Weekly Wrap March 31: Reservation Scalping, Shrinking Dining Rooms, and More
The most important hospitality industry news right now
Dave Foss
March 31, 2025
In this Weekly Wrap, we’re looking at the business of reselling dining reservations, restaurant closures in D.C., how different generations are dining out, and more.
Reservations For Sale
The Headline: “Restaurateur says 'fighting for our lives' against reservation scalping trend.”
The Source: Fox Business
What You Need to Know:
Some individuals have turned reselling dining reservations into a profitable business.
However, it is coming at a cost to both diners, who struggle to secure spots on platforms like Resy, and restaurants, which argue that these people are siphoning away their revenue.
Lawmakers are working to dismantle third-party reservation services — such as Appointment Trader or ResX — that they argue are exploiting the reservation process and creating an unfair system. Platforms like Resy, owned by American Express, are also working alongside lawmakers and the National Restaurant Association to help "amplify" issues the most in-demand restaurants are facing, Resy CEO Pablo Rivero told FOX Business.
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Zhou said restaurants typically see about 5% to 10% of their books no-show in a single night. In 2023, that jumped to 25% "seemingly overnight," she said. Profit margins in the industry range between 5% and 10% when things are going well, so "if a quarter of your book doesn't show up, that's almost your entire profits that have just gone down the drain," Zhou added.
Zhou, who has worked in the business for more than a decade, said people program bots to understand when a restaurant is going to release all of its reservations at the same time. The moment they are released, the bots take each one with the intention of reselling them for a premium price.
Even though every reservation is taken, not all of them are sold, leaving the restaurant with no-shows, she said. Zhou’s team also discovered that some reservations were being sold that never actually existed. Another issue is that the people programming bots to snatch reservations for resale often use invalid credit or debit card information to secure the bookings. As a result, restaurants are unable to collect the no-show fee when they fail to resell the reservations.
Our Take:
It’s hard to feel sympathy for a restaurant that’s so wildly popular that people are literally auctioning off reservations. But if left unchecked, this could become a real issue for the industry as a whole.
First off, as a consumer, if I can’t secure a reservation for months (or years), I will eventually just stop trying. The hype wears off, and these places fall off our radar. Next thing you know, I see an announcement that the restaurant is closing. Why? Who knows, there are most likely a multitude of reasons. But, I stopped even considering it ages ago because it was effectively “unreservable.” And if I start seeing those reservations pop up on secondary platforms for insane prices, I’ll lose all interest. I’m looking to have a solid dinner out, not scalp tickets to a Taylor Swift concert or NBA playoff game.
From a restaurant owner’s perspective, if the cancellation rate continues to go up and the reservation platform does nothing, my confidence in that platform tanks. When I lose confidence in the platform’s ability to keep out bot activity, I have two choices: ditch the platform and move to another, or have someone on the team call EVERY single reservation to confirm it is a real person. Which is smart — if you have the time and money. But if you’re running 250 covers a night, that’s a serious labor and payroll drain just to verify bookings.
The loss in revenue from last minute cancellations and no-shows is real. Yes, most of these places have “notify” lists, and most operators will try and make up cancellations with people from those lists, but let’s be honest, most of those people have already made a reservation somewhere else at that point in the game.
This is far from the biggest problem in the restaurant industry as it affects a small subset of restaurateurs, but it’s definitely something that needs to be addressed and dealt with sooner than later.
D.C. Restaurants In Trouble
The Headline: “Survey finds that 40% of D.C.-area eateries likely to close this year”
The Source: Washington Times
What You Need to Know:
A new survey from the Restaurant Association Metropolitan Washington finds that 44% of casual dining restaurants in the D.C. area expect to close this year due to higher food costs, tipped wage increases and federal layoffs.
Among 200 eateries the trade group surveyed in January and February, 11% described closing as “very likely” and 33% as “somewhat likely,” while 62% reported lower profits in 2024.
