Monday, December 01, 2014

Kokonas and Achatz taking restaurant ticketing system national

Kokonas and Achatz taking restaurant ticketing system national

Photo by Stephen J. Serio Chef Grant Achatz, left, and his partner, Nick Kokonas, are taking their restaurant ticketing system national.

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The pioneering restaurant ticketing system developed by Nick Kokonas and his partner, Grant Achatz, for their fine-dining destinations Alinea and Next and cocktail bar the Aviary will roll out nationwide in early 2015 under a new company called Tock.
The new venture is backed by “several million dollars” in investments from boldfaced names in the restaurant and technology worlds, putting the company's valuation at "greater than $20 million," Kokonas said.
Investors include Thomas Keller, the world-renowned chef/owner of Napa Valley's French Laundry and New York's Per Se, both of which will migrate to the system next year; Chicago's Melman family, owners of restaurant conglomerate Lettuce Entertain You Enterprises; Dick Costolo, CEO of Twitter; Kimbal Musk, owner of the Kitchen and a board member of his brother Elon Musk's Tesla Motors; and Howard Tullman, the Chicago entrepreneur and venture capitalist behind tech hub 1871.
Kokonas, a former options trader, and Achatz, who's earned three Michelin stars at Alinea, began using the proprietary software in 2011 at Next and eventually rolled out the ticketing system to their other restaurants. The wild success of the novel approach, which requires diners to purchase seats in advance at the restaurants, has attracted interest from around the world, eliciting queries from dozens of restaurants seeking to implement the Web-based technology.
So far, nine other U.S. restaurants have adopted the software under a pilot program: Elizabeth and Senza in Chicago; Coi and Lazy Bear in San Francisco; Aldea and WD-50 in New York; Trois Mec in Los Angeles; Journeyman in Boston; and Tuck Shop in Phoenix. Others are launching soon, Kokonas said. The pilot program has processed more than $3.1 million in ticket sales from those restaurants and another $15.1 million from Alinea, Next and the Aviary.
"I was getting so many requests for the software that there was no way I could fulfill them," Kokonas said. His in-house-developed system "wasn't built to scale to hundreds of restaurants, so we had to try to find a way to build one."
To refine the software for wider adoption and a more robust user experience, Kokonas and team brought on Brian Fitzpatrick, a software engineer who launched Google's Chicago engineering team in 2005 as founding partner and chief technology officer. They also hired JJ Lueck, formerly of Bose, Apple and Google, as senior engineer; Dan Nelson from Trunk Club as head of user experience; and Michael Vo, formerly at Blackrock. Steve Bernacki, chief financial officer of Alinea, Next and the Aviary, will hold the same role at Tock.
Restaurateurs, particularly those in the fine-dining space, see upside in the ticketing model. Perhaps the biggest is that it gives restaurants more control over their finances. Revenue can be projected further in advance. Purchasing is streamlined because a restaurant knows exactly how many diners it will feed each night, and more important, they all but eliminate no-shows, the bane of the fine-dining business.
Not many people are willing to stomach shelling out $806 for a Saturday night reservation for two with beverage pairings at Next—if they're able to snare a reservation in the first place. "If people put money down, they tend to show up," Kokonas said. "And they tend to show up on time."
Scoring a table at Next, the Aviary and other highly acclaimed restaurants is often more difficult than securing primo seats for major sporting events, musical acts or theater shows. Kokonas said that prior to implementing the ticketing system at Alinea, his labor costs associated with staff answering phones was nearly $200,000 a year. On top of that, he says, the restaurant lost about half a million dollars over several years because of no-shows.

