June 19, 2014

Democratizing the Dining Experience

Tyler Cowen

Holbert L. Harris Chair of Economics at George Mason University

Do new apps usefully provide a way for people to get into popular restaurants, or are they just another way to sell what was once free?

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The New York Times Room for Debate posted this question:

Do new apps usefully provide a way for people to get into popular restaurants, or are they just another way to sell what was once free?

Tyler Cowen provided the following response:

It’s increasingly common for a restaurant to charge for reservations. Either you pay the restaurant itself for the table, or you buy the reservation through a third-party service, often using smart phone apps. This may seem like yet another expensive rip-off, but overall it democratizes the dining-out experience and makes it easier, all things considered, to get the meals we really want.

Consider how it works when you can’t just buy a place at the table, as is still the case in most restaurants today. Tables at the best places are hard to get and you have to take other measures, such as waiting in long lines, trying to befriend restaurant staff, becoming a regular, or eating much earlier or later than you want to, among other tactics. Those actions cost money, or time, or they are inconvenient, or all of the above. For most people, it is better to have the option to pay money up front to ensure access when desired.

While the explicit pricing of reservations does favor the wealthy, keep in mind a restaurant can only demand so much money. The ability to charge for tables will, over time, limit the rate at which prices for the food go up and that is likely more or less a wash. Besides, paying for a reservation is commonly about 10 percent of the total value of the check, so if you need to, skip dessert and win those dollars back.

When restaurants don't charge for reservations, they tend to hold back tables for regular customers, celebrities, very attractive people and the politically and socially well connected. You might be dying to go to that restaurant for a special birthday or anniversary, but you'll simply be unable to get in. Money is ultimately a more egalitarian force than privilege, as everyone’s greenbacks are worth the same.

Besides, selling the reservation means it is much more likely that diners, who have prepaid for part of the experience, actually show up. Restaurants can plan better and fit in more seatings, giving everyone a good chance at that special meal and also limiting overbooking and wait times. We pay prices for lots of other things in life, so this is one beneficial change we simply ought to get used to.