Some San Franciscans hopping mad over ReservationHop
The idea behind ReservationHop is simple: demand for tables at San Francisco’s booming restaurant scene is high. People are willing to pay for reservations to accommodate their temporally flexible culinary desires. ReservationHop’s platform allows would-be diners to sell their reservations to other would-be diners.
This novel service commoditizes a hitherto valuable but complimentary restaurant convenience – so, the distaste for ReservationHop’s model is easy to understand.
Complaints about the new market and demands that it be shut-down are coming from patrons and restaurateurs alike. Patrons dislike that free reservations are becoming scarce. Restaurateurs understandably dislike that some reservations, made to realize a profit on ReservationHop, are being made with no intent to honor them. Thus, when a reservation-maker does not make a sale on ReservationHop and also does not cancel, the reserved table may go unfilled, with the restaurant perhaps unable to accommodate other diners to make up the loss. These complaints are sensible, but likely will not be sufficient to stifle the impacts of the new service.
It goes without saying that a prohibition on businesses like ReservationHop would be slow to develop and institute, clumsy to effect and likely to fail. Fortunately, there are market-friendly answers that do not require the ritual murder of a disruptive technology. Here are a few (although, undoubtedly, creative minds could think of more):
- Restaurants could seize upon this model themselves. Now that it is apparent that selling or auctioning off reservations is a viable business model ripe for commoditization, restaurateurs are in an excellent position to add to their slim profit margins.
- Inversely, restaurants that choose to adhere to an egalitarian approach to reservations could take recourse of their own by requiring that prospective diners present some form of identification when they arrive, for use in matching identities. If that does not prove a sufficiently robust deterrent, restaurants could require the submission of a form of payment with the reservation (a practice not uncommon in Canada and Europe).
- Restaurant reservations could borrow the form of medical office reservations by requiring an appropriate liquidated damage if the reservation is not honored.
Any of these options are preferable to clumsy and stifling prohibition. After all, it’s not the end of the world, it’s just a change.
Outside of the policy objections, some commentators have gone so far as to suggest that making a reservation without an intent to honor it is an actionable form of fraud. Without jumping into picayune details, one would need a unique set of facts to prevail on such a claim.
To avoid problems associated with its disruptive technology, ReservationHop would do well to make nice with local restaurants. Unlike other parties that are involved in the new reservation-making process, restaurants are not opting-in to the use of its service and view it with hostility. So, to allay concerns within the restaurant industry that they will be left with unfilled seats, ReservationHop should make an effort to solicit restaurant involvement by, for instance, demonstrating that the service it offers concretely translates into a lower no-show rate.
At bottom, ReservationHop is an ingenious and perfectly legitimate effort to both create wealth and better allocate scarce resources, given San Francisco’s current market for culinary excellence. That restaurants and diners should adjust the way they function in response only makes sense and will yield a sensible and viable result.