Under the Tock model, restaurants pay a flat monthly fee of $695 for access to the platform, which eventually will offer five ticket types: fully prepaid prix-fixe tickets like those offered by Next and Alinea; deposit tickets, which require diners to put down a nonrefundable deposit for a reservation; dynamic deposit tickets, where the deposit varies depending on the date and time of reservation; special-event tickets; and no-cost tickets, which function as normal reservations.
Kokonas expects most restaurants will initially start with the no-cost ticket model and migrate to prepaid over time.
Wylie Dufresne, the avant garde chef behind New York's WD-50, which is slated to close tonight after an 11-year-run, used Kokonas' ticketing system to book the final 10 dinner services at his restaurant. He wasn't sure how diners would react to having to buy a ticket to a restaurant that once allowed them simply to call. But within two hours of opening for sale online, the vast majority of seats were sold, generating some $250,000, Kokonas said. The remaining tickets were sold within 24 hours.
"It would have taken us days to fill 1,000 seats over the phone, one reservation at a time," Dufresne said. "This was not only efficient, but the perception was that it would be more fair and equitable to dinners. There was something about the democratic method of putting them up first-come, first-served that I liked."
Dufresne, who also owns Alder in New York, said he is considering rolling out the ticketing method there, perhaps as soon as early next year.
"I think it's a smart idea, and I think this is something that's really going to catch on," he said. "No-shows are a giant source of frustration with restaurant owners and chefs. One night, we had about 95 covers and we had 30 no-shows. That's a giant kick in the chest that can affect the bottom line. Notionally, any way of figuring out how to mitigate the affect of people who don't show up is in my mind a great idea."
Peter Frost

Introducing Nick Kokonas's Ticketing System, Tock
Eric DeJesus
30 November 2014

After months of anticipation and speculation, Nick Kokonas — the Chicago restaurateur behind Alinea, Next, and the Aviary — has finally unleashed information about his commercially available ticketing system platform. Christened Tock (a play on the idea of tickets, time, and the "tick-tock" sound of a clock), the system will launch in early 2015 with a team of heavy-hitters in Kokonas's corner: Among his investors are legendary chef Thomas Keller (The French Laundry, Per Se), Twitter CEO Dick Costolo, venture capitalist Kimbal Musk, chef Ming Tsai, and the Melman family, the owners of the 118-concept Lettuce Entertain You restaurant group. Keller's restaurants will join Tock when it launches next year; one of Melman's properties will be on the pilot-program version in just four weeks. "We wouldn't have gotten all the people that we've got on there if we weren't doing something right," Kokonas excitedly tells Eater. "I'm enthusiastic about our ability to really change the industry."

"I'm enthusiastic about our ability to really change the industry."

Kokonas has been hinting at the possibilities of Tock — formerly and colloquially known as "Tickets" — for months. As promised back in May, Tock will give restaurant owners the option of how many tables to set aside for pre-purchased tickets or table-holding "deposit tickets." Tickets, like at a movie or sporting event, simply pay for the experience in advance, while the deposit tickets apply the full ticket "fee" to the diner's final bill. For fine-dining restaurants like Kokonas's Alinea, the pre-purchased ticket guarantees up-front payment for a multi-course tasting menu. Deposit tickets have worked for neighborhood restaurants with a la carte menus, like Phoenix's Tuck Shop, which implemented Kokonas' system in August.

In a now famous blog-post manifesto, Kokonas also revealed in July that the system would include "dynamic deposit tickets" to shift demand pricing in "both directions." Tock has delivered: While the tickets system always allowed restaurants to adjust prices based on the desirability of reservation time (peak hours could mean higher ticket costs), dynamic deposit allows restaurants to draw in diners by effectively offering a discount to book. As a guest, "on days where there are a high number of seats available, or low-demand days, you could put down a $15 deposit and it would actually give you a larger credit," Kokonas says.

But today's announcement adds additional options to the mix, and Tock's $695/month fee for restaurants will offer every feature at the same flat rate, with no additional fees. "We are trying to build a whole toolbox of every aspect of what a customer needs, from a booking and table management and CRM," Kokonas says. Tock will provide a fully integrated customer service management system, a table management platform, an open API that allows sharing of data, a social media manager, event ticketing, and crucially, zero-deposit tickets — which may be better known as traditional reservations. "One of the reasons to include that is a restaurant may want all the other features," Kokonas says. "But they're not willing to take the risk, in their mind, of doing deposit tickets. They'd rather take ordinary reservations."

The Tock system will offer five types of tickets, including one that's essentially a regular, no-cost reservation.

