Alinea and the Aviary. It received so much attention—millions of page views—that I knew the time was finally right to build the system properly. That’s when I enlisted the help of Brian Fitzpatrick, who was the co-lead of Google’s Chicago engineering office. He soon quit Google after a distinguished 10-year career to be my co-founder and CTO of what became Tock. We have a world-class engineering and design team and have now booked over $70M and seated over 380,000 guests… and we’re just getting started. What’s broken with the old fashioned way of reservations or OpenTable? How does Tock improve on this?

NK: I could write 5,000 words on this alone! First, start here. That’s their current online help! The part that faces restaurants is janky old software and hardware that they are still selling. Those old touchscreens you see everywhere are 1,000 times worse than any iPad, but that’s their business model—charge for installation, hardware, software, AND per diner booked. For diners they ask date, time, party size… then instead of showing you a real inventory it just says whether it’s available or not. Then, 95% of the time a customer will pick up the phone because they have been conditioned to not believe the results of their query. In addition to delivering a clear inventory via mobile web or any web browser (importantly NOT an App, with nothing to download or update ever), Tock also allows restaurants to offer specific Experiences for booking—not just a reservation to the restaurant in general. A restaurant can also offer Chef’s Tastings, private dining, special events, really anything they can think up, all on one page. Tock sits on Google Cloud Services and pushes this inventory to a person’s mobile smartphone in 30 to 40 milliseconds! It’s not an app; it’s real engineering and technology. OpenTable still sits on very, very old ideas and code base. Explain the impact of reservation no-shows on the restaurant business.

NK: No-shows make up 7 to 8 percent of all reservations by some studies. And when you take into consideration what we call “short seated tables”—tables that reserve at 6, but show up as 4 people—it’s far more than that. So restaurants over-book on Fridays and Saturdays and that’s why you have to wait at the bar. It’s just like an airline, not great hospitality. And this is because restaurant margins are very thin, 5 percent of the people not coming can destroy the bottom line. A small number of inconsiderate patrons sully the experience for everyone sadly. What are some of the less obvious ways the Tock system positively affects restaurant business?

NK: Better planning and reducing no-shows to almost zero means that restaurants can offer better hospitality and more personalized service. Food waste is reduced because of this planning, and food costs are reduced. Labor used for answering phones can be pushed to more direct service, improving the guest experience. It creates a virtuous circle… cost savings —> greater margins —> more investment in the guest experience —>  more creative opportunities —> happier guests —> go back to the start! How does Tock improve the dining experience for customers?

NK: Clear and transparent bookings show integrity and comfort with the process. Tock also eliminates the phone call confirm, which frankly no one likes anymore. It’s way easier to swipe four times, book, and get a nice confirm email with Google Maps embedded. But most of all, Tock lets customers discover all of the Experiences embedded within the restaurants we love and book them seamlessly and easily. A ticketing system makes total sense for high-end restaurants like Alinea and Next, but what about smaller, more casual restaurants with less demand for reservations?

NK: Tock works really well for casual restaurants for just the same reasons. I especially love the example of the walk-in only places that are busy. How many people avoid those thinking there might be a 2 hour wait, but in fact, that particular day there isn’t? What about a bad weather night? The ideal situation for casual places is a mix of local walk-ins with booking a simple reservation next to a unique experience, all in one place on Tock.  And there are restaurants that are doing amazing work with that. See the partial list here. Tock offers five different kinds of reservations. What are the options? How do they differ from each other?

NK: Ordinary reservations and deposit tickets, which require a small deposit that is fully credited towards your final bill. It is NOT a cover charge or a fee that goes to Tock; it only goes to customer food and beverage purchases. Event tickets, or pre-paid bookings for private events or wine tastings, which is built right into Tock so a restaurant does not need to pay the high fees of, say, EventBrite or TicketFly… and they get a restaurant specific piece of software. Finally, Prix Fixe bookings for high-end places like Alinea. Explain the dynamic deposit ticketing system. Is that sort of like how Ubers are more expensive at bar time?

NK: Yes, but critically, we encourage pricing to move in TWO directions: up during busy times and DOWN during weekdays or early dining. We do that at all of our restaurants and it makes them more accessible to people at a lower price point. So, I don’t like the Uber comparison. How does Tock handle gratuity?

NK: This depends entirely on the restaurant and local regulations. It can be voluntary gratuity, a service charge or similar admin fee, or nothing at all and it’s then handled at the restaurant, or never if it is included in the price of the food, which I think is the future. We have not taken tips at our restaurants for nearly 6 years by the way. Biggest way you think technology is changing how we dine out?

NK: Ideally all restaurant technology is in the service of better hospitality. Tock is where technology and hospitality meet.





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