When will the diverse technologies that help run a restaurant finally become connected?
Ben Leventhal, CEO and co-founder Resy, said at Skift Restaurants Forum Monday that creating more powerful connected software-as-a-service platforms for restaurants is where the future of the sector lies. Reservation tech can only go so far if it doesn’t interface with other restaurant systems, helping staff and managers better handle the demands of day-to-day operations.
“You’re going to actually have services that talk to each other,” said Leventhal. “How do you make a choice on something other than pricing? They should make choices on: does this speak to how I run my restaurant, does this speak to how I serve my customers? What they have is choice and we’re going to look back in five years [and find the power of systems that speak to each other].”
Earlier this year, Resy began an international expansion with the acquisition of Spanish high-end reservation app ClubKviar as well as partnerships with Formitable and Restorando to serve the Netherlands and several markets in Central and South America. “People are now using Resy Global Services through Airbnb to make a reservation in the Netherlands. That is the magic to me.”
Going global is one thing, but the real battle will be fought by creating compelling tools and systems for restaurateurs.
“The reservations space is incredibly exciting today, innovation is coming from all quarters,” said Leventhal. “We’ve broken down this monopolistic player and what is happening now is there are services being thoughtful about the future of reservation tech.
“People are figuring out where to eat on Instagram, their friends, and Google Maps. I’m opening Google Maps and not anything else. That’s the point: the funnel has changed. You used to have OpenTable at the top of the funnel and Google is now at the top of the funnel. Yelp? If you want 4000 choices, great.”
Now that digital platforms are giving restaurants more data and context on their diners, a new focus on personalization has taken hold across the sector.
Leventhal, however, said good restaurants are already personalized to their guests; there’s no established way to leverage the new swath of data available. Good hospitality is good hospitality, regardless of whether it’s backed by data.
“It’s not our job to say that’s what you’re supposed to do,” said Leventhal. “The name of the game is to provide context and data so they can make actionable decisions. Good restaurants have been personalizing in good ways for a long time. That’s about understanding customers’ general preferences. We’ve looked at whether there is a correlation between guest notes and the perception of a restaurant. We know that good restaurants know things about their customer and the idea that they take time to know things [means they understand their customer].”
[Updated with full transcript]
Full Transcript of Discussion With Ben Leventhal
Skift Table: Our next speakers is no stranger to the food world. Back in 2005, he co-founded the popular food media site Eater, and nine years later he co-founded the restaurant-reservations platform Resy, of which he is the CEO and co-founder.
The restaurant tech needs of today are very different of what they were just five, 10, 15 years ago, and with Resy it’s very clear that Ben and his team are trying to build and develop technology that supports the many evolving needs of today’s modern restaurants. With that, Ben, my first question for you is what’s the biggest challenge or problem that restaurant technology needs to overcome today?
Leventhal: Well, I think that we’re in very exciting times because there’s tons of technology available to restaurants now, and so I think probably if you ask restaurateurs, the key challenge is cutting through the noise of what’s available to them and getting to the place where they can make good, informed decisions about building a technology stack.
Skift Table: What’s the kind of noise out there?
Leventhal: Well, it’s not to say that it’s necessarily a bad thing. I mean, with competition comes innovation and you’re seeing it across the reservation space and POS and all kinds of other corners or restaurant technology. These services are getting better because with competition they have to get better, but I think Resy’s sales pitch and OpenTable’s sales pitch at first blush are not that far apart, and so do you as a restaurant make a choice on something other than pricing, which we think restaurants should do.
They should make choices based on, “Does this speak to how I run my restaurant? Does this speak to the ways I want to connect with my customers?” So on and so forth. I think that is the thing that we have to get better at as an industry is articulating the differences between things, and making sure restaurants understand that what they have right now is choice and that’s a good thing, and in five years we’re going to look back and restaurants are going to have a different kind of technology stack, they’re going to be paying less for it, and their businesses are going to better.
Skift Table: What kind of technology stack will it look like?
Leventhal: Well, first of all, it’s going to be … you’re going to actually have services that talk to one another. Ten years ago or 20 years ago you had these two big, monolithic hardware systems and there was a bunch of data sitting in OpenTable, and there was a bunch of data sitting in either Micros or NCR depending on what your choice was, or one of the Legacy systems, and you couldn’t really marry those things up.
