An ambitious smartphone app released this week promises to bring dynamic pricing to the dining industry, allowing restaurants to fill seats on slow days while giving customers the chance to negotiate discounted meals.
Called Requested, the free app for Android and iPhone is the creation of a team that includes Sonny Mayugba, co-owner of The Red Rabbit Kitchen & Bar, who spent 12 weeks living and working in San Francisco as part of a startup incubator project.
The app allows customers to pursue discounts – often as much as 20 percent off a total bill – by contacting restaurants during slow times and offering to pay a reduced price for a meal. Called dynamic pricing, it works much like the pricing structures for hotels and airlines, which typically drop rates when demand is low.
Traditionally, the restaurant industry has clung to static pricing, meaning a meal costs the same on sleepy Mondays as it does on bustling Thursdays and Fridays. With Requested, restaurants are able to broker deals to fill tables during down times and consumers are able to make offers to multiple restaurants at once and have them compete for their dining-out dollars.
“We’re applying dynamic pricing and capacity management to restaurants,” said Mayugba, 44, whose entrepreneurial efforts include Heckler, a prominent snowboarding and skating magazine he co-founded in the 1990s. “This hasn’t been done before.”
The user-friendly app – sort of a mash-up of Priceline and Groupon – is linked to participating restaurants, which have the option of accepting an offer or rejecting it.
Why make deals for discounts? Mayugba says it brings in crowds at off-peak times, builds customer loyalty and allows restaurants a more consistent flow of traffic that helps with staffing. Several high-profile restaurants and bars in Sacramento have already signed up, including Kru, Shady Lady, Mayahuel and Blackbird.
A quick run-through of the app on Wednesday gave a glimpse of how it can be used. The consumer saves money, but only if the offer comes at the right time, and at the right price, for the restaurant.
For instance, an offer to pay $45, or 10 percent, off a $50 bill at Bacon and Butter came with the generated comment: “Chances are great.” But when the offer was changed to 15 percent off, the line read “Risky!” A low-ball offer of 25 percent off advised: “You may want a backup plan.”
Once an offer is accepted, the customer’s credit card is charged and there is no backing out. Requested gets 10 percent of the bill the customer actually pays.
The offers are mostly for near-immediate seating and is not ideal for long-term planning.
Requested is operating in Sacramento, San Francisco and Roseville, but Mayugba says he hopes to take it national, if not globally. He and his team of Sacramento-based software developers – Carlos Rivera, Nichole Barnum and Jon Shumate – worked weekly for three months with The Launch Incubator, a San Francisco startup center for entrepreneurs. The four met once a week with Silicon Valley professionals who helped them refine