Destination D.C., the city’s tourism bureau, estimates the District has 2,513 restaurants among thousands in the Maryland and Virginia suburbs.
More than half of surveyed restaurants expected conditions to worsen in 2025, up from 21% who felt the same at the start of 2024. Another 49% reported seeing fewer diners in 2024, up 20% from the year before as higher prices led more people to eat at home.
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Another 82% worried how Trump administration tariffs on imported goods will increase food, beverage, and equipment costs; 73% anticipated negative effects from federal layoffs and relocations; and 68% questioned how immigration policies will affect their ability to maintain sufficient staffing.
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Tipped wages have increased nearly 50% in the District as part of a $2 annual increase that city officials have mandated through 2027. In July, the next hike will bump tipped wages from $10 to $12 an hour, costing the average restaurant $140,000 annually.
In addition to rising food and labor costs, federal layoffs have threatened to cut into restaurant profit margins.
Our Take:
The past few years have been particularly brutal for the D.C. dining landscape, and the phasing out of the tip credit by 2027 was just the first domino to fall. In the following year, full-service restaurants have seen a 12% reduction in workforce, with 96% of operators raising prices to compensate. Many have also introduced service charges, sparking widespread confusion — and frustration — over where exactly that money goes.
Layer in the proposed tariffs and their potential effects on the industry, along with the slashing of government jobs, many of which are based in D.C., and throw in a dash of consumer spending dropping due to all the uncertainty, and you have a perfect storm.
That all being said, I do think the article is maybe a little alarmist. There will be a sizeable amount of closures in D.C., but I think 40 percent is a bit high. I could see it somewhere in the 20s, which is still significant. And unless the economy and administration inject some level of predictability back into the market, we’re likely to see retractions in restaurant businesses across the country, not just in D.C.
But people need to eat and they crave social connection. Habits may change, but dining and drinking out isn’t going away, just evolving. The opportunity is there for those who can figure out how these habits will change and be ahead of the curve.
Influencer Keith Lee Partners with Toast
The Headline: “Keith Lee partners with Toast for $150,000 restaurant giveaway”
The Source: Nation’s Restaurant News
What You Need to Know:
Social media influencer Keith Lee is partnering with point of sales provider Toast on a contest for restaurants to win $150,000.
The “It’s the Little Things” contest will surprise three restaurants nationally with a free year of Toast and a $50,000 check based on three categories: commitment to hospitality, community connection, and employee care and engagement.
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This is all part of an ongoing marketing campaign between Toast and multiple celebrities and influencers. The campaign kicked off in January with the premiere of a movie short starring chef and actor Matty Matheson. The campaign will also feature content with chef Sophia Roe and social media influencer Danny Grubs.
Our Take:
Keith Lee is arguably one of the most influential voices in the food world today. A popular food influencer and critic known for his food reviews, Lee gained a large following on TikTok (17 million), where he reviews various restaurants and food establishments. A good review from him can change the fortunes of any business, for better or worse. What sets Lee apart is that he gives preference to Black-owned and family-owned restaurants. He frequently has family members place takeout orders on his behalf in order to avoid preferential treatment from restaurant owners.
As the industry continues to evolve, we’ll only see more brands and restaurants partnering with influencers, both big and small. Despite the backlash against “influencer culture,” it is a sign that it is not going anywhere, at least for now.
How Different Generations Are Dining Out
The Headline: “How Dining Out Differs Across Generations”
The Source: Eater
What You Need to Know:
The survey covers how diners discover new restaurants (plus what sources they trust for recommendations), what diners want to get out of the experience of dining out (including pictures for social media), how inflation has affected dining, approaching dining abroad, and what food trends may currently be on the rise. Here are some key takeaways:
The study found 77 percent of Gen Z respondents and 67 percent of millennial respondents say they typically find out about new restaurants through social media, while 56 percent of millennials rely on review platforms, like Google or Yelp (that’s at least 10 percent more than any other generation). This is partly because of greater trust in these online sources, as each generation rates personal recommendations as the most reliable dining source (trusted by 80 percent or more of each generation) but review platforms are also greatly trusted by Gen Z (70 percent), millennials (69 percent), and Gen X (66 percent).