We’ve been talking a ton in the last couple of years about data and how data’s the next frontier, and it’s not there yet because all it is is data. It still has to be processed and productized and programmed in a way where restaurants can understand how to use it, but that’s the thing that is going to come in the next five years is the stack is going to be the services you want.
If you’re a restaurant that’s primary reservations, but you have some walk in and there’s a daytime QSR business, you’re going to put the right softer pieces together. They’re going to talk to one another. You’re going to get concise and comprehensive reports about how your business is doing, and you’re going to be able to say, “I understand that I marketed on Instagram and those customers each cost me $3, but lifetime value of those customers is $75, right? Because I know that they visited my restaurant twice in a year, the average check was $60, and they also bought a ribollita soup at my QSR around the corner, and that’s going to all come together.”
It may some like pie-in-the-sky, and that may seem kind of hard to see and how to see the value of today, but that’s the point of an integrated stack and that’s where we’re going.
Skift Table: Right, and that’s what you’re building for?
Skift Table: Okay, great. You mentioned walk-ins, so I was interested in that because I feel like there are a ton of restaurants … well, there are a ton of restaurants on Resy that I want to go to but they’re always filled. The reservations are always booked, but there’s also ..
Leventhal: Use Notify.
Skift Table: Yeah, but there’s also a growing number of restaurants that insist on just walk-in business. They don’t want to take reservations, so how do you speak to those restaurants as potential customers?
Leventhal: We have tons of services that they can use. Most notably our waiting list functionality, but I think what we recommend to restaurants is you have to create a balance, you have to create a mix. I mean, walk-ins allows you flexibility when people don’t show up, but when it rains walk-ins are a disaster, and so you have to do things to be strategic about where your customers are coming from, so we recommend to pretty much every restaurant have some balance between reservations and walk-ins walk-instead.
Skift Table: Do you have recommendations for what that perfect balance is?
Leventhal: It really varies. It really varies location to location.
Skift Table: Right, so when you think about the overall sort of restaurant reservations ecosystem as it is today, how would you describe it to someone who may not necessarily know too much about it?
Leventhal: Well, you have Resy, which is this amazing platform, and then you have …
Skift Table: And no one else?
Leventhal: No, look, what we’ve always said is the industry needs better solutions, so I think that the answer is that the reservation space is incredibly exciting today. As I said to start, innovation is coming from all corners. We’ve created a space where there’s actual competition.
We’ve broken down this monopolistic player, and what is happening now is you have services that are being thoughtful about what the future of reservations tech should look like, what the industry deserves, what the relationship between the technology and the industry should be, and as a result it’s exciting times.
Skift Table: Yeah. Definitely. I know something maybe we talked about a little briefly before was the idea of how the customer or diner journey has changed over time, and you talk about sort of the funnel. Could you tell me a little bit more about your thoughts on that?
Leventhal: Yeah, I think that our perspective is that the top of the funnel is Google and Instagram and places where your friends and your entrusted advisors, recommenders, are, and the idea that Resy or OpenTable could be a one-stop shop for all your customers is an incredibly dated idea and is quickly becoming obsolete from the perspective of is that scalable?
I think if you choose an OpenTable and you say, “Well, I’m done. I’m using OpenTable. I’m good. I’m going to get my 10% bump, and I don’t have to worry about my business,” I think two things: one is you’ve just handed them a 2 to 3% percent management fee on your restaurant, so good luck with that in the long run.
Two is, you’ve missed the fact that people are figuring out where to eat on Instagram, and people are figuring out where to eat by listening to their friends, and by using Google Maps. When I’m in a city or in a place that I’m not familiar with, I’m opening Google Maps.
I’m not opening anything else, and I think that I’m not unique in that way, and so I think that’s the point, the funnel has changed. You used to have a service like OpenTable at the top of the funnel, it turns out that Google’s at the top of the funnel now, and I think that’s where restaurants have to thinking about what does marketing look like?
Skift Table: What about sites or apps like Yelp?
Leventhal: Yeah, sure. Yelp’s, if you want 4,000 choices, is great.
Skift Table: I know you talked a lot about where diners are really being inspired or motivated to find restaurants and you mentioned Instagram as a really big game changer. Why Instagram in particular? What makes that particular channel so enticing?
Leventhal: In terms of how I use it, I follow people whose opinions I trust, and they’re showing me the places that they’re eating, right? So, that is an incredibly potent way to think about discovery. I’m following chefs and I’m following writers and I’m following friends, and I’m following them because I’m interested in what they have to say.
