Friends of Branded!
Happy Saturday, and I hope you had a great holiday!
Just like NBA Hall of Famer, Karl Malone (aka: “The Mailman”), the Hospitality Headline, is a 52-weeks per year commitment and I’d like to say that we strive to deliver an interesting read every Saturday morning. That's the goal, but you're the judge and jury.
So, let's dive into 2025 together!
On December 19th, New York’s Governor, Kathy Hochul signed into law legislation that prohibits reservation platforms from arranging unauthorized reservations. This is New York State’s crackdown on the “black market” for restaurant reservations. According to the announcement from the Governor’s offices, the bill specifically prohibits third-party restaurant reservation platforms from reselling reservations and putting an end to a predatory marketplace that placed a cost on consumers before they even entered a restaurant and are making dining inaccessible to those who refused to pay.
With strong and supportive quotes of this legislation coming from our friends at the New York State Restaurant Association (President & CEO, Melissa Fleischut) and the NYC Hospitality Alliance (Executive Director, Andrew Riggie), it’s obvious that the industry is positive on this development and the criticality of this crackdown on secondary market reservation platforms that operate WITHOUT permission of the venues.
Cheers to good guys, right?
Not so fast young grasshopper, not so fast.
One article I read regarding the passing of this legislation provided the following statement (and did so with some authority & conviction): “Ask anyone what the biggest problem facing restaurants today is, and they’ll inevitably say the same thing: bots, specifically those ones that are always scooping up online reservations at places like Carbone, Polo Bar, downtown’s Polo Bar clone Corner Store, Cote, and Don Angie.”
Good, bad, or otherwise, Branded is committed to speaking its truth, so let me tell you EXACTLY how many restauranteurs believe that the “biggest problem facing restaurants today is the bots.” ZERO! ZILCH! NONE! NADA!
No one should misunderstand Branded’s position on the secondary market reservation platforms that are operating without permission of the operators – we don’t like them! This isn’t a new position that Branded is taking and I’ve pasted the April 22nd, 2023, edition of the H^2 where this emerging trend was identified.
To Reserve or Not to Reserve, That is the Question
In the April 2023 Top of the Fold, I wrote that these reservation platforms were not even pretending to be wolves dressed in sheep’s clothing. They’re wolves dressed as wolves.
However, despite my dislike of these platforms, as a free markets person, my strong recommendation then was for everyone to let the market work things out for itself.
The issue of bots and the reselling of reservations is a SUPER niche issue which impacts only a small subset of the industry (yes, this segment is a high-profile one, but still a tiny subset). This action by New York State represents the over proliferation of legislation and if you speak with restaurant operators, they will tell you that such over-reach is a greater threat to the hospitality industry than the bots.
As I’ve written about previously, the restaurant industry has over $1 trillion in sales! What percentage of that do you think is being impacted by reservation bots? Again, please don’t misunderstand my position, I believe the legislation is well-intentioned and it might even make some people (operators, guests, legislators) feel good, but it will have little impact on the industry and on the specific issue that it’s even trying to target.
I don’t want to stand on a soapbox, but as long as I have one handy, I’d prefer our government work with operators on the issues that are far more troubling and challenging for our industry. In my home city of New York (where I was born, raised, live and will love forever), we’re dealing with increased homelessness & crime, deteriorating infrastructure, heavy taxes, over the top & business stifling regulations, and litigation empowering laws & regulations. (JB - was the proceeding the single best line you've ever read in the H^2?)
While I know our legislators are trying to be allies to our industry, Carbone’s inventory being pulled off Resy by bots doesn’t rise of the level of challenges needing attention from our government.
How this law will even be enforced, of course, raises other questions and I dare say, if the bots can still secure concert tickets for Taylor Swift and Bruce Springsteen, I don’t see how a crackdown on New York’s finest and hardest to get dining tables is going to be stopped any time soon.
According to PYMNTS’ Restaurant Readiness Index, only 14% of restaurants in the country have their reservation operations mostly or fully automated (meaning 86% of restaurants take their reservations the old-fashioned way).
Except for a truly small segment of the market, restaurants that use reservation platforms pay these platforms for their services. Think about that, restaurants are paying a monthly SaaS fee and / or a per-person fee to utilize these reservation platforms. These platforms represent labor-savers for operators and for the most part are embraced as value-added and key service providers.
A little over two decades ago, Branded Hospitality didn’t even take reservations at our full-service restaurants. When OpenTable came onto the scene, Branded was an enthusiastic beta-tester of the software and it was truly revolutionary (Schatz likes to say it was the biggest technological change in our industry since the dishwasher). 😊
While subscription plans with OpenTable vary, at its core is a monthly software as a service fee (“SaaS”) a per-cover fee for reservations made through OpenTable’s platform and a smaller per-cover fee made via the restaurant’s website using OpenTable’s widget. Restaurants can elect to use the more premium plans that OpenTable offers where some of the per-person fees are reduced or even eliminated and at the highest plan, OpenTable offers enhanced relationship management and data tools.
