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Why booking a table may soon mean buying a ticket

Both restaurant and customer take a risk when they make a reservation. Is the table really going to be ready at 8:00? Will the party of six be a no-show? Chicago restaurateur Nick Kokonas, co-owner of elite restaurants Alinea and Next, says one way to avoid the waste of broken reservations is to sell prepaid dinner tickets. Economics correspondent Paul Solman reports on Tock, a new tech startup.

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  • JUDY WOODRUFF:

    Before you head out for a meal tonight, a story that asks, how much do you really want that dinner reservation?

    Economics correspondent Paul Solman explores why some restaurants are requiring customers to pay for their meal ahead of time. It's part of our ongoing reporting Making Sense, which airs every Thursday on the "NewsHour."

  • WOMAN:

    Good afternoon. RPM Italian.

  • PAUL SOLMAN:

    A popular midrange restaurant in Chicago. Looking for a prime-time table a few weeks out?

  • WOMAN:

    It looks like I can do 5:00, or you're looking at about 10:00 p.m.

  • PAUL SOLMAN:

    Reservations, it seems, are a problem at, and for, pretty much every eatery tonier than Arby's, all the way up to Alinea, number one in Chicago on TripAdvisor, 26th in the world, says Restaurant magazine.

    To co-owner Nick Kokonas, reservations can be a dance of deception between restaurant and customer.

  • NICK KOKONASThe Alinea Group:

    I think we have all had that experience where we call a restaurant, and we feel like the person's lying to them. It's evidenced by the fact that, when you show up at an 8:00 reservation on a Saturday, your table is hardly ever waiting for you. PAUL SOLMAN: Why is that?

  • NICK KOKONAS:

    One, there's a no-show rate of 10 percent, 12 percent.

  • PAUL SOLMAN:

    So, restaurants are overbooking.

  • NICK KOKONAS:

    Just like the airlines do.

    And the other thing is that they're afraid to say no to people. So, they know people will, if they arrive at a restaurant and the table's not quite ready, they will go to the bar for 40 minutes, they will spend a little more money, and then they're not going to leave at that point. It's Saturday night.

  • PAUL SOLMAN:

    So, the restaurants lie to the people, and then the people who know they might not show up are lying to the restaurant.

  • NICK KOKONAS:

    Right. I think it's a minority of the restaurants and a minority with the people, but it sort of spoils the kettle for everybody else.

  • PAUL SOLMAN:

    Alinea, he says, played it straight, at considerable cost.

    The Temple of Molecular Gastronomy he created with chef Grant Achatz serves salad that's still growing, an 86-component lamb dish, a helium-filled green apple balloon for dessert, cuisine that doesn't come cheap. At a restaurant where dinners for two, including wine, tax, and tip can reach $1,000, no-shows are a pricey proposition.

  • NICK KOKONAS:

    We had about 110 people a month that didn't show up who said they were showing up. And you multiply that by a few hundred dollars a person, and all the time it takes to make all that food and all the waste, I mean, it's $400,000, $500,000, $600,000 a year, just at our one 64-seat restaurant.

    This is a problem which is ubiquitous in a huge industry. Eight percent of the GDP, or something like that, is food service.

  • PAUL SOLMAN:

    So, four years ago, when Kokonas and Achatz opened a new restaurant, called Next, they replaced reservations with tickets, requiring full payment in advance. In 2012, Alinea followed suit.

    But Kokonas thinks tickets are an option for restaurants far more modest than his own.

  • NICK KOKONAS:

    In the case of Alinea or Next, we charge for the entire meal. In a more casual restaurant, that the check might be $25 a person, it's just a $5 or $10 deposit. And it's very important to note that all of that money, it's not a cover charge. All that money gets applied to your bill.

  • PAUL SOLMAN:

    So, people, just by putting down $5 bucks, will then more consistently honor the reservation they have made?

  • NICK KOKONAS:

    Hugely more consistently. They don't want to lose that deposit.

  • PAUL SOLMAN:

    Putting his now ample money where his well-fed mouth was, Kokonas founded Tock, to scale up Next's ticketing software to serve restaurants worldwide.