The biggest generational divide is over trusting social media platforms, with just 21 percent of Boomers but a whopping 72 percent of Gen Z respondents trusting reviews and recommendations on social media. There’s also a visual element here, with diners eating with their eyes first and being reeled into new restaurants by food imagery and “what I ordered” videos. This has a disproportionate effect on Gen Zers, with nearly 60 percent saying “what I ordered videos” make them want to try a new restaurant.
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Similarly, 86 percent of diners have changed their dining behaviors in some way to navigate inflation, with 33 percent choosing less expensive menu items and 29 percent planning their dining around budget constraints. Other big inflation trends include looking for specials deals or discounts before going out (28 percent) and prioritizing dining out for special occasions over regular outings (27 percent). Even though Boomers are much more likely to be looking out for fair/reasonable prices when searching for a new restaurant to try (62 percent ranked it in the top two factors), Gen Z is taking a different approach by being more likely to share plates with fellow diners and order appetizers or kid’s meals to offset costs.
Our Take:
To the surprise of no one, different generations have different dining preferences, different advertising preferences, and are influenced by different things. This has been the tale for generations and will continue on for all subsequent generations.
Moral of the story? Know your target demographic and market to them accordingly. If you are a bar in a college town, pouring time and money into Facebook ads or traditional marketing isn’t just inefficient, it’s plain wrong. TikTok is your friend as is Instagram. And please, for the love of god, learn how to take good pictures and videos.
What's more interesting are the areas the generations do align. Trust in review platforms was consistent across the board. As restaurateur’s, we hate this — Yelp and Google reviews are the bane of our existence (albeit a necessary one) — but the fact that diners of all ages so heavily rely on them means operators need to be diligent on this front.
The other commonality is inflation. Across generations, customers are looking for value and are either looking for deals or dining out less. Given the current state of the economy and industry, we don’t see this trend changing anytime soon.
Famous Dave’s Shrinking Dining Rooms
The Headline: “Famous Dave’s shrinks dining room in play for big market growth”
The Source: Restaurant Dive
What You Need to Know:
Famous Dave’s BBQ is working to make its store smaller to keep up with consumer demand for off-premise dining and fast service. The brand is shrinking its dining room, eliminating the full bar and setting up counter service for small stores.
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Pre-pandemic, the business had started to evolve pretty dramatically. If you go back to the heritage of the brand, 30 years ago, most restaurants were all built with a dedicated takeout area and entrance. To-go had always been a big philosophy of the brand. Pre-pandemic we were doing between 35% to 40% of our revenue off-premise. Post-pandemic, that number is more like 55% to 60%.
The historical Famous Dave’s restaurant model is somewhere between 6,000 and 7,000 square feet and 220 to 240 seats, with a heavy emphasis on dine-in traffic. As the consumer has changed their behavior, we’ve continued to evolve the prototype’s design, footprint, layout, model, etc.
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Historically, we did a lot of free-standing buildings. This prototype gives us quite a bit of flexibility in the multi-tenant space, predominantly endcaps. We haven’t really tested an inline space thus far, but we really like the idea of endcap locations.
Our Take:
Like many restaurants, Famous Dave’s is looking to streamline costs. By embracing the smaller footprint, there are less upfront costs associated with buildout and all facilities related fees are theoretically lower (rent/mortgage, utilities, insurance, property taxes, maintenance/repairs). Reducing reliance on in-store dining also keeps labor costs down, which is a challenge for a lot of operators across the country right now. In theory, this strategy will also allow for quicker and more affordable expansion.
We’re going to see more and more sit-down chain restaurants moving in this direction. I don't see smaller 1–5 unit operations following suit, but they should.