Reservations App Pivots to Fancy Takeout to Keep Restaurants Running

(Bloomberg Businessweek) -- When social distancing orders shuttered restaurants around the world, the industry banded together to survive what it hoped would be a temporary crisis. A newly formed Independent Restaurant Coalition lobbied the government for bailout funds; restaurant workers suggested on social media that people buy gift certificates to local eateries; and 20 of New York City’s top restaurants asked officials to ban takeout orders to protect their employees’ health.

Nick Kokonas didn’t play along. The co-owner of the Alinea Group, five high-end restaurants in Chicago, took to Twitter to warn that gift certificates were akin to taking on debt without a revenue plan. He was bracing for a long shutdown, followed by an even longer period when restaurants would be filled to only half capacity. To survive, Kokonas advocated takeout. “Why not try this?” he says he thought. “The restaurant is sitting there. You have a bunch of people who are eager to work.” He persuaded Alinea’s chef and co-owner, Grant Achatz, to switch from offering a $250 prix fixe meal for 125 people a night to a $35 dinner to go. On most weekend evenings, Alinea now sells 1,250 dinners consisting of set items such as duck cassoulet, osso bucco, and braised short-rib Wellington, plus add-ons like wine and cookbooks, lifting the group’s flagship restaurant to about 75% of its previous revenue.

Kokonas, 52, who made his first fortune as a derivatives trader, founded the online reservation app Tock in 2015. A smaller competitor to reservation systems such as OpenTable, Yelp, and Resy, Tock did things a little differently. It sold prepaid tickets for seating at exclusive restaurants, with dynamic pricing depending on the reservation time, to eliminate cancellations. And it serviced restaurants, managing their reservations and providing details about customers they could use to target advertising on Instagram or Google. In early March, looking at the bookings from Tock’s 3,000 clients in 28 countries, Kokonas says he feared many would soon close their doors: “I watched clients in Hong Kong go from busy to zero.” That’s when he got the idea for Tock to Go.

In six days, Tock’s engineers reinvented the app—instead of taking reservations for tables, it would schedule takeout orders. OpenTable and Tock’s other competitors had lost all their revenue and resorted to linking clients to delivery services such as GrubHub and Uber Eats. But Tock to Go was able to offer its restaurants a solution. Sticking to its roots in reservations, the app helps restaurants schedule pickup and delivery times to avoid a rush of orders at 6:30 p.m., a common problem with delivery apps that often overwhelms the kitchen. Plus, Tock to Go tracks inventory, automatically pulling items off the menu when a restaurant runs out of, say, banana cream tarts. And the app sorts local restaurants, making them easy to find. Perhaps most important is what Tock to Go doesn’t offer: the actual delivery. That allows it to cap fees to restaurants at 3%, significantly lower than the 30% some delivery services charge. Kokonas says he hoped people would be willing to come for pickup. And for those who weren’t, he figured restaurants could dispatch their otherwise out-of-work waitstaff to drive around delivering orders.

The Harbor House Inn, in the northernmost corner of California wine country, with sweeping views of the Pacific, used to serve $180 dinners to 20 guests, most of whom were staying at the hotel. The Inn had already switched from Resy to Tock in December, so it jumped on Tock to Go, which helped it build webpage options for add-ons such as sourdough bread loaves. Now Harbor House is selling $20 meals of lasagna or Vietnamese noodles to about 40 locals a night. “We have regulars,” says Amanda Nemec, the general manager and partner of Matthew Kammerer, the chef. “Who would have thought this would be happening here?” It’s enough business to keep their staff employed.

Steve Hafner, CEO of OpenTable and Kayak, is impressed. “Nick is pivoting, and we applaud his effort,” he says. OpenTable has “thrown in the towel on 2020” as it focuses on convincing governments to allow restaurants to reopen. “I’m down here in Miami Beach, and we’re ready,” Hafner says.

Tock to Go waived its fees in April, and Kokonas went on a flurry of virtual sales calls, adding more than 800 clients and hiring an account manager. It’s also branching out beyond restaurants to places that suddenly have lines forming, where people want to make sure they get an item before it’s out of stock. Kokonas has been talking to grocery store chains. “Someone checks you in, like a grocery store maître d’,” he says. Other new clients include a fishmonger, a distillery, and the Nisei Lounge, a dive bar next to Wrigley Field. At the end of April he added Tock Pasture and Produce, which helps farms and ranches that sell to restaurants deliver to homes. Kokonas thinks that new business will thrive after the pandemic. “Farmers will say, ‘Oh, I can do digital sales at retail prices?’ ” he says. Likewise, he plans on continuing Alinea’s takeout options even after the restaurant fully reopens.

So does Seven Reasons, a highly rated Latin restaurant that seats 90 people a mile-and-a-half from the White House. A few days after the restaurant broke its sales record, on March 10, it was ordered to close. It reopened for takeout and sold 900 dinners in 15 minutes, causing its system to crash. When co-owner Ezequiel Vázquez-Ger got a sales call from Tock a week later, he signed up. Then he informed the restaurant’s handyman that he’d now be making deliveries.

The restaurant is doing twice as many covers as it did before the pandemic, Vázquez-Ger says, taking in $50,000 to $60,000 a week, compared with nearly $80,000 before. He’s going to keep the new At Home by Seven Reasons brand around permanently, selling cook-at-home kits. Two of the line cooks and the pastry chef have created takeout pop-up restaurants from the kitchen, under his umbrella. “If there was an award to that person or company that did the most to help restaurants during the crisis … It would be for Tock,” he says.

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