Source Code: Your daily look at what matters in tech.

source-codesource codeauthorShakeel HashimNoneWant your finger on the pulse of everything that's happening in tech? Sign up to get David Pierce's daily newsletter.64fd3cbe9f
×

Get access to Protocol

Your information will be used in accordance with our Privacy Policy

I’m already a subscriber
People

‘A slow road to recovery’: Resy’s CEO on the outlook for hospitality tech

Ben Leventhal talks post-COVID restaurants and how to plan when nothing is certain.

Resy CEO Ben Leventhal

"It's very, very hard to imagine how restaurants operate in a post-COVID world," says Resy CEO Ben Leventhal.

Photo: Getty Images North America

At the beginning of March, Resy CEO Ben Leventhal had to make a decision: Should he continue to charge his customers for a service they'd now struggle to afford?

Resy charges a subscription fee for its online booking software, with restaurants paying upwards of $249 a month. But when restaurants started to shut down in droves Resy — backed by its owner, American Express — ultimately decided it would waive its fees for the rest of the year, counting its revenues as yet another casualty of the coronavirus crisis.

As of May, it's unclear what future — if any — lies in store for restaurants. Resy, meanwhile, is making bets on what might help, ranging from new capacity limitation and takeout features, to a mobile waitlist tool. "This is a reinvention moment for the industry," Leventhal told Protocol in a recent interview, in which he discussed how he made the call on fees, what the future of restaurants looks like, and how to plan when nothing is certain.

This interview has been lightly edited for clarity and length.

What was it like to make the decision to waive fees and basically turn off your revenue?

It was frankly never a question. I mean, restaurants are effectively closed for the most part right now, and so the idea that we would be sending them bills felt kind of silly. We've always positioned ourselves very much in restaurants' corner. And so the easiest and most obvious way to back the industry was to provide fee relief. I'm very proud to be part of a company that's able to do that. This certainly is the right thing to do.

So once you've decided, what was the process at Resy? Did you have to change all your business plans?

Obviously, the financial projections change. The operating model changes a little bit. But we looked at our model, and we found that we were in a fortunate position, where we could offer fee relief and not have that be a threat to the business overall. I think you'll see us continue to play the long game with the industry: Restaurants will come back, and they will come back as strong as ever. It may take some time, but I have no question, they'll be back.

Resy's launched a bunch of new products to help restaurants when they reopen. How did you decide what to build?

There's definitely a process through which we arrived at those products. It kicked off in early March. I think one of the things that's particularly hard about this crisis is how challenging it is to see out toward the other side — it's very, very hard to imagine how restaurants operate in a post-COVID world.

A starting point for us was building a framework that we felt was reasonable, in terms of how we expected restaurants might try to operate, and the challenges that restaurants might face. It's hard to make that roadmapping process work, and develop any degree of confidence around what you're building, but the solve was to just form a view of what might be, if only a straw man view. And to start stress testing against that — with restaurateurs, with people on our team, with other people in the industry whose views we respect — to have enough of a basis of understanding of what's on the other side to build some basic stuff. Things like capacity issues, and the difficulty around how walk-in restaurants will operate — I think those are more obviously going to be problems.

What assumptions are you making on how many restaurants will reopen?

There will be a contraction of this industry, there's no question about it. Some people you talk to say it's as high as 75%, more optimistic insiders say it's 20%, 25%. It's incredibly hard to know. Picking a number would not be productive, nor do we have to pick a number to figure out what products such restaurants might need.

What will they need?

Restaurants are one of the few premium entertainment businesses that are monetized in one way: Restaurants put food on a plate, and you buy that food, and sometimes they put a beverage in a glass and you buy that. But if you think about it, most other categories of entertainment have a way more diversified revenue model. And I think we can expect restaurants coming out of this to be imaginative and to be inventive and to find new ways to make money. So you could see that being chef experiences, meal kits, cooking lessons — a whole range of things that restaurants, we believe, will do coming out of this to make money.

You've rolled these new tools out very quickly — from a development standpoint, how did you pull that off?

