Why NYC’s Hottest Dining Reservations Will Stay Impossible to Score

(Bloomberg) -- Is it worth dropping anywhere from $250 to as much as $1,000 just to get into a New York City restaurant?

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The 30,000 people who have flocked to a service called Appointment Trader to buy reservations at some of the city’s hottest dining spots seemingly think so. Now, that practice is coming under threat from New York’s proposed Restaurant Reservation Anti-Piracy Act.

But far from suddenly making scoring a table at Carbone, Cote, Coqodaq or Don Angie a breeze, the bill isn’t guaranteed to free up significantly more tables, say restaurant owners, booking sites and reservation resellers. That’s because the hot spots are, well, simply too hot.

“There are some restaurants that people can’t get into,” Joel Montaniel, chief executive officer of reservation booking platform Sevenrooms, who works with companies like Danny Meyer’s Union Square Hospitality Group. “I’ve even talked to restaurateurs, we’ve hosted them on panels and asked them for tips to get in, and they say, ‘I don’t have them.’”

If New York Governor Kathy Hochul signs the bill that passed earlier this month into law, websites would require permission from restaurants to offer bookings. It is ostensibly targeted at curbing bots, which are used by scalpers to scoop up spots for sale to diners willing to pay for entry into establishments that are hyped as the places to see and be seen. The practice has been blamed for exacerbating a mania over reservations for the city’s hard-to-get-into restaurants and skewing the playing field toward the wealthier set.

The prospective law won’t affect platforms like Resy, Sevenrooms and OpenTable, which partner with restaurants directly by charging a monthly fee. But services like Appointment Trader and Cita may no longer be able to advertise the city’s hottest tables.

Appointment Trader Founder Jonas Frey rejects the idea that his website contributed to a scarcity of reservations in New York City. Instead, he believes his platform took off because of the lack of available tables.

“There were just too many diners for too few restaurants,” Frey said. “I believe we’re serving a need. That’s why it worked.”

The platform has sold over $6 million in reservations over the past year, according to its website. It has some provisions in place against scalpers and bots, Frey said.

If users sell less than half of their listed tables, their account receives a warning. Accounts that sell less than a quarter are suspended.

If the New York bill becomes law, diners would simply turn to influential concierges or pricy prepaid reservation services, according to Frey. In that case, he’ll focus on other restaurant hubs.

“We’re certainly not going to stop operating because we can’t operate in New York,” Frey said, adding that his website’s current peak demand is in European cities like Paris. Cita founder Arya Toufanian, meanwhile, says he is eyeing other ways to continue operations in New York, though he doesn’t know exactly what form that might take under new restrictions.

While the bill probably won’t help diners score reservations more easily, it’s likely to be appreciated by restaurants. Sevenrooms’ Montaniel said the legislation would be especially welcome in New York, where cancellation rates are higher than anywhere else in the US.

According to Sevenrooms data, the cancellation rate for restaurants in New York City grew to 19% last month, versus 17.5% in May last year. By comparison, the national cancellation rate dropped to 11.6% in May 2024 from 12.5% a year earlier.

That’s why Amy Zhou, executive director of operations for Gracious Hospitality — which includes the popular Manhattan dining rooms Cote Korean Steakhouse and fried chicken and Champagne destination Coqodaq — worked with the New York State Restaurant Association to get the legislation passed.

Zhou estimates that on a busy night, Cote will serve around 400 customers its tableside grilled beef. Meanwhile, it will lose as many as 100 reservations to bot-driven cancellations and no shows. Lost revenue is at least $10,000 on nights when the no show rate is high, based on an average spend of $100 to $150 per customer.

It became such a problem that the company took a number of reservations offline so customers could book them by phone. “About a year ago, we had to bring in two extra reservationists,” Zhou said. “It’s their job to audit the books every day and fill them with legit reservations.”

If the bill is passed into law and the problem is at least somewhat alleviated, “we’ll find something else for them to do in the company,” she said.

Still, Matt Tucker — a supporter of the bill who is the head of reservation booking website Tock — understands it might not be enough to completely solve the problems over reservations. “Legislation can only do so much,” he said. “It’s supply and demand that’s going to drive real outcomes here.”

Some others who have benefitted from the demand for reservations are undeterred, for now. Alex Eisler, a rising junior at Brown University studying applied mathematics and computer science, says he has made about $100,000 selling reservations for places like Cote. He first got into the business when he purchased a table for 4 Charles Prime Rib on a weekend trip to New York.

“The whole process worked great,” he said, prompting him to ask himself: “How hard is it to actually be one of the people selling reservations?”

Since then, Eisler says he has spent anywhere from half an hour to two hours a day in between classes booking reservations — once even telling a restaurant he needed a table for a proposal so he could get in. Eisler also uses his own bot software to secure tables at the time they are released, a strategy he says puts him “ahead of other people.”

If Hochul signs the New York bill into law, Eisler may well ditch his side gig. “Until then, I wouldn’t say there’s a reason for me to stop,” he said.

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