When Brice Gumpel and his girlfriend were successful New York food bloggers a few years back, the city was the Big Apple Tart for them — getting invited to meet Manhattan’s hottest chefs and dine on their artistic creations was a sweet gig. But while enjoying meal after brilliant meal, Brice was troubled by the old adage that it’s “a bad business decision” to get into the restaurant game, especially the fine-dining spots the couple so loved. That was the genesis of Seated, a booking-and-rewards platform and mobile app that incentivizes consumers to dine in upscale full-service restaurants, or at least have those delicacies delivered.
When Gumpel asked chefs and restaurant owners whether that old restaurant adage was true, “I got pretty straightforward answers,” he recently told PYMNTS. They gave him a quick tutorial on the similarities between restaurant economics and those of other hospitality-centric industries like airlines and hotels.
“The punchline is [that] restaurants have very … high fixed costs and rely on volume,” Gumpel said. “It's an inventory [utilization] game. If they're at 100 percent occupancy,” then the night turns a profit. It’s like a full plane — optimal utilization.
But Gumpel said he learned that “if occupancy rates are low, fixed costs eat all [of that] revenue.” He said hotels are all about “heads in beds,” while restaurants are all about “butts in seats.”
However, Gumpel added that “the big difference between hotels, airlines and restaurants is that [many] are small businesses. They're not billion-dollar revenue generators. They don't have finance departments, pricing departments, marketing departments” and the wherewithal of large chains.
Instead, many full-service restaurants (or “FSRs”) consist of only the chef and his or her family. “[It’s] a small group and they're really hospitality and culinary experts, not marketing and business experts,” Gumpel said.
So, he designed Seated to be a digital-reservations app that entices FSR fans with more than just convenience. And while giving an admiring nod to the ResTech sector, Gumpel said that “there had been no partner, no company that had come along to take [the reservation booking] burden off” of FSRs before Seated began marketing its ability to fill seats or sell gourmet delivery in several top urban markets.
Generating Demand For FSRs
The Seated app works on a system of earned credits. An individual selects a restaurant, makes a reservation, arrives, dines and pays as normal. Then, customers upload pictures of their meal receipts into the app and receive rewards credits redeemable with partner brands like Amazon, Uber, Starbucks and Apple.
“There's 30 or so [rewards partners], give or take, where you can redeem your Seated credits,” Gumpel said.
And true to its mission of creating full-spectrum demand generation for FSRs, Seated awards extra incentives for last-minute and off-peak reservations, as that’s where eateries’ greatest need always is.
“The idea [for Seated] was definitely born out of helping restaurants and being a demand-generation and profit-maximization partner,” Gumpel told PYMNTS. “We very much view ourselves as a restaurant-first business, but in order to help restaurants, we need consumers. So that's why we talk about ourselves as a consumer platform.”
And you can add the word “events” to that restaurant-first mantra, as Seated recently completed the acquisition of events platform VenueBook. The acquisition accompanied Seated’s news of a $30 million fund-raise completed in August.
Seated said in a recent statement announcing the VenueBook deal that “it’s estimated that private events typically make up 10 to 15 percent of a restaurant’s revenue and up to 20 percent of a restaurant’s profit. With the National Restaurant Association reporting that restaurants likely suffered a loss of more than $120 billion during the first three months of the COVID-19 pandemic alone, Seated Events provides a seamless way for restaurants to begin rebuilding this critical revenue stream, allowing families or smaller groups of people who would like to take extra precautions while dining out to book private rooms.”
With so many event planners either furloughed or laid off, Gumpel told PYMNTS that the addition of VenueBook to Seated’s platform creates a way to plan for the inevitable return of corporate events that might look different, but are certainly not going extinct.
A Restaurant Recovery With Style And Smarts
Gumpel doesn’t downplay the bind that FSRs are in, with coronavirus hotspots popping up and social-distancing regulations that can vary county to county. But he’s bullish on fine dining’s future.
In fact, he sees entirely new opportunities arising from COVID. He said FSRs “that are thriving right now — and there are a good group of them — are the ones that have been able to morph their business model. That means … restaurants that have been able to quickly spin up pickup and delivery [and also] gotten very innovative and done things like … selling their wine inventory or becoming a mini grocery store or selling branded merchandise. If you are nimble and you use the technology that's out there, operators are doing OK. It comes down to their ability to be innovative — and their ability to negotiate with their landlords.”
As for signs of recovery, Gumpel said that after Seated began offering outdoor-dining options in July, “[business] has come back much faster than we expected. There is a pent-up demand among consumers to dine out. It’s everyone's favorite social activity. We've been pleasantly surprised by the demand … and we're happy to fill tables for these restaurants and outdoor-dining areas. I can only imagine that once restaurants do reopen for indoor dining, that demand will hold up.”
He added that pick-up and delivery of gourmet meals will play a vital role in the full FSR recovery. That’s why Gumpel recently launching Seated At Home, a courier service for fine-dining delivery.
The platform has partnered with a network of courier services in major metros, eschewing mainstream aggregators for delivery services more attuned to their clientele and a more precious foie gras level of cargo.
Gumpel said that before the pandemic, pickup and delivery was on the order of “a single-digit percent” of FSRs’ revenues. But now, “they are basically forced to get smart at pickup and delivery, because the name of the game in the recovery for these fine-dining establishments is more revenue per location. The way to do that is to expand revenue streams,” he said.
“Rather than have 1 percent of your revenue come from pickup and delivery, have it be 20 percent of your revenue, and really bolster that,” Gumpel said. “I think that's here to stay.”