We have a very talented product and engineering team, and they've made smart choices about how to triage into some of these features, and how to make use of the existing code base. The At Home product is a more elaborate build, but we are tuning a very solid platform that we've been working with for quite a while. I think it speaks to what we've built to date that we were able to do it quickly

In places that are starting to reopen, are you seeing people going back to restaurants?

We are seeing some uptick, but this is going to be a slow road to recovery. I don't think anyone should expect restaurants to snap back to how they were operating pre-crisis. This is not a simple exercise of turning the lights back on. This is a reinvention moment for the industry.

Do you see technology playing more of a role in the industry than it did before?

We're definitely seeing a significant increase in restaurants that are transitioning from pen and paper onto Resy. As a percent of the overall, that part of the pie is increasing. We are definitely seeing an acceleration in the adoption of technology as a result of the crisis.

I think technology has to enhance hospitality, but I don't think that technology should be playing a conspicuous or distracting role in the hospitality equation. I think there are other areas where technology will advance and will make the business better, but the fundamentals are not going to change: Restaurants connect with people, and they make them happy. We don't want to be a conspicuous layer that sits between restaurants and guests and prevents them from making direct connections.

What do you see happening in the food delivery space?

I think it's a very interesting space to watch. It is clear that there's downward pressure on fees right now for a lot of reasons. I think the question is what do the economics look like steady-state? It's very much unclear how many players will exist, and what the pricing will be.

I think something that is important to consider is how the restaurants will be thinking about this. The key change on this playing field is that for a lot of restaurants, delivery may be going from 20% of their overall revenue to 40% or 50%. At 20%, it's incremental — it's sort of gravy on top. At 50%, it's a core part of the business. And why that matters is that at 50%, restaurants are going to pay a lot closer attention to the margins on delivery. Restaurants will have to make a choice between selling a piece of salmon in the restaurant and selling a piece of salmon for delivery. And if they make 25% margin on the salmon in the restaurant, and they break even by delivery, they have to make a choice there.

Those dynamics, and the increase of delivery as a percent of the whole, will play a real role in what comes next. Certainly, you're going to see restaurants be much more assertive now, if they decide that that's a big part of the business.

Correction: An earlier version of this article misstated Ben Leventhal's surname. This article was updated May 28.

Power

The video game industry is bracing for its Netflix and Spotify moment

Subscription gaming promises to upend gaming. The jury's out on whether that's a good thing.

It's not clear what might fall through the cracks if most of the biggest game studios transition away from selling individual games and instead embrace a mix of free-to-play and subscription bundling.

Image: Christopher T. Fong/Protocol

Subscription services are coming for the game industry, and the shift could shake up the largest and most lucrative entertainment sector in the world. These services started as small, closed offerings typically available on only a handful of hardware platforms. Now, they're expanding to mobile phones and smart TVs, and promising to radically change the economics of how games are funded, developed and distributed.

Of the biggest companies in gaming today, Amazon, Apple, Electronic Arts, Google, Microsoft, Nintendo, Nvidia, Sony and Ubisoft all operate some form of game subscription. Far and away the most ambitious of them is Microsoft's Xbox Game Pass, featuring more than 100 games for $9.99 a month and including even brand-new titles the day they release. As of January, Game Pass had more than 18 million subscribers, and Microsoft's aggressive investment in a subscription future has become a catalyst for an industrywide reckoning on the likelihood and viability of such a model becoming standard.

Keep Reading Show less
Nick Statt
Nick Statt is Protocol's video game reporter. Prior to joining Protocol, he was news editor at The Verge covering the gaming industry, mobile apps and antitrust out of San Francisco, in addition to managing coverage of Silicon Valley tech giants and startups. He now resides in Rochester, New York, home of the garbage plate and, completely coincidentally, the World Video Game Hall of Fame. He can be reached at nstatt@protocol.com.

Over the last year, financial institutions have experienced unprecedented demand from their customers for exposure to cryptocurrency, and we've seen an inflow of institutional dollars driving bitcoin and other cryptocurrencies to record prices. Some banks have already launched cryptocurrency programs, but many more are evaluating the market.

That's why we've created the Crypto Maturity Model: an iterative roadmap for cryptocurrency product rollout, enabling financial institutions to evaluate market opportunities while addressing compliance requirements.

