As rising inflation eats away at the bottom lines of restaurants, a Canadian startup says it has an additional revenue source that will help: charging customers for choosing their seats.
Tablz, a tech company based in Ottawa, has launched an online platform that allows customers to navigate a 3D map of a restaurant and reserve specific seats for their meal. Restaurant owners can make the reservation free, or set a fee for the most desirable seats and times. The platform has seen fees range from $5 to $100.
Frazer Nagy, founder of Tablz, said the idea for the platform was to bring the concept of premium seating and dynamic pricing from airplanes and concert stadiums to the neighbourhood restaurant.
He said while special seats, such as private booths, are frequently booked, he’s been surprised to see what other options have been popular with diners.
“We’re even learning that some of the seats that I like to make fun of, like the bathroom seats, are actually very, very popular for young mothers who want to be close to the bathroom,” Mr. Nagy said.
About 50 restaurants in Canada and the United States are currently using Tablz. Mr. Nagy said the company has dozens more locations in the pipeline, and should have 100 eateries online by the fall.
Tablz announced last month it had received $3.2-million in preseed financing from U.S. investors.
Krystle Mobayeni, one of those investors, said she saw long-term potential in the platform. Ms. Mobayeni is also co-founder and chief executive officer of BentoBox, a food-tech company that helps build restaurant websites.
“Many technology products serve either the diner or restaurants. Tablz is able to meet the needs of both in a unique way, which is rare,” Ms. Mobayeni said in an e-mail.
Tablz says it is hoping to capitalize on the big return of customers to restaurants this summer.
According to data from OpenTable, an online restaurant reservation platform that can work in tandem with Tablz, bookings in Canada are currently 15 per cent higher than they were in 2019, and up substantially over the disastrous 2020 and 2021 years.
And Statistics Canada reported that spending on food services and drinking places exceeded $7-billion in April, the second month in a row it was above pre-COVID-19 levels.
At the same time, however, soaring inflation is making it a lot more expensive for restaurants to operate. Grocery prices were up 9.4 per cent last month over the previous year. But wages for restaurant workers have remained flat, despite widespread job vacancies in the industry.
Restaurants have responded by raising menu prices – those were up 6.6 per cent in April, according to Statistics Canada. Charging for seats, as Tablz does, gives restaurants another way to offset rising costs.
But there may be a limit to how much consumers will take.
Vince Sgabellone, a food-service industry analyst with the NPD Group, said he likes the idea of charging for seats, especially with customers showing how much they missed in-person dining.
Still, he said restaurants will have to be careful on their pricing, and they may want to target higher-income clients whose disposable income has come through the pandemic intact.
“It’s going to tough for restaurants to figure out, what is that sweet spot for how much they can charge,” he said. “If there’s a revenue opportunity here, they’ll figure out how to make it work.”
Rob Holder, director of purchasing for U.S. restaurant group INTL Cuisine, which has six locations across California, Arizona and Texas, said his company has been happy using Tablz so far.
The company projects it will earn an extra US$10,000 through seat-booking fees this year and – just as important – it’s helped cut down on the number of no-shows, which have risen as overall reservations have increased.
“I think this is the direction the industry needs,” Mr. Holder said. “I think we’re all going to need to be more focused on experiential dining.”
Editor’s note: A previous version of this story incorrectly stated Statistics Canada's report on spending on food services and drinking places in April. The correct figure is in excess of $7-billion.
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