Have you ever tried to reserve a table at the hottest restaurant in town and kept getting turned away?
You’re not the only one who feels this way.
Certainly, the low- and mid-priced restaurant business has suffered recently. McDonald’s (MCD) reported a decline in U.S. sales in the second quarter, and Dine Brands’ (DIN) U.S. sales at its IHOP and Applebee’s locations fell 1.4% and 1.8%, respectively.
But high-end restaurants, like those found on online reservation apps like Resy and OpenTable (BOOK), have been able to grow their business. American Express (AXP) “has spent $100 billion in 2023 in restaurant alone,” Resy CEO Pablo Rivero said in an interview with Yahoo Finance. (American Express bought back Resy in 2019.)
For American Express, that $100 billion in restaurant spending was an all-time high. And that means that number goes beyond “pandemic revenge” spending in 2022. Amex’s wealthy cardholders love to eat out. Rivero said it’s a “passion area” for them and that demand has translated into more restaurant reservations through the Resy app.
In its tenth year of existence, Resy recently exceeded the 600 million reservations mark on its platform.
However, Rivero said even upscale, hip restaurants are not without challenges. Restaurants struggle with high rents, food inflation and labor costs, with challenges varying from city to city.
At the same time, Rivero noted that new restaurants are still opening. Even new concepts like Resy’s Misipasta, which opened on Governors Island in New York City, are super popular, he said, and appeal to people willing to shell out $450 per seat.
Why can’t I get a reservation?
But the reservation business that Resy is in also has a dark side. There are numerous complaints about bots flooding the online systems, buying up seats and reselling them at exorbitant prices.
New York Times restaurant critic Pete Wells lamented in his recent column the loss of the human touch in restaurants with online reservation systems and prepayment for meals through other apps.
Resy and Rivero said they are combating bots and “reservation fraud” in general, which they hope will alleviate some of the frustration of restaurant patrons in busy urban areas. Rivero did not say how the app is combatting the bots, but other companies have done so by blocking certain IP addresses, strengthening login procedures to keep virtual users out, or using third-party security services.
It is not only customers who suffer from reservation bots and black marketeers; restaurants also suffer damage from unused reservations.
As guests complain about bots, scammers, and the inability to access the new hotspot, Rivero tries to steer the conversation away from those complaints and toward how Resy can help users get reservations at places that fly under the radar—low-key restaurants or jam spots that are making a local buzz but aren’t very well known.
“How do we help (restaurants) connect with more diners? We just announced a new version of our app that lets you discover the places in your area that you might know, right? So the focus is really on connecting restaurants with diners and encouraging diners to try new restaurants.”
Resy says the company is working on software that will help users identify these up-and-coming spots before they’re written about in foodie blogs like Eater or Grub Street.
Translation: Trying out new and hidden restaurants also increases the chances of getting a reservation for 8pm, even on a Saturday night, making Resy users happier.
As for those “neighborhood dust storms,” or understated hidden gems you might miss, Rivero highlighted a few select spots in New York City and Miami in the video above.
Pras Subramanian is a reporter for Yahoo Finance and covers the automotive industry. You can follow him on X and further Instagram.
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