If somebody posts a photo of a tomato dish at a new restaurant — at Misi — but that’s how I’m going to market that and that’s how I figure out, “Oh, okay, I have to try that restaurant.” I just think it’s a fundamentally better interface than a list of restaurants.
Skift Table: Right.
Leventhal: But just to be clear, I think content companies continue to do a good job on curating. I think the New York Times food section is as must read as it’s ever been. I think people trust Eater, trust Infatuation. There’s lots of good stuff out there, and I think those places for slivers of the population are top of the funnel as well.
I think the point is just that there’s no one gate keeper sitting at the top unless you’re talking about Google, and then you’re right, that’s the gate keeper.
Skift Table: I see. Interesting. I know when you talked about your dream of sort of everything being integrated and the restaurants really knowing each and every customer, I think about personalization. That’s such a big buzz word in every industry these days, but I’d love to know your thoughts on that. How much personalization is too much personalization, how much is not enough, how do restaurants take that data that you’re able to deliver to them and really apply it in a meaningful way?
Leventhal: We talk about this a lot because personalization to some extent is important. I think personalization for us means different things in different contexts. I think in terms of what it means for a restaurant to be personalized, I think that that you’d have to ask restaurateurs what their perspective is because I think that they vary restaurant to restaurant, and the last thing that we want to do is start to prescribe what hospitality should feel like.
We’re working with the restaurants that we work with because we love them. They’re amazing restaurants. I walk into the restaurants we work with and I sit down for a meal, and I’m proud of Resy because we’re working with these amazing places. The last thing we want to do is say, “Yeah, in your steps of service the waiter should come over and say, ‘We saw you ordered the tomatoes last time, would you like the broccoli?'” That’s silly, right? Or even a somm who comes over and says, “Hey, I see you like Beaujolais, can I recomended this?”
In some settings that probably works, but that’s not our job to say like, “That’s what you should do.” I think in the context of the SaaS [software as a service] part of our business, the software that restaurants use, the name of the game for us is to provide context, to provide the data so that they can make good, informed, actionable decisions. I do think that that varies restaurant to restaurant in terms of what personalization looks like.
I think good restaurants have been personalizing in good ways for a long time, and really, that’s about understanding your customers’ kind of general preferences. We have found that there’s a correlation generally between the presence of guest notes and the rating of the restaurant, so we know that good restaurants are knowing things about their customers. The idea that they take time to know things about their customers means that generally they’re doing the things that are required to be a great restaurant, but the service at the NoMad and the service at the Union Square Café are very different.
Those are two restaurants where the hospitality is extraordinary. It’s a long answer, long way of saying it, but that’s for restaurants to decide. On the Resy app, we think about it like Netflix or Spotify. There needs to be a personalization to it, but I’m not sure that we have to be too precise. I think, generally, we have to figure out what are the couple of signals that matter to you, and we have to put some good choices in front of you on that basis.
Skift Table: And you guys are highlighting some form of like a loyalty program, right?
Leventhal: Yeah, we are. We have a problem called Resy Select, which is a loyalty program to an extent, and a membership club also where we invite our best customers to just get a slightly elevated level of service from Resy to then get them into good restaurants.
Skift Table: Has participating in that been really high?
Leventhal: It’s still a small group, but we’re thrilled with the results, and I think next year you’ll probably hear more about that.
Skift Table: Okay, good to know. The theme of our conference today is really a lot about collaborations and partnerships, and I know that they’ve been really fundamental to the growth of Resy in particular. You’ve partnered with brands that range from Airbnb and Upserve to Danny Meyer’s Union Square Hospitality Group, so I wanted to ask you what makes Resy’s partnerships though in particular really different from the other ones that we’ve seen in the industry before?
Leventhal: I think that there’s lots of good partnerships. I think what we focus on is listening. In terms of our collaborations with the restaurants, we’d like to really listen and understand what needs are and how we can help address those needs and solve those problems.
I think with a partnership like with the Union Square Hospitality Group, the reason it’s taken time is because it’s in a long dialogue about what works and what’s needed to make real change, and we’re very proud of that partnership because of what it says about Resy. Union Square Hospitality Group in many ways has helped us evolve our product to where it is today, and I think to some extent we’ve helped them evolve their thinking on technology, so I think that would be an example of a good partnership.
The one with Airbnb is different. The one with Airbnb is about driving value to our restaurants. We’re opening up the Airbnb demand firehose to the restaurants that use Resy, that’s a big deal for our restaurants, and it speaks to our thinking about where’s the top funnel, right? That’s another great source among many where if we can unlock that for restaurants, their business gets better.