Keep Reading Show less
Caitlin Barnett, Chainanalysis
Caitlin’s legal and compliance experience encompasses both cryptocurrency and traditional finance. As Director of Regulation and Compliance at Chainalysis, she helps leading financial institutions strategize and build compliance programs in order to adopt cryptocurrencies and offer new products to their customers. In addition, Caitlin helps facilitate dialogue with regulators and the industry on key policy issues within the cryptocurrency industry.
Protocol | Policy

Lina Khan wants to hear from you

The new FTC chair is trying to get herself, and the sometimes timid tech-regulating agency she oversees, up to speed while she still can.

Lina Khan is trying to push the FTC to corral tech companies

Photo: Graeme Jennings/AFP via Getty Images

"When you're in D.C., it's very easy to lose connection with the very real issues that people are facing," said Lina Khan, the FTC's new chair.

Khan made her debut as chair before the press on Wednesday, showing up to a media event carrying an old maroon book from the agency's library and calling herself a "huge nerd" on FTC history. She launched into explaining how much she enjoys the open commission meetings she's pioneered since taking over in June. That's especially true of the marathon public comment sessions that have wrapped up each of the two meetings so far.

Keep Reading Show less
Ben Brody

Ben Brody (@ BenBrodyDC) is a senior reporter at Protocol focusing on how Congress, courts and agencies affect the online world we live in. He formerly covered tech policy and lobbying (including antitrust, Section 230 and privacy) at Bloomberg News, where he previously reported on the influence industry, government ethics and the 2016 presidential election. Before that, Ben covered business news at CNNMoney and AdAge, and all manner of stories in and around New York. He still loves appearing on the New York news radio he grew up with.

Protocol | Fintech

Beyond Robinhood: Stock exchange rebates are under scrutiny too

Some critics have compared the way exchanges attract orders from customers to the payment for order flow system that has enriched retail brokers.

The New York Stock Exchange is now owned by the Intercontinental Exchange.

Photo: Aditya Vyas/Unsplash

As questions pile up about how powerful and little-known Wall Street entities rake in profits from stock trading, the exchanges that handle vast portions of everyday trading are being scrutinized for how they make money, too.

One mechanism in particular — exchange rebates, or payments from the exchanges for getting certain trades routed to them — has raised concerns with regulators and members of Congress.

Keep Reading Show less
Tomio Geron

Tomio Geron ( @tomiogeron) is a San Francisco-based reporter covering fintech. He was previously a reporter and editor at The Wall Street Journal, covering venture capital and startups. Before that, he worked as a staff writer at Forbes, covering social media and venture capital, and also edited the Midas List of top tech investors. He has also worked at newspapers covering crime, courts, health and other topics. He can be reached at tgeron@protocol.com or tgeron@protonmail.com.

Protocol | Workplace

The Activision Blizzard lawsuit has opened the floodgates

An employee walkout, a tumbling stock price and damning new reports of misconduct.

Activision Blizzard is being sued for widespread sexism, harassment and discrimination.

Photo: Bloomberg/Getty Images

Activision Blizzard is in crisis mode. The World of Warcraft publisher was the subject of a shocking lawsuit filed by California's Department of Fair Employment and Housing last week over claims of widespread sexism, harassment and discrimination against female employees. The resulting fallout has only intensified by the day, culminating in a 500-person walkout at the headquarters of Blizzard Entertainment in Irvine on Wednesday.

The company's stock price has tumbled nearly 10% this week, and CEO Bobby Kotick acknowledged in a message to employees Tuesday that Activision Blizzard's initial response was "tone deaf." Meanwhile, there has been a continuous stream of new reports unearthing horrendous misconduct as more and more former and current employees speak out about the working conditions and alleged rampant misogyny at one of the video game industry's largest and most powerful employers.

Keep Reading Show less
Nick Statt
Nick Statt is Protocol's video game reporter. Prior to joining Protocol, he was news editor at The Verge covering the gaming industry, mobile apps and antitrust out of San Francisco, in addition to managing coverage of Silicon Valley tech giants and startups. He now resides in Rochester, New York, home of the garbage plate and, completely coincidentally, the World Video Game Hall of Fame. He can be reached at nstatt@protocol.com.
Latest Stories