And those restaurants might have a point: Early forays into ticketed dining have proved it doesn't work for everyone. At his Philadelphia fine-dining restaurant Volver, chef Jose Garces abandoned his restaurant's ticketing platform just five months in: Its Thundertix system, powered by an Austin-based company, was often criticized for being too complicated. (Eater critic Ryan Sutton called the booking process "Sisyphean," a frustrating journey through "various pitfalls.") One-Michelin-starred restaurant Elizabeth, an early adopter of Kokonas' system, broke away from the tickets-only mold and began offering traditional reservations earlier this summer. A representative from the restaurant, the first outside Kokonas's own portfolio to offer tickets in Chicago, was diplomatic in her critique, calling the addition of reservations an effort to "make the experience for our guests as simple or best as it can be." Even Keller has questioned if the ticketed platform would work as well for casual restaurants, telling the Chicago Tribune he's unsure the system is the best option for his less-in-demand restaurant Bouchon.

But Kokonas cites investor Ming Tsai's Boston restaurant Blue Dragon as an example of how Tock could work for those customers. According to Kokonas, Tsai's main dining room is walk-in only, but the chef could use the Tock platform to sell tickets for Blue Dragon's chef's table. For a farewell set of dinners, wd~50 chef/owner Wylie Dufresne used Tock's "event ticket" feature to rack up $41,000 in ticket sales in the first two minutes; Kokonas says any restaurant on the Tock platform would be able to sell tickets for special, one-off dinners. "It's just a matter of having every possible mix for having a ticket, and one of them was an ordinary reservation," Kokonas says. "Which means it can do everything OpenTable can do, and then some."

Taking on OpenTable

OpenTable, the 16-year-old reservation service that powers online reservations for some 32,000 restaurants nationwide, comes up frequently in conversation with Kokonas. (It's the industry standard-bearer: Per OpenTable's own numbers, the service seats 15 million diners every month.) But Tock's ability to draw Keller, one of the country's most high-profile chefs, is a coup for Kokonas: When Keller's French Laundry joins the Tock line-up next year, it will switch from its current OpenTable system. The 118 restaurants in the portfolio of new investor Lettuce Entertain You, according to Kokonas's numbers, accounted for nearly one percent of all OpenTable's 2013 revenue. (One of Lettuce's concepts will join the Tock pilot program in the next four weeks, and Kokonas calls its investment a "huge vote of confidence that this system can be used in basically any restaurant that takes any type of reservation.")

"This system can be used in basically any restaurant that takes any type of reservation."

When chef Daniel Patterson's two-Michelin-starred Coi announced its switch to the tickets system this summer, it did so by abandoning OpenTable. At the time, Patterson told Eater Kokonas's ticketed system provided the best way to curb no-show diners, saying "about 15 percent [of diners] either cancel or no-show within the last 48 hours." As Kokonas has mentioned several times of Alinea and Next's ticketing system — which is now referred to as the "legacy software" in Tock's pilot program — one of its greatest advantages is that it creates a relationship between the restaurant and diner. More than simply pre-charging for a seat at the table, it's this relationship, Kokonas argues, that gives diners more reason to follow through on a reservation. According to Kokonas's internal data made public this summer, incidence of no-shows at Alinea dropped to less than two percent in 2013 due to the ticketing system (no-shows numbered less than one percent for its sister cocktail bar, the Aviary, which uses deposit tickets).

The addition of Keller's fine-dining institutions the French Laundry and Per Se, meanwhile, is fueled by the chef/owner's desire to "improv[e] the relationship with his customers," Kokonas says. Tock provides restaurant owners with the contact information of everyone who buys a ticket, allowing restaurateurs to phone guests without the back-and-forth of leaving reservation request voicemails. From the diner's perspective, Tock offers optional features like the capability to create a "diner's profile" (which can deliver information about food allergies and dietary restricts directly to the restaurant) and the ability to login via social media accounts, like Facebook and Twitter. "We're not trying to get between a customer and the restaurant and vice versa," Kokonas says. "We're simply trying to give a restaurant a toolbox to do all this stuff themselves."