It’s a different kind of customer from a different kind of platform, so we look for generally whether it separates us or not the partnerships that we look for are ones where we’re driving significant value to our restaurants or our customers or ideally both, and with the identity where we’re being as collaborative as we could be to make our product better.
Skift Table: About the Airbnb integration, I was wondering, has it been as successful as you’d hoped it would be? Our travelers are Airbnb users actually booking on restaurants via Airbnb’s channels?
Leventhal: They are.
Skift Table: Any numbers you can share?
Leventhal: Yeah. No, they are. We’re thrilled with it so far. They’re a right partner for us. It is a true collaboration. The idea of connecting travelers and diners, we’re not the first two companies to come together and have this idea, and so there’s a lot of nuance to getting it right, and there’s been a great back and forth between the companies.
You’re going to see that we’re just getting started. We’re piloting a bunch of new ideas that you’ll likely see come to fruition in the next couple of months all around the idea of, “How do we take travel and make restaurants and native part of that experience on a platform like Airbnb?”
Skift Table: Yeah. Looking ahead, are you going to play a part in their own … Aribnb’s Super Guest Loyalty Program?
Leventhal: We might be.
Skift Table: Okay. I have a hunch you might be. In April, Resy also launched Resy Global Service, can you tell us a little bit more about that, and do you think that dream of sort of having a global network of restaurants is feasible and buildable at scale?
Leventhal: It’s feasible, it’s buildable, it’s vital. People are traveling, people are using whatever service they use, whether that’s Airbnb or Google Trips or booking to create, plan a trip, and restaurants are now fundamental to the reason why you visit a city.
The idea of connecting restaurants into that trip experience is vital for the industry moving forward, and so we’ve got some great beta partners. People are now using Airbnb, using the Resy Global Service via Airbnb to make a reservation in the Netherlands. That’s the magic that the industry needs.
Skift Table: Yeah. One last question from me, in the next ten years, do you think we’ll still be booking restaurants in the same way? Why or why not, and what are your thoughts maybe …
Leventhal: Are reservations dead?
Skift Table: Well, I …
Leventhal: Well, I don’t know. I mean, we hope not. No, people are going to be making reservations, people are going to be walking in. To Sue’s point earlier, the restaurant itself is being merchandised in all kinds of different ways, so I don’t think restaurants are going away. I don’t think there’s going to become a time ever where customers stop caring about connecting with their diners, right?
Restaurants and customers are going have to be connected regardless of whether that’s a reservation or some parcel that we haven’t thought up yet, so as long as we’re focused on making good connections between customers and restaurants, I think we’re pretty excited about the future.
Skift Table: Well, let’s take some questions from the audience. Okay, the first one, do you believe that guests who have a negative experience at a restaurant will tend to write more reviews than someone who has a good one?
Leventhal: I think this is pretty well established. I think there’s a ton of research that shows that extreme experiences good or bad are the ones that provoke reviews. We’ve done some things to help drive engagement on the reviews up a little bit regardless of whether you had an extremely good or bad experience. We see good engagement there, but I think, yeah, there’s plenty of research that says that’s true.
Skift Table: This is popular, what’s in the pipeline for Resy? What can you tell us that you don’t have to keep under wraps?
Leventhal: Lots of new, amazing, exciting restaurants are in the pipeline for consumers. In terms of our product, we are going to start focusing on … I don’t know if I’m supposed to say this, but we’re piloting mobile payments quite meaningfully doing a pilot and a test with Manhatta and Union Square Café, and I think that mobile payments will finally be part of the experience at scale, but it’s going probably another 18 months, but it’s happening.
Skift Table: So, it might be more like things are in China, for instance?
Leventhal: Yeah, I think skip to 2021, we’ll have good data on this.
Skift Table: Okay.
Leventhal: And we’re thinking about post-booking too as an area of hospitality opportunity.
Skift Table: What do you mean by post-booking?
Leventhal: Well, once you make the reservation, how can we use tech to get you excited about visiting and start to get you connected to the restaurant?
Skift Table: Great. Well, thank you so much.
Leventhal: Thank you.
Skift Table: Thanks, room.
Sign up to receive the all new Skift Table newsletter
A weekly newsletter covering the food & beverage world, focusing on news and ideas at the intersections of chefs, restaurants and technology.