Photo credit: chicago.eater.com
After a challenging experience trying to secure a table at Armitage Alehouse, a popular restaurant in Lincoln Park owned by Hogsalt, Illinois State Representative Margaret Croke encountered an even more disconcerting issue: multiple reservations for sale on Appointment Trader.
“Many people are unaware that this is happening,” Croke remarked. “They assume that securing a reservation is just difficult or that it requires connections. I found it quite shocking.”
Appointment Trader, which facilitates the sale of reservations in various cities such as Miami and Las Vegas, has faced increased scrutiny from regulators for its role in an emerging market where automated systems rapidly acquire spots at sought-after restaurants, only to resell them at a premium. In Chicago, the platform features a range of eateries including Maple & Ash, Bavette’s Bar & Boeuf, and Tre Dita. For instance, if someone wishes to dine at Monteverde in the West Loop on Saturday, March 22, they can procure a reservation for $240 through the platform. Croke, representing a district that encompasses Lincoln Park, is now advocating for regulation within this niche market.
In February, she introduced an ordinance developed in collaboration with the Illinois Restaurant Association to tackle the unauthorized resale of reservations. The proposed Restaurant Reservation Anti-Piracy Act would prohibit third parties from listing, promoting, or selling reservations for restaurants without a formal agreement with the restaurant itself. Offenders could face fines of $1,000 for each violation.
States including Illinois, California, Nevada, and Florida are considering similar legislation, following New York, which has initiated measures to outlaw the resale of restaurant reservations. Legislators argue that scalpers worsen the situation by employing bots to secure reservations, leaving regular customers at a disadvantage and leading to empty tables due to no-shows, which ultimately affects restaurant profits.
“Restaurant profit margins are razor-thin, and no-shows create significant challenges, especially when restaurants believe they are fully booked,” Croke said.
Although Chicago is widely regarded as the heart of Illinois’ dining scene, Croke is concerned about scalping becoming an issue that extends beyond urban areas, especially as prominent Chicago restaurant operators like Ballyhoo Hospitality venture into suburban markets. While the Illinois Restaurant Association was already drafting an ordinance addressing these concerns, Croke’s advocacy provided added momentum. According to the association’s CEO Sam Toia, many members have voiced worries regarding reservation scalping: “Customers should not have to vie with exploitative third-party resellers,” Toia stated.
With a legislative sponsor onboard, the ordinance was set for discussion on March 12 in Springfield. Croke and Toia report that they have not encountered any opposition, emphasizing that this initiative prioritizes consumer interests while supporting restaurants during a period of escalating operational costs. They clarify that the focus is not on individuals who may have legitimate reasons for reselling reservations, such as personal emergencies but rather on the scalpers, like one Brown University student who reportedly made $80,000 by selling reservations.
Jonas Frey, the founder of Appointment Trader—a platform he launched in 2021—contends that the narrative surrounding his service has been disproportionately negative. He argues that the site has implemented various measures to mitigate abuse, such as removing users who sell less than 50% of their listed reservations. Frey also asserts that the use of bots is not a tactic employed by his platform: “We firmly believe we have solid systems to prevent that,” he said.
Frey likens the backlash against Appointment Trader to the experiences of eBay during its formative years in the late 1990s. He questions what impact similar restrictions would have had on eBay’s growth. New York’s legislation mandates that restaurants must provide written consent for their reservations to be sold, leading to Appointment Trader voluntarily withdrawing its services from New York after the state enacted its rules. Frey compares this to requiring eBay sellers to acquire permission from companies like Sony or Samsung before selling their products. He claims that Appointment Trader serves a purpose akin to that of StubHub for sports and entertainment, enhancing consumer options.
Frey argues that both New York and Illinois legislators did not reach out for dialogue before proposing these restrictions, asserting that his awareness of the Illinois measure came only after being prompted by an interview request from Eater. He expresses skepticism that the legislation serves consumers’ best interests, highlighting the absence of consumer advocacy groups endorsing these proposals, and accusing credit card companies of being behind the push for regulation. Major players like Resy and Tock, both owned by American Express, are seen as having vested interests in limiting competition.
About six months ago, Resy formed a task force to address the impact of bots on consumers, supporting the Illinois legislation as well as similar initiatives in Nevada and Florida. The company is also a listed sponsor for related measures in California, reflecting its commitment to the issue.
Frey indicated that while he understands American Express’s motivations for supporting the legislation, he believes it primarily serves the interests of established market players.
Frey confidently stated, “Ultimately, what benefits consumers will ultimately prevail.”
Resy’s CEO, Pablo Rivero, expressed support for the proposals, stating:
“We align ourselves with restaurants on this matter. They have voiced that unauthorized third-party sales of reservations typically lead to increased no-shows and cancellations, negatively impacting these small businesses. Resy and Tock endorse the Illinois Restaurant Reservation Anti-Piracy Act as it safeguards restaurants from lost revenue due to fraud and ensures reservations remain with legitimate diners.
Matt Tucker, the head of Tock, which was founded in 2014 by Nick Kokonas of Alinea Group and is also owned by American Express, further supported the legislation:
“Tock backs the Illinois Restaurant Reservation Anti-Piracy Act in order to shield both restaurants and patrons from the predatory practices of reservation scalping while promoting a fairer and more transparent dining environment. Our alliance with the hospitality community compels us to support any measures that combat these detrimental practices that hinder restaurants’ capabilities to serve their neighborhoods effectively and protect the integrity of restaurant reservations for everyone.”
While restaurants seem to favor these legislative efforts, many have remained silent publicly. Croke noted that Hogsalt’s legal team has been active behind the scenes but opted not to comment on the matter when approached. Attempts to reach additional restaurant owners have similarly not yielded public statements.
Croke indicated that while adjustments to the Illinois proposal might occur, she does not foresee significant opposition. She acknowledged that enforcement might be complex, particularly regarding participants outside the state, yet she believes the measure is crucial.
“Whenever I see an opportunity to support the restaurant industry, particularly small businesses, I will stand behind it,” she stated.
Source
chicago.eater.com