Definitely a dramatic improvement at the very moment we switched to tickets.

These are remarkably similar to Next’s numbers:

23,288 dined

364 no shows, or 1.54%. Again, very few full table no shows… only 5 on the year.

The restaurant was losing hundreds of thousands of dollars simply from people not showing up. We’d far rather people come, eat and enjoy and this system encourages that. Keep in mind that we can actually charge everyone less and create a better experience through this efficiency.

And if you think that pricing variability does not matter on the high end you’d be wrong.

During January – April the percentage of out-of-town diners goes way down in Chicago and along with it demand plummets. It’s pretty miserable here in February and dining at 9:30 on a Wednesday night when it’s -22F outside is not really on anyone’s bucket list. That’s when we move our pricing downward to inch demand upwards. Doing so has resulted in the best Q1’s we’ve ever had by far… in fact, I can’t give you a percentage because a typical January for us was break even at best. Now it’s not July, but it’s running 12% to 15% to the bottom line each month of Q1.

Finally, Super Bowl Sunday.

This past year we had 28 diners booked on Super Bowl Sunday. Makes sense. There are always a few days per year when dining at Alinea is not a priority for people. Oscar’s Sunday. July 4th. And the Super Bowl.

As of noon that day it looked like a losing day for us. We still have about 30 chefs in the kitchen working, and the front of house is doing their side work and cleaning up. Our costs have not changed.

At about noon I tweeted “Don’t care about football tonight? Come eat at Alinea instead. $ 165 super bowl special.” We re-priced the tickets at roundly 35% off and did 74 covers that evening. $ 23,800 of incremental revenue, after food and beverage sales, and service. Not a normal night, but not a disaster.

And here’s what most restaurateurs and chefs don’t think about.

There’s an old saying that you don’t take percentages to the bank. Most restaurants look at food costs as a percentage of gross revenue. And that can be useful so long as you don’t bog yourself down in it. Our food costs run far higher when we lower ticket pricing, but our revenue and bottom line go way up. Incremental revenue increases are far more important than running a constant or low food cost percentage.

So if this is so great why is no one else implementing the idea?

I fully expected OpenTable to copy the tickets once I saw how readily people adapted to them and how beneficial it was for our restaurants. And I knew that they could crush us… tons of developers, multi-billion dollar market cap, and a huge install base. So we built it for our own restaurants and concentrated on servicing our customers and making our money that way, not through software.

When that didn’t happen I started to think about it more critically. And I looked at their Annual Report.

Here’s all you need to know – 2012 Year End:

Total revenue: $161.6 million

Revenue from Reservations, North America: $ 78.9 million.

Revenue from Reservations, International: $ 12.1 million.

If OpenTable changes its model they miss out on roundly $ 91 million in revenue… or put another way, about 56% of their revenue stems from charging restaurants for booking reservations.

It is very much NOT in their interest to have restaurants connect directly with customers through social media. It is not in their interest to have tickets reduce the number of no shows. And with about another $15 million in revenue (from what I can tell, it’s not specific) from equipment leases they won’t be selling iPads independent of old servers and touch screens any time soon.

As for the rest of the start-ups they are trying to carve out a niche to add a layer on top of OpenTable rather than compete directly with them. A few have created new and better systems that touch on the ticketing concept… I’d put SeatMe on that list – and that’s why they recently got bought by Yelp. But for the most part the reservation systems that try to compete directly with OpenTable lose. So the VC’s back companies and apps that try to layer on top of OpenTable. And as a restaurant owner it strikes me that very few of these people have ever owned and operated a restaurant because if they did they’d be concentrating on a different method entirely.

It also strikes me that they’re only trying to solve their own problem of ‘access’. The thought is: yeah, I’d pay $ 50 extra to go to Per Se on short notice this Saturday night. And certainly a lot of people are willing to do that. But that’s only applicable to a minority of restaurants and their willingness to share that incremental revenue. I’m not so sure why, other than convenience and a few extra dollars, they’re willing to do that. Perhaps no other good option yet exists?

So what’s our strategy?

Too much software suffers from feature bloat and too broad a focus. We’re going to be offering restaurants a narrow, powerful, and affordable system that measurably decreases their labor expense line while increasing overall revenue in immediate and measurable ways. It will be:

web based, hardware agnostic system to quickly template restaurant reservations that offer a mix of sales options ranging from traditional, no cost reservations for customers, to deposit-based tickets like we use at the Aviary, to full-on tickets for daily reservations or only private events – or any mix thereof.

CRM is a mess on most reservations systems. On many it’s just a glorified post-it note for info about customers. We’ll have that if that’s all you need, but will also be able to ‘off load’ ticket sales data and customer information to other CRM’s. In our mind CRM is a totally different problem to be solved than reservations. At our restaurants we’ve built a custom Salesforce App that integrates with our ticketing system to handle CRM across all 3 (soon to be 4!) of our restaurants. See addendum below.

Several methods and tools to automatically or manually dynamically price tickets and analyze the results.

Social media integration for customers and the restaurant.

No central network branded by us. The ticket system is yours to use and you can promote your restaurant as you wish… but you won’t be lumped in our App or limited to our network of affiliate restaurants.

Flat monthly fee regardless of use, charged by restaurant location – one fee per restaurant.

Pass through web-hosting costs. You pay exactly what it costs to host your traffic and data in the cloud on AWS.

Over the next several months we have several amazing restaurants that will begin using the current version of our software. They include restaurants across the US as well as in Europe and Asia. Most of them you’ll recognize and a few are switching from other ‘ticketing’ software… while one is giving the middle finger to no-shows in the best possible way instead of their usual way!

Concurrently we are rebuilding the entire system from scratch using what we’ve learned by selling over $ 60 million of restaurant tickets to patrons, having dozens of our staff members use the system, and feedback from our beta restaurants and our customers. I won’t give a date (I’ve learned that lesson) but when we launch our platform a restaurant will be able to integrate our ticketing and table management software with their web site, on their own, in just an hour or two.

We welcome questions, analysis, and feedback of all types and will do our best to provide more information.