Restaurants using Reserve wouldn't likely be smiling if their place was this empty. (Credit:... [+]
When Reserve launched out of a waitlist-only testing period in February 2015, the startup promised a concierge-like experience for fine dining. Reserve users could book tables at the country's best restaurants without having to mix it up with the masses on
It sounded a lot like the early days of Uber, when StumbleUpon cofounder Garrett Camp wanted an app to order black cars at the tap of a button for his friends. And Camp was the founding investor in Reserve through his startup lab called Expa, making the press rounds in 2014 for the booking startup. Celebrities like Jared Leto and Will.i.am would sign up to invest.
Uber proved popular demand that vastly exceeded the initial clubby use case it was built to solve. And while it's still early for Reserve, the company's announcement Tuesday that it's shifting its business model to charge restaurants for management software suggests that it's harder to convince restaurant goers to pay for a choice table than it might have seemed.
Reserve's new management software, called Reserve for Restaurants, shifts the focus away from the diner and back to the restaurant. Gone are the $5 booking fees passed on to the user, replaced by a flat $99 monthly rate. Booking a table on Reserve's website (it still has the app) is free for both sides of the transaction, as is booking through a Reserve widget on a restaurant's own site. Reserve is also offering restaurant's its own management software to handle the flow of diners through its tables.
Reserve's new website, perhaps what would happen if OpenTable had a baby with Airbnb. (Credit:... [+]
Out of 500 restaurants using Reserve today, about 150 are live on the new platform at launch on Tuesday, a test group that started in January after Reserve began developing the software in September. CEO Greg Hong says that owning "the entire ecosystem" with restaurants has been the plan all along. "We talk about building a reservation product that diners and restaurants alike can both love," Hong says. "Now we're getting more aligned with our restaurant partners, listening to their needs and aligning on price."
The new product's in large part the design of Peter Esmond, the startup's head of restaurant product and former CEO of a startup Reserve acquired last year called Set For Service. For Esmond, a key feature of the new-look Reserve is that it allows restaurants to keep track of customers who visit multiple locations of the same restaurant group, keeping a knowledge of allergies, birthdays and similar, little touches that can greatly improve experience.
But while both executives say that Reserve's envisioned this more comprehensive—and Open Table like user experience and pricing—all along, since Hong cofounded the company with chairman Joe Marchese, it's unclear that Reserve's initial app ever gained sustainable traction. The app has been out of the top 1,000 general apps on the iOS App Store for months, and has remained in the middle of the pack in the top 250 apps in the food and drink category, according to data from App Annie. While Reserve has raised $17.3 million to fuel its growth, the company's 500 restaurants in system represents 1.4% of the reach of OpenTable's 36,000. Then there are a host of other startups looking to tackle the dining category.
Reserve says that its app store rankings are more the result of a deliberate city-launch strategy that's seen it grow from four initial cities with New York, Boston, Los Angeles and San Francisco to add Philadelphia, Chicago and Washington D.C. in recent months. Reserve is also cheaper than OpenTable, which charges $0.25 per diner for reservations made on a restaurant's site, $1 for bookings made on OpenTable and a monthly subscription bundle of typically $249. Esmond says Reserve is scoring customers with restaurants that never signed up for OpenTable because of those prices, as well as taking some customers directly from the company acquired by Priceline for $2.6 billion in 2014.
Restaurants may grumble about OpenTable, but many still use the system because of its scale. Reserve's new tools may prove a salve for OpenTable's user experience and added charges, but only if it can drive enough traffic that restaurants put people into seats at a comparable rate.
It's a new look for Reserve that focuses less on the white glove diner treatment of the diner, more on hand-holding frazzled restaurant staff. But Hong and Esmond appear confident they can pull off that repositioning, starting by denying there's any repositioning happening at all. "I think this has always been part of the path that we've been on," says Hong. "It was just timing to have more resources. The whole technology stack is something we are excited to innovate."
