To Queue or Not To Queue?
Bryan Miller - September 2013
The question of taking reservations or not is plaguing restaurateurs as never before. Bryan Miller investigates the pros and cons, from the effect on the bottom line to just who is willing to wait in line.
The 40 seat dining room at two year old RedFarm, a wildly popular Chinese restaurant in Manhattan’s West Village, is going full tilt, and a line of gastronomic supplicants winds out the door, down the stoop, and onto Hudson Street. Co-owner Ed Schoenfeld, between chatting with customers and darting into the kitchen, checks in on the queue, at times cracking a joke to diffuse any rising anxiety.
“A lot of our customers, mostly the younger crowd, will wait up to two hours, ” Schoenfeld says. “Often I take their cell phone numbers so they can go off and do something other than stand in line.” On a given night, RedFarm turns away several hundred customers, and its tables routinely turn more than four times, close to 200 covers. “If we accepted reservations, it would be a third less,” he notes.
Like an increasing number of hot, new restaurants nationwide, RedFarm has opted for a walk-in policy that boosts profits by turning tables rapidly and minimizing administrative staff. It also saves owners from promising customers tables that may not be ready, and having to overbook to compensate for no-shows. This approach is not without risks, nor is any single plan in today’s volatile marketplace.
As the foodservice industry awakens after a long and fitful economic slumber, owners are reconsidering reservation strategies to cope with escalating rents, high food and labor costs, and a more competitive landscape. At the same time, they’re trying to get their arms around the 35-and-under set—who tend to be opinionated, highly informed, and socially interconnected. “It’s a different game,” observes Gabino Sotelino, a partner in Mon Ami Gabi in Las Vegas and Cafe Ba-Ba-Reeba! in Chicago. “Everything happens so fast now, especially with reservations.”
Restaurants in the web era have numerous ways to go: No reservations, all reservations, reservations for larger parties, charging no-shows, and the newest and most radical gambit, selling tickets to be redeemed at a later date, such as at a ball game or a Justin Bieber concert. Only a handful of places have tried this, all successfully so far. And judging from the reaction in the industry, and the teeming frustration with no-shows, it may well catch on.
There are no current statistics to track the walk-in trend, and reservations remain the system of choice for so-called white
tablecloth establishments. This affords restaurateurs control over customer counts so they can plan accordingly; it facilitates relationships with diners; it allows accommodation of special requests; customers are confident they will be seated within a certain time frame; and it appeals to a wider age group.
“A no-reservations system makes it more challenging for people who don’t live in your neighborhood to visit you,” observes Gabriel Stulman. In the past three-and-a-half years, he has launched six hit restaurants in Greenwich Village (Perla, Montmartre, Jeffrey’s Grocery, Fedora, Chez Sardine, and Joseph Leonard). All but Joseph Leonard accept reservations. There is a flip side—reservations-only establishments are vulnerable to dreaded no-shows. In upscale restaurants, this occurs about 10 percent of the time and as high as 25 percent on weekends. As a result, restaurateurs are compelled to overbook their dining rooms while praying that the math works out.
The always packed Nobu, in Manhattan’s TriBeCa, is hit with some 40 no-shows a night. “We can deal with that because we have so many walk-ins,” says Drew Nieporent, co-owner with actor Robert De Niro. “If you have 25 seats, a couple of no-shows can mean the difference between profit and loss.”
A key advantage to a walk-in policy is that it eliminates what restaurateurs call the “cold table” factor. When one party vacates a table, it can be reset in minutes for the next party. Restaurants that book tables, on the other hand, have to estimate how long a party will remain. So if a table is booked for, say, 7 p.m. and 9 p.m., the expectation is that the first party will depart shortly before the second seating. But what happens if they leave at 8:15? “That’s valuable real estate for us,” says Schoenfeld. “Say this happens to you 10, 20 times an evening—that’s a lot of lost income.”
Then there’s the challenge of filling seats at off-peak hours. “When you have a no-reservation policy, you no doubt lose the business lunches and early dinners,” observes Richard Melman, founder and chairman of Chicago-based Lettuce Entertain You Enterprises that has 49 restaurants nationwide. “But if you’re doing a lot of consistent business with that policy, you can do fine.” He adds, though, that if a business flags after the first flush of publicity, there may be little choice but to accept reservations.
He cites a Chicago restaurant called Hub 51, opened by two of his children in 2008. Preopening publicity made it clear that this walk-in dining room was exclusively for a young clientele, a statement reinforced by the decor and loud music. “It was a great, inexpensive place,” Melman recalls, “but I told them it was a mistake.” Within a short time it became clear that the restaurant was losing critical early diners and alienating the older set. They began accepting reservations and toned down the music.