  • NICK KOKONAS:

    Today is actually the launch day of….

  • PAUL SOLMAN:

    An 11:00 a.m. launch. What time is it now?

  • NICK KOKONAS:

    It's 11:00.

    (LAUGHTER)

  • PAUL SOLMAN:

    You're literally launching now.

  • NICK KOKONAS:

    Yes, any minute.

  • PAUL SOLMAN:

    Well, just as soon as they exterminate a few bugs.

  • NICK KOKONAS:

    It looks like Tock has caused the Next site to crash, which looks really bad.

    BRIAN FITZPATRICK, Co-Founder and CTO, Tock : One more problem.

  • PAUL SOLMAN:

    Brian Fitzpatrick started Google's engineering office, now right across the street, left last November to co-found Tock.

  • MAN:

    There it is.

  • MAN:

    Yay.

  • MAN:

    It's fixed.

  • MAN:

    Are we a go? Jake, are you good?

  • MAN:

    I'm good.

  • MAN:

    Nicole, T.J., you good?

  • MAN:

    I'm good.

  • MAN:

    Do it. We're good.

  • MAN:

    Post.

  • MAN:

    Fire the missiles.

  • MAN:

    Here we go.

  • PAUL SOLMAN:

    At exactly 12:28, they went live.

  • MAN:

    Hey, it's up.

  • PAUL SOLMAN:

    Within moments, dozens of customers were on Next's Web site, buying thousands of dollars worth of tickets via Tock.

    Why was Fitzpatrick willing to leave a cushy career at Google for a food start-up?

  • BRIAN FITZPATRICK:

    Because I thought that Nick's idea is something that could transform an industry.

  • PAUL SOLMAN:

    By total transparency and variable pricing, as here on Friday, July 3. At 5:30, a $90-per-person early bird special, two tables left, 8:00 p.m., $120, and back down to lower prices at 10:00.

  • BRIAN FITZPATRICK:

    So it's full transparency there.

  • PAUL SOLMAN:

    So that's what the customer sees of Tock. And the restaurant?

  • BRIAN FITZPATRICK:

    Red is a table sold. Yellow is tables held. Every restaurant holds a few tables every night, friends of the chef, VIPs, that sort of thing, right? Green tables are tables that are available. Your goal as a restaurateur is to have everything here turn red.

  • JERROD MELMAN, Managing Partner, Lettuce Entertain You Enterprises:

    The most expensive thing in our business is an empty seat.

  • PAUL SOLMAN:

    Jerrod Melman is a managing partner of Lettuce Entertain You Enterprises, a family business that owns or operates a hundred restaurants across the country, from burger joints on up. His father, an original investor in the OpenTable reservation Web site, also invested in Tock, tested it in their top restaurant, Intro.

    It's been a palpable hit.

  • JERROD MELMAN:

    One of the most appealing things about Tock has been how low the no-show rate has been while using the system. It's virtually zero. As a company with restaurants at all sorts of different price points, we think that the model where people aren't necessarily paying for the entire meal ahead of time will hopefully be successful in — in all of our restaurants.

  • PAUL SOLMAN:

    Now, there is a substantial cost to restaurants for this service, $695 a month. And the cost to the public?

  • BRIAN FITZPATRICK:

    The people who aren't going to like this are the people that like to skip out on reservations.

  • PAUL SOLMAN:

    Aren't you potentially offending customers by suggesting that they were going to break their reservation, and the only way to get them to honor it is to have them pony up?

  • NICK KOKONAS:

    Does the opera assume that you're a culprit if they ask you to buy a ticket? I think that, just like it would've seemed weird to go online and buy a plane ticket 15 years ago, a few years from now, it will seem really weird to not be able to book a restaurant this way.

  • WOMAN:

    Want to do 10:00 p.m.?

  • PAUL SOLMAN:

    Until then, however, the folks at Tock suggest taking this receptionist's advice.

  • WOMAN:

    I would give us a call back the day before. That would be the best way to check on any cancellations.

  • PAUL SOLMAN:

    This is economics correspondent Paul Solman, reporting for the PBS NewsHour from the cutting-edge of high-tech cuisine, Chicago, Illinois.

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