No one would ever prepay for a ticket to eat at a restaurant.
For years, Nick Kokonas was undaunted.
He was collecting data, reams of it, showing prepaid tickets increased revenue and wiped out no-shows at Alinea, the restaurant he owns with chef Grant Achatz.
And now, Nick Kokonas is prepared.
He is unveiling a new company with Achatz called Tock, challenging OpenTable and taking restaurant ticketing nationwide.
Fueling the company are A-list investors, including chef Thomas Keller, of Napa Valley's The French Laundry and New York's Per Se; Twitter CEO Dick Costolo, who used to live in Chicago; chef Ming Tsai, of Blue Ginger and cooking-show fame; salesforce.com CEO Marc Benioff; and Chicago's Melman family, whose Lettuce Entertain You empire could supply an early and stable source of revenue for Tock.
Guests at Per Se and The French Laundry will prepay for food but not beverages. Staff will call ticket holders ahead of their meals to gauge food preferences.Next year, after a remodel at The French Laundry, Keller plans to switch his restaurants from phone and OpenTable reservations to Tock — meaning at least one-quarter of the Michelin three-star restaurants in America will run on Kokonas' system.
Typically, guests call exactly 60 days ahead to get a table at The French Laundry and 30 days out for Per Se.
"Who wants to be frustrated and aggravated trying to make a reservation?" Keller said. "This eliminates the aggravation and frustration that some of our guests go through just getting to the reservationists."
Still, Keller is keeping traditional phone calls and OpenTable in place at his other restaurants.
"I'm not sure it works well for Bouchon," Keller said of Tock, noting less competition for reservations there.
And there is Kokonas' next challenge.
Can he convince dining establishments in that Bouchon-band — restaurants without prix fixe and tasting menus — that advanced tickets work?
Kokonas' solution is in the next version of the Tock software, which he and his staff are rebuilding "from the ground up" to offer options to restaurateurs, that would :
•Require prepayment just as Next does, with gratuity and taxes prepaid.
•Require for a reservation a $20 deposit, which is credited to the final bill.
•Offer dynamic-deposit tickets, in which a $20 deposit can be converted into a $30 credit if, say, you're booking on a Monday or Tuesday night, which are typically slower. For higher-end restaurants, dynamic pricing could mean a tasting menu for $65 to $95, depending on the night of the week, said Tsai, adding that he is still tinkering with the numbers for Blue Ginger.
•Offer a ticket price of zero, which amounts to a standard reservation.
•Or require prepayment only for special events, such as a wine tasting or a New Year's Eve party.
Kokonas expects the next version of Tock to be ready in the first half of 2015.
"It's logical to assume we'd be interested in switching over our restaurants," said R.J. Melman, whose father, Richard, was an early investor in OpenTable. "When and how that will look and take place is something that we're still working out."
Jerrod Melman suggested Lettuce may not use the software as a ticketing system at all, meaning offering free reservations. That's a viable option because Kokonas intends to undercut OpenTable on price by about half, the Melmans said.
Meanwhile, Kokonas said OpenTable is planning a ticketing system of its own, a claim the San Francisco-based company declined to address.
"I think OpenTable has increased no-shows," Tsai said. "People make more reservations because it's easier, and just not show."
Tsai's Blue Ginger in Wellesley, Mass., will soon switch to Tock. Still, Tsai plans to keep using OpenTable for now, particularly to keep track of things such as food allergies, which Tock does not offer.He estimated his no-show rate at Blue Ginger can range from 2 percent to almost 8 percent some nights.
"If you lose that table or that seating, you don't ever get that money back." Tsai said.
Tock's new investors, including Chicago's Jason Fried of Basecamp and Kimbal Musk, brother of billionaire Elon Musk and a member of the boards of Tesla and SpaceX, will own 10 percent of the software company. Other partners include Kokonas, Achatz, Chief Technology Officer Brian Fitzpatrick, who walked away from Google to run the software development effort, and some Next investors, Kokonas said.
Kokonas declined to reveal how much Tock is valued at other than to say it is in the "tens of millions of dollars."
The longest wait
Kokonas, a former derivatives trader turned restaurateur, has a history in technology.
He said he learned how to code at 12 and continued through college, later investing in technology companies.
Persuading restaurants to adopt his software was a slow-going process, Kokonas said. The idea gained steam this year after his blog post — lengthy enough to be deemed a Jerry Maguire-esque manifesto — touting the idea, including actual Alinea revenue and no-show numbers before and after Tock's implementation.
"Essentially what I'm asking them to do is blow up their model," Kokonas said.
"Nobody wanted anything to do with it, which is really the hallmark of a good idea in retrospect," he added.
Kokonas envisions making the $695-per-month (pilot program price) service available to all "time-slotted businesses," including dentists and hair salons.
Tock would show customers which seats are available, just like booking for an airline. It can also save high-demand restaurants untold hours of answering phones only to disappoint callers who can't get through, much less get a table.
Among Tock's investors, Keller and the Melmans have been with OpenTable since its earliest days. Keller also is Achatz's mentor, a close enough friend that Achatz named one of his sons Keller.
"If you were to ask me, what's the one restaurant you want on the system over any restaurant in the world? That would be (The French Laundry)," Kokonas said. "It's hard to go to businesses that are successful and say we can make them even more successful. Really? Why don't you just go do it yourself? Thankfully, we did, but it took years of data to prove that, yeah, it really is better."
Kokonas is quite confident in Tock. He derided OpenTable as "the Comcast of the restaurant industry."
"You need your Internet service, but good luck trying to get a technician to help you out," he quipped.
Wylie Dufresne, chef and owner of WD-50 and Alder in New York, noted that there have been single days when 75 percent of WD-50's reservations were from OpenTable.
"OpenTable has been very helpful to us over the years in terms of giving people access to the restaurant and allowing people to book online," he said.
OpenTable counts about 32,000 restaurants as customers and says it seats more than 15 million diners each month.
Still, Dufresne decided on Tock to sell tickets for the final 10 nights of WD-50, which is closing Saturday night after more than 11 years.
"I certainly think that this platform would work for other people and is worth exploring," said Dufresne.
Dufresne said he plans to speak with Kokonas in December about using Tock at Alder, which, like WD-50, uses OpenTable. Dufresne shares his colleague's frustration with no-shows, to the point of keeping a list of people who have made reservations several times only to cancel at the last-minute.
"We now no longer let those people make reservations," he said.