Diners can also log in to Tock and interact with its web platform without having to download a specific Tock app, and a single username/login will work across all Tock restaurants (this is not the case in the current system, on either the restaurant's or the diner's end). Kokonas, who admits Tock's pilot program interface was "clunky" at times, has brought in a tech team to improve user experience. Last week, Kokonas announcedformer Google engineer Brian Fitzpatrick would join as founding partner and CTO; he'll be joined by a three-person engineering/design team, who flaunt Apple, Bose, and Trunk Club on their resumes.

"It's going to be one of those things where: Imagine you had to call an airline right now to book an airplane ticket, or go to a travel agent," Kokonas says. "It would seem weird. OpenTable's like a travel agency. I don't need a third-party agent to do that transaction for me anymore. And that's important. It'll feel weird in five years to not just be on your phone and instantly make a purchase at a restaurant."

Looking Ahead

Tock, which will be completely redesigned from the current tickets legacy system, won't roll out until the "late first quarter" of 2015 — it lives online as But Kokonas clearly has big plans for the idea, which according to his numbers, has processed $3.1 million in ticket sales for its commercial clients thus far this year (that number doesn't include his own spots in Chicago). "Doing ticketing, along with an administrative charge, or a service charge, or whatever you need to call it in your state, is the future of all dining," Kokonas says.

Selling tickets and eliminating tipping is the "future of all dining," Kokonas says.

According to Kokonas, ticketed dining cuts down on food waste, allows chefs to purchase product more strategically and efficiently, and thus passes along those savings to the consumer. It also takes a stance on the much-discussed, often-maligned practice of tipping in restaurants: Service/administrative charges are often automatically added to the ticket purchase price. "I think everybody is going to get rid of tips," Kokonas says. "At the end of the day, if someone raised our minimum wage to $15, and our labor costs went up whatever the percentage was, we could easily change all of our pricing to reflect that without redoing our menus, without redoing anything. We can change our deposit tickets, we can reduce no-shows, we can reduce waste. That's what we're doing here."

Kokonas's greatest challenge might be luring customers that would otherwise balk at paying up-front for a reservation, or conversely, distance Tock from the recent influx of booking apps, some of which offer last-minute, "pay-for-play" access to restaurants. He has help. Other Tock investors from the tech world include Marc Benioff and Scott Hansma of CRM company Salesforce, LA venture capital firm Upfront Ventures, and "several others that wish to remain anonymous," Kokonas says. He won't specify the exact valuation amount, other than that it's in the "tens of millions" of dollars. (Kokonas tells Crain's Business Chicago the valuation is worth "greater than $20 million.") And the Tock system promises a few additional "surprises" that he can't — or won't — go into further detail about right now. Says Kokonas: "For me, I want the leaders in the industry to go, 'Here's what's wrong with the industry now, and here's what we hope it can do.'"

Bay Area restaurants consider Nick Kokonas’s newly christened Tock tickets reservation system
Paolo Lucchesi
Inside Scoop SF
30 November 2014 

Today, Nick Kokonas (of Chicago’s Alinea, Next and The Aviary) announced that his restaurant ticketing company has taken several big steps forward as a challenger to the status quo of online reservations.

First of all, it now has a name: Tock.

The fledgling company has raised “several million dollars on a tens of millions valuation,” according to Kokonas. Investors include Dick Costolo of Twitter, Kimbal Musk, Jason Fried, Marc Benioff, Scott Hansma, Ming Tsai and Melman Family of Lettuce Entertain You. (Rich Melman was an original OpenTable investor.)

Perhaps just as importantly for momentum within the restaurant industry, Thomas Keller is aboard as an investor, board member and advisor. In what is already shaping up to be a big year of changes at the French Laundry, Keller will be incorporating Tock at both the French Laundry and Per Se this spring.

“It’s a reservations system,” says Keller, who politely bristles at the “tickets” label, instead explaining that it will be a new feature that will improve the guest experience at the French Laundry.

“Right now when you call for a reservation at 10 a.m., 90 percent of the time you’ll get a busy signal,” says Keller. “Then the majority of our guests who get through get the response of ‘Sorry we’re booked.’ Now they are disappointed they didn’t get a reservations. This affords certainly more transparency and more opportunity to get a reservation without the frustration of calling and getting a busy signal. We’re increasing the quality of experience for our guests.”

