Reservation Hop lands sharing economy in hot water with San Franciscans
There are many things that are awesome about the so-called “sharing economy." Like, for instance, the fact that you can get a ride to the airport via Lyft without paying $80 for a cab, or that you can stay in someone’s castle on Airbnb rather than shelling out $400 a night for a room at a mid-level hotel chain that may or may not have a body stuffed under the mattress.
But one thing that’s not so great about the collaborative economy model is the rise of services that are convenient for users in the short-term, but may take money out of struggling small vendors’ pockets in the long-term. Case in point: Reservation Hop, a San Francisco-based startup that’s essentially a restaurant reservation scalping service.
Reservation Hop makes reservations at in-demand restaurants in advance. You then type the restaurant’s name, the date and your party size, and see if Reservation Hop has a spot for you. If it does, you pay a small fee (the company says prices start at $5) for the reservation, at least four hours in advance of your meal. The website will then give you a name to use when you arrive at the restaurant.
It’s a clever idea, and given the enormous contingent of foodies in large metropolitan areas like San Francisco and New York, it’s bound to be a popular one. But is it ethical? Tech bloggers on Twitter don’t seem to think so:
ReservationHop, a dick move-as-a-service. Steals hot restaurant reservations and sells them for $5. https://t.co/EKPqVSkCAN— Josh Constine (@JoshConstine) July 3, 2014
What's the deal with all these startups buying up and selling goods that aren't theirs to sell? It's rude. https://t.co/pIxInslwjV— Farhad Manjoo (@fmanjoo) July 3, 2014
The newest way to be an utter jerk in San Francisco: https://t.co/pCceTvj2i9 "Let's disrupt all basic social niceties and monetize them!"— Morgan Johnson (@Poormojo) July 3, 2014
Restaurants make staffing calls far ahead of reservation time. Even if you cancel a Reservation Hop, it could bankrupt restaurant over time.— Margarita N⚽riega (@margafret) July 4, 2014
The criticism of Reservation Hop seems to be twofold. For some people, the primary bone of contention seems to be that Reservation Hop is exploiting its users by slapping a price tag on something that was already free to begin with.
To be fair, it’s become increasingly common in recent years for high-end restaurants, such as Alinea in Chicago, to start selling “tickets” for in-demand tables, so this aspect of Reservation Hop’s business model is not exactly unprecedented. Nor is the basic concept of selling reservations, if the existence of the Craigslist marketplace and similar apps like Shout are any indication.
What’s more difficult to defend, however, is how the service potentially puts those in the restaurant industry, a notoriously risky and cash-strapped business venture, at serious financial risk. If the service buys up reservations at a restaurant and they’re unable to sell them, the restaurant could lose a lot of money on empty tables that could’ve been filled had they not been reserved by the site. As ramen chef Richie Nakano put it to Valleywag:
An app like that, while not breaking any rules or laws per se, has the potential to be hurtful to small businesses that rely on having a reservation book full of diners that actually show up. What happens to the reservations that no one winds up buying? This is a perfect example of tech trying to 'disrupt' something without thinking of the consequences. I hate this idea. It's awful and selfish and if it was my restaurant I would check that site everyday to see if my place were listed there so I could delete those reservations.
To his credit, Reservation Hop founder Brian Mayer seems to be listening carefully to his critics, and says he’s willing to work with restaurant owners to reduce putting them at financial risk.
Mayer does, however, still stand by the idea that there’s nothing unethical about the basic concept of selling reservations, or putting a price tag on a service that’s ostensibly free. “There are a lot of claims that we are selling something that’s ‘free,’ Mayer told TechCrunch. “But if you think about it, there’s nothing free about restaurant seating. There’s a limited number of tables in high demand and there are very long wait times for walk-ins.”
Mayer also took to his blog to explain himself. He says he built Reservation Hop over the weekend, and expected to get a very mild amount of interest, not the wratch of the Internet.
"I have to say that overall, I think that the people who have sent me violent threats via email and Twitter, while excessive, may have a point. So in the interest of ethics and fairness, I want to talk to restaurants about working with them directly on a better reservation system. I’ve heard that OpenTable is loathed by many restaurants who don’t want to pay to fill tables. There may be a ticketing solution to high-demand restaurants."
H/T Valleywag | Photo by Unique Hotels/Flickr (CC BY SA 2.0)