OpenTable, Resy and other platforms comprise a software market that in 2023, was valued at $7.71 billion and is expected to reach $24.5 billion by 2031. This represents a constant annual growth rate (“CAGR”) of 10.13% from 2024 to 2031. For avoidance of any doubt, these growth rates represent strong market dynamics and an expected ongoing expansion. The labor saving that comes from these reservation platforms explains some of the enthusiasm from operators for reservation platforms, but the need for operators to know their guests better and specifically leverage the consumer data that comes from these reservations are key factoids contributing to the growth of reservation software platforms.
The scarcity of reservations that comes from the “black market” impacts a tiny percentage of the industry and really hits only a few elite restaurants. For the vast majority of restaurants, there doesn’t even exist a secondary market for reservations. This New York State law is addressing a challenge that the industry can handle on its own and should be left to do just that. If people are screaming that this is a real problem, it’s not and it's just an illusion.
Again, I don’t like or support the platforms that are monetizing these secondary reservations without consent of the operators by positioning itself between the venue and its guest, but at the end of the day, this is a “nothingburger.” Bots buying up reservations is a nuisance and maybe annoying, but it’s an issue that can be addressed with technology solutions and good management. It certainly doesn’t need systemic legislation.
In last week’s edition of the H^2, I made a comment about how 38% of restaurants reported unprofitability in 2024 (meaning that 62% of the industry is profitable). The percentage of restaurants struggling can be regarded as high and that’s of course unfortunate.
But here’s where the rubber meets the road, the US restaurant and dining market is over-saturated, there are too many restaurants and associated dining options to choose from. We may have stretched the consumer with higher prices, but we are an industry with a supply / demand equation that still very much favors the guests. Restaurants, in general, have little to no pricing power b/c there’s an abundance of dining options available.
The saturation of the industry is an issue that we need to solve for and despite the goodwill and comradery that exists among industry players, the saturation contributes to the high-level of competition that exists as operators compete for a share of the guests’ wallet.
I’ll concede and want to recognize that the intentions of State Senator Nathalia Fernandez, Assembly member Alex Bores and of course our friends Melissa Fleischut and Andrew Riggie from the NY State Restaurant Association and NYC Hospitality Alliance respectively are all good (and these people are allies to and champions of the restaurant industry).
But as a free markets person, I’d prefer for our industry to manage this and other issues on our own.
Bots buying up reservations isn’t a good thing, but this is a solvable issue. Legislative overreach, however, has me more concerned as it represents longer-lasting implications for the restaurant industry’s viability and growth.
It takes a village.
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Branded’s portfolio is dominated by operator-centric technology companies, but our love of this industry started with brick & mortar restaurants and investing in restaurants and restaurant companies remains a key part of our platform.
I want to use the Shoutout section this week to give some well-deserved attention to our restaurant partners and specifically the great work they’re doing in the city I love (despite what I wrote about in the Top of the Fold). 😊
The first shoutout this week goes to our partners at LDV Hospitality (The Good Life). In 2024, Branded Hospitality invested in LDV and following a most successful New Year’s Eve celebration, the doors to LDV’s newest restaurant, Barlume, officially opened this week.
BARLUME—meaning “a glimmering light”—is LDV’s heartfelt tribute to the sun-kissed flavors of the Mediterranean. From its inviting all-day caffè to the vibrant evening cocktail lounge, every detail has been designed to bring warm hospitality, community, and connection to the heart of Flatiron at 900 Broadway (corner of 20th street and Broadway).
The Branded team loves how LDV Hospitality operates its longstanding brands (Scarpetta, American Cut , LDV At The Maidstone and Dolce Italian) and that very much includes the way the company leverages guest-centric technology to surprise and delight its patrons.
LDV is on a mission to channel its passion for genuine hospitality by creating charming and engaging restaurant and bar experiences. Through its food & beverage offerings, LDV Hospitality brings La Dolce Vita, “The Good Life,” to its guests by curating an ambiance of effortless elegance. These experiences elevate and define a true sense of place for the neighborhoods it operates in, and the hotel partners it works with. LDV achieves all this with its team of extraordinary people, culinary integrity, and excellence in service. They also leverage guest-centric technology, which makes the Branded team smile!
The second shoutout this week goes to the amazing team at Monterey and specifically its recognition as one of the best steakhouses in New York City.
You can read about this list from EATER New York here: The Best Steakhouses in New York City, but I want to give a shoutout to our partners Simon Oren, Dudi Sasson, and Chef James Tracey who are the masterminds behind this art deco midtown brasserie with a Miami-pink hue and a Rat Pack (Palm Springs) vibe. 😊
Voted the best bar to grab an after-work drink within two blocks of his office, by our friend and LP in Monterey Mr. BL, this joint is an oasis in Midtown East.
