When something valuable is mispriced at say zero, speculators appear to grease the wheels of commerce while earning a little something for themselves. This is all well and good until the government steps in to put a stop to the speculator’s arbitrage. The real issue is, “There were just too many diners for too few restaurants,” Appointment Trader founder Jonas Frey told Bloomberg. “I believe we’re serving a need. That’s why it worked.” A thriving market for New York restaurant reservations has turned into a mania, evidenced by the 30,000 people who have flocked to Frey’s site to buy reservations at some of the city’s hottest dining spots for $250 to $1,000 a seat. His platform has sold over $6 million in reservations over the past year, according to its website.
However, in a case of legislation looking for a problem, New York Governor Kathy Hochul has the proposed Restaurant Reservation Anti-Piracy Act on her desk which would require permission from restaurants to offer bookings. On its face the bill looks to curb bots, used by scalpers to reserve spots for sale to diners who will pay for entry into high profile establishments that cater to the see-and-be-seen crowd.
These bots are blamed for exacerbating a mania over reservations for the city’s hard-to-get-into restaurants and skewing the Big Apple’s restaurant scene toward the wealthier set.
Bots make reservations at no cost. The reservations which can’t be sold are simply canceled. No harm, no problem. Except the cancellation rate for New York restaurants rose to 19% last month, while the national restaurant cancellation rate was only 11.6%.
Alex Eisler, described by Bloomberg as “a rising junior at Brown University studying applied mathematics and computer science,” spends 30 minutes to two hours a day between classes booking reservations. He says he made $100,000 last year for his trouble. He first got into the business when he purchased a table for 4 Charles Prime Rib on a weekend trip to New York.
“The whole process worked great,” the junior at Brown said, prompting him to ask himself: “How hard is it to actually be one of the people selling reservations?”
Governor Hochul may yield her pen, However, as Matt Tucker, head of reservation booking website Tock, told Bloomberg, “Legislation can only do so much. It’s supply and demand that’s going to drive real outcomes here.”
Supply and demand usually does.
