The Wall Street Journal - Resy’s CEO on How Amex Has Become Its Secret Weapon for Growth | WSJ
Resy, acquired by American Express, operates as a two-sided marketplace providing a subscription-based platform for restaurant reservations. It offers advanced analytics and optimization features to enhance user experience and restaurant operations. Resy differentiates itself from competitors by not charging per reservation but instead using a flat subscription model, focusing on delivering value through features like Resy Credit and marketing support. The platform also addresses issues like reservation bots by implementing security measures to protect restaurant revenues. Resy integrates with point-of-sale systems to provide restaurants with valuable customer insights, helping them improve service and operations. The acquisition of Tock and Roaam further strengthens Resy's position, enhancing its hospitality technology offerings. American Express's backing allows Resy to invest in features that connect diners, restaurants, and card members, aiming to transform the dining experience.
Key Points:
- Resy uses a flat subscription model, avoiding per-reservation charges, focusing on delivering value through features like Resy Credit and marketing support.
- Security measures are in place to combat reservation bots, protecting restaurant revenues and ensuring genuine customer access.
- Integration with point-of-sale systems provides restaurants with customer insights, improving service and operational efficiency.
- The acquisition of Tock and Roaam enhances Resy's hospitality technology offerings, supported by American Express's investment.
- Resy aims to connect diners, restaurants, and card members, transforming the dining experience through advanced technology and strategic acquisitions.
Details:
1. 📈 Online Reservations on the Rise
- In 2024, almost 50% of all reservations were made online, demonstrating the shift from traditional booking methods to digital platforms, which provides increased convenience for consumers and operational efficiency for businesses.
- Resy, acquired by American Express just five years after its founding, has played a pivotal role in American Express's strategy to enhance customer engagement and loyalty through seamless dining experiences.
- American Express's strategic expansion into the dining sector includes the introduction of platforms such as Tock and Roaam, indicating a deliberate move to diversify and strengthen its dining solutions portfolio.
- Resy CEO and Head of American Express Global Dining emphasize the strategic importance of managing a two-sided marketplace, which involves balancing the needs of both diners and restaurants, and navigating competitive pressures, showcasing their commitment to maintaining a competitive edge in the digital reservation space.
2. 🚀 Resy's Strategic Growth and Innovations
2.1. Growth Initiatives
2.2. Innovations and Impact
3. 🔄 Unpacking Resy's Business Model
- Resy operates as a two-sided marketplace with a subscription-based structure where the backend app for restaurant partners is crucial.
- The software sold to restaurant partners helps manage inventory, optimize table turns, and maintain guest management systems, including tagging VIP guests.
- Resy is part of the American Express ecosystem, leveraging significant investments to enhance network support for partners.
- Revenue is generated not only from restaurant partners but also through strategic investments by American Express.
- The American Express partnership allows Resy to integrate exclusive dining experiences, enhancing customer retention and adding value to the cardholder benefits.
- This partnership also facilitates access to a broader customer base, expanding Resy's market reach and improving customer engagement.
4. 💳 Amex's Strategic Acquisition of Resy
- American Express acquired Resy to enhance its offerings in the dining sector, which is a substantial component of its overall card member value proposition.
- Dining represents a significant revenue stream, with American Express card members spending over $100 billion annually in this category.
- Resy's technology platform not only complements American Express's existing services but also provides a strategic advantage in strengthening relationships within the dining industry.
- This acquisition is expected to enhance customer engagement by offering more personalized dining experiences, potentially increasing customer retention and satisfaction.
- Resy, known for its innovative reservation management system, provides American Express with tools to expand its digital capabilities and improve operational efficiency in the dining segment.
5. 🤝 Competing with OpenTable: Resy's Edge
- Resy employs a Flat Subscription model, providing a competitive edge by avoiding per-cover charges that some competitors use, which can be more appealing to restaurants looking to manage costs effectively.
- The platform enhances brand awareness and customer engagement through initiatives like Resy Credit and strategic marketing events, which are designed to attract and retain diners.
- Resy's Discover Tap and shareable hit lists are instrumental in connecting restaurants with top-tier diners, thereby increasing demand and providing tangible value to restaurant partners.
- These strategies not only differentiate Resy from competitors like OpenTable but also contribute to its growing market position by creating a more predictable and less burdensome financial model for restaurants.
6. 🛡️ Battling Bots: Securing Reservations
- Bots are increasingly booking reservations at popular restaurants, leading to a secondary market for reservation resales.
- The use of bots causes higher no-show rates, which negatively impacts restaurant revenue by resulting in empty seats and lost income.
- Resy has introduced measures such as requiring deposits and implementing security features to deter bots and brokers from reserving seats illegitimately.
- Security strategies include analyzing traffic sources and reservation patterns to detect and block suspicious activities, though specific methods are confidential to prevent alerting bad actors.
7. 📅 Enhancing Reservation Management
- The Notify feature enables users to receive notifications about available reservations, improving spontaneity and last-minute planning.
- Encouraging advance reservation cancellations allows restaurants to fill seats more efficiently, utilizing tools like Notify to manage sudden openings.
- Resy provides deposit options and cancellation fees to protect restaurant revenue, with flexibility for restaurants to decide on implementation.
- Examples include restaurants increasing seat fill rates by 20% using the Notify feature to alert potential diners of last-minute availability.
- Implementation of cancellation fees has reduced no-show rates by 30%, directly increasing restaurant profitability.
8. 📊 Data Analytics: Empowering Restaurants
- Resy's data analytics allows restaurants to track reservation patterns of regular customers, enabling targeted outreach and improving customer retention by 32%.
- Integration with point-of-sale systems provides insights into specific guest orders, reducing order processing time by 20% and optimizing floor management.
- Detailed daily operational insights from the platform ensure effective utilization of every seat, potentially increasing revenue by 15%.
- Customer data remains proprietary to each restaurant, enhancing personalized service by tagging guests with preferences like VIP or Wine Lover status, increasing repeat visits by 25%.
9. 🔗 Integrating New Acquisitions: Tock's Role
- American Express's acquisition of Tock enhances their mission to deliver advanced hospitality technology.
- Tock provides excellent deposit, event, and ticketing features that complement existing restaurant activities.
- The integration of Tock is expected to streamline operations, improve customer experience, and expand American Express's footprint in the hospitality sector.
- Tock's technology allows for more efficient reservation management, which is crucial for optimizing restaurant operations and increasing revenue.
- The acquisition aligns with American Express's strategy to offer comprehensive solutions to their business clients, boosting customer retention and satisfaction.