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Branded invites readers of the H^2 that are interested in learning more about our portfolio companies, and investment strategies to become part of our Access Hospitality Network.
In last week’s Access Hospitality Network section, I got a little granular with our partners at Big Chicken and Mr Bing Foods.
The feedback and engagement that followed was great fun, so let’s see what this week’s AHN write-up on Fishbowl generates.
I expect 2025 is going to be a big year for a number of companies in Branded’s portfolio, and that is most certainly the case for Fishbowl.
Fishbowl is the OG of guest engagement platforms and with the consumer data becoming an ever more important factor in helping restaurants win by improving the relationship with their guests, customers of Fishbowl are going to be the beneficiaries of this guest relationship management platform and its marketing automation solutions.
Fishbowl’s GRM dashboard offers a comprehensive view of where a restaurant's guest data originates, enabling marketers to work more effectively. With Fishbowl, you gain insights that turn data into action, enhancing your marketing strategies with precision.
Exclusively built for restaurants, Fishbowl dropped some knowledge at the end of the year and it’s all a precursor to what’s ahead in 2025!
Fishbowl's Menu & Price Optimization Services drove
- $400 million in profit improvement for clients.
- $350 million restaurant sales influenced per week.
- 25 million restaurant guests influenced per week.
Fishbowl’s Guest Relationship Management (“GRM”) Milestones:
- Fishbowl facilitated the redemption of 3 million offers for our restaurant clients.
- Fishbowl clients relied on the company to deliver 4.7 billion emails, which is more than one message to everyone on the planet with an email account.
- Fishbowl sent 53 million SMS messages for its restaurant clients.
Restaurant operators, please keep in mind the following:
- Loyalty Program Impact: Implementing a loyalty program can boost customer retention by 25%, with members showing 20% higher purchase frequency and spending up to 60% more than non-members.
- Redemption Rates: Average redemption rates for loyalty programs range from 20-50%, serving as a benchmark to evaluate a program's effectiveness.
- Revenue: The top 10% of loyalty users account for nearly 48% of full-service restaurant visits and 50% of spend, underscoring the value of engaged customers.
Finally, please check out the links below.
- Pricing decisions drive the value of a restaurant
- Building Guest Loyalty Across Restaurant Locations
- Fishbowl Guest Relationship Management platform
- Contact Fishbowl
Fishbowl is all about empowering its restaurant clients and if you’d like to explore how to get involved with this company, please contact me directly (or click the link below).
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Featured Episode: Being a World-Class Operator: The Secret to Success in the Restaurant Business
In this REWIND episode , get ready to dive into Greg’s incredible journey, from flipping burgers at McDonald's to leading the world’s largest franchise operation, managing over 2,600 units across iconic brands like Applebee’s, Taco Bell, Panera, Arby’s, Pizza Hut, Wendy’s, and Planet Fitness. Greg opens up about his secret recipe for success—operational excellence, strategic diversification, and staying ahead of market trends.
This isn’t just another business story; it’s a masterclass in hospitality leadership. Whether it’s his approach to running exceptional operations or exploring new industries like fitness, Greg offers priceless insights for operators looking to excel in diverse portfolios, including restaurants and real estate. His message is clear: success isn’t only about financial strategies; it’s about delivering world-class hospitality every single day. Tune in!
Tune into the episode and subscribe to our channel here: Hospitality Hangout With Greg Flynn
Re-Run of the Week: Mario Del Pero from Busser to Boardroom
In this REWIND episode, get ready to be inspired by Mario Del Pero’s remarkable journey through the restaurant industry. From mentorship and hard work to creating transformative brands like Mendocino Farms, Dom Food Group, and Neighborly, Mario’s career is a powerful example of how vision, strategic partnerships, and innovation can change the game.
Mario takes us through pivotal moments, from his early lessons in work ethic taught by his father to how working with Ron and Greg Newman at Sharkeez reshaped his life’s trajectory. He shares the unique approach behind Dom Food Group, a food venture studio dedicated to nurturing restaurant brands from the "preschool" phase and setting them up for long-term success.
In this episode, Mario also discusses the future of virtual kitchens, how convenience stores and grocery stores are disrupting traditional restaurants, and his innovative concept, Neighborly, which combines multiple dining experiences under one roof to maximize space and offer variety.
Tune into the episode and subscribe to our channel here: Hospitality Hangout With Mario Del Pero
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Restaurant Marketing Fuel for 2025
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That’s it for today!
See you next week, same bat-time, same bat-channel.
It takes a village!
Jimmy Frischling
Branded Hospitality Ventures
jimmy@brandedstrategic.com
235 Park Ave South, 4th Fl | New York, NY 10003
Branded Hospitality Ventures ("Branded") is an investment and solutions platform at the intersection of foodservice, technology, innovation and capital. As experienced hospitality owners and operators, Branded brings value to its partners through investment, strategic counsel, and its deep industry expertise and connections.
Learn more about Branded here: Branded At-A-Glance