Some credit the surging walk-in movement to David Chang, who in 2004 opened Momofuku Noodle Bar and in 2006 opened Momofuku Ssäm Bar, both in Manhattan. The immediate logjams fueled public fascination—and longer lines. In subsequent years, a similar scenario played at Pok Pok, first in Portland, Oregon, then in Brooklyn, and Rosemary’s in Manhattan and Mission Chinese Food, first in San Francisco, then in Manhattan. A walk-in policy can also convey an air of exclusivity, trendiness, and heightened expectations, merited or not.
The popular perception is that younger diners are not averse to waiting in long lines; some see it as part of the social experience. This is not necessarily true, judging from interviews with more than 20 diners in that age group. About 50 percent of the respondents said they would wait more than an hour to get into a new restaurant that enjoyed good media buzz; 30 percent said they would wait up to half an hour; the rest generally reserve.
As recently as five years ago, few upscale restaurants asked patrons to pay a deposit, as they were concerned it would be a turnoff. That is no longer the case. Deposits are as little as $25 at Chez Panisse in Berkeley, California, to $50 at Boulevard in San Francisco, and $75 at Manhatttan’s Eleven Madison Park, Del Posto, and Le Bernardin. The Washington, D.C. area has many such restaurants because it hosts legions of tourists who are notorious for booking multiple reservations far in advance. Then they choose where to go at the last minute, without canceling the others. Deposits are now the rule at, among others, Restaurant Eve, CityZen, Rogue 24, and The Inn at Little Washington. Even Mickey Mouse is fed up—the Walt Disney empire has implemented deposits from $10 to $25 at some of its better restaurants.
At San Francisco’s Coi, deposits aren’t required, but no-shows get slapped with a $100 penalty. Oleana in Boston adopts a more lenient policy. No-shows are fined $50, and that can go toward a future visit. “When guests are forced to provide their credit card number, even for a small amount, they take it more seriously,” says manager Sara Fetbroth.
All of this presents a challenge to middlemen like OpenTable, an online booking service used by some 28,000 restaurants. The company sends reminder emails to all customers, and makes it easy to cancel online. But the ultimate responsibility for collecting any fines rests with the restaurant.
Many restaurants are tightening the vise by charging delinquents the price of the meals they have spurned. At the 30 seat Saison in San Francisco, that adds up to $250 per person. “We don’t have many no-shows,” says general manager Patrick Ellis. Le Grand Véfour, a historic Michelin two-star establishment in Paris, charges those who cancel after 3 p.m on the same day and no-shows roughly $140. But, as Melman proffers, “When you do this, you’d better make sure that the table is ready and everything else is perfect.”
If any phenomenon demonstrates the degree to which some diners will go in order to be on the cutting edge, it’s a ticketing system. At Chicago’s Next and its elder sibling Alinea—both showcases for Grant Achatz—customers buy advance tickets that cover the full price of a future meal (including tax and gratuity). This allows one to circumvent the hundreds of other petitioners waiting in line to pay $90 to $265 per person. Tickets are inhaled within hours. Scalpers seize the opportunity, scooping up dozens at a time and reselling them at inflated prices on social media.
At Alinea, tickets go for $210 to $265, depending on the menu and the day of the week. Also in Chicago, Elizabeth Restaurant offers three price levels, the highest being 20 to 25 courses for $175 to $195. The tickets sell out in hours. “We’re very small,” says Ben Aviram, the manager and sommelier. “If we have a just a couple of no-shows, it can be very harmful.”
In Los Angeles, the 26 seat Trois Mec joined the movement in April with $75 tickets (not including wine and 18 percent tip). These vouchers are released every other Friday at 8 a.m. and are consumed faster than a first cup of coffee.
Meanwhile, a revolution in customer-restaurant relations is underway in the form of smart phones and tablets. More diners are using these to communicate with restaurants, and vice versa. Consequently, reservations are being made on the go—instantly and impulsively. OpenTable reports that in the first quarter of this year, 36 percent of its users booked tables via mobile devices. In the population as a whole, that number is about 50 percent, as per the National Restaurant Association.
“You’ll be seeing technologies where a restaurant can reach out to potential customers who are walking nearby, and offer them incentives to drop in,” predicts Sheryl Kimes, a professor of services operations management at the Cornell University School of Hotel Administration. “You’ll be instantly in touch with restaurants, whether you want to be or not.”