He likens it to the initial shift to online reservations a decade ago. Furthermore, the three French Laundry reservationists who might spend 80 percent of the day saying no to would-be diners will be able to spend their time acting more like a true concierge service for French Laundry guests, he adds. There will be no dynamic pricing at the French Laundry.

Kokonas says that initially, it wasn’t an easy sell to Keller.

“Chef Keller, it is fair to say, was an early skeptic on the system — going back two years or so,” explains Kokonas via email. “We’ve had many conversations over a long period of time and his main comment to me was always to push us: ‘how can we make it better for our customers.’”

One of Kokonas’ solutions was to build out a virtual “toolbox” for all restaurants, so that each business can customize it to its needs: “Not all features will apply to every restaurant, but they can pick and use the features they need. So some may want a wait list while others will not.”

For the French Laundry, Tock added custom features like the ability to exchange tickets a certain number of days out, and a wait-list for last-minute bookings rather than announcing sudden availability via social media, as Kokonas and chef-partner Grant Achatz do at Alinea and Next.

The interior of Atelier Crenn in San Francisco is seen on November 11, 2014.  John Storey
Atelier Crenn in San Francisco. Photo: John Storey
For the definitive exegesis of his ticketing system, Kokonas’ June very thorough blog post explains nearly everything surrounding his little experiment, from finance to philosophy.

Down the line, Kokonas imagines that Tock can be a tool for any business that conducts a time-slotted charge, from hair salons and spas to private training and non-emergency medicine.

Outside of the Alinea family tree in Chicago, nine restaurants across the country are currently using Tock’s “legacy” software, including a pair of Bay Area restaurants in Coi and Lazy Bear. (Note: Coi is doing both tickets and OpenTable.)

Other Bay Area restaurants are considering Tock, including Atelier Crenn, Dominique Crenn‘s Michelin-two-star in San Francisco.

“For fine dining like us, it’s the idea of when you go to football game or the theater, you buy the ticket before. It’s already paid for. It’s basically the same when you come to our type of restaurant,” says Crenn. “The thing is we get a lot of cancellations. It’s not like a bistro where you can get walk-ins.”

“The drawback is that the American mentality – I don’t know that they’re ready yet,” Crenn says, echoing Keller’s original concerns: How would a potential change make for a better customer experience? Crenn explains that if they did it, they would have to educate customers and give them all the right information.

As we’ve reported in the past, OpenTable is an expensive online reservations system for restaurants, with monthly fees, set-up fees and individual cover fees. Though the monthly fee is $199, a big and busy restaurant like Yountville’s Bottega can pay around $100,000 a year. OpenTable’s monopoly on the online reservation game has sparked undercutting competitors like Yelp’s SeatMe, which has a flat rate of $99 per month.

tock-white-on-blueDuring Tock’s pilot program, the monthly flat fee is $695, with no transaction fees.  There is no annual contract, and payments are processed through Braintree.

When it fully launches, Tock will have five different types of tickets: Deposit Tickets, Dynamic Deposit Tickets, Event Tickets, Fully Prepaid Prix Fixe Tickets, and “ordinary reservations” that are essentially a ticket price equal to zero.

Places like the Aviary and Phoenix’s Tuck Shop use Tock, but don’t serve tasting menus. Instead, 100 percent of the deposit is applied to the final bill. Kokonas says that the system has cut down no-shows at the Aviary from 14 percent to less than two percent. He notes that dynamic deposit tickets can incentivize customers to come during non-peak times. For example, a $10 deposit could yield a $15 credit.

With a rising minimum wage and other rising costs, Bay Area restaurateurs find themselves in a challenging financial time. Some are moving to a tipless restaurant model to help combat the situation, but perhaps tickets can also help the bottom line. It’s obviously worked elsewhere.

For example, if a party of four no-shows at Atelier Crenn, that’s probably an instant loss of roughly $2,000, explains Crenn. That money can go a long way in restaurant operations.

“We’re still thinking about it. Nick has a great product. It’s a pretty tough decision but there’s a change that needs to be made,” says Crenn. “It’s a system that for us as businesses, it’s really, really good … On the other hand, what will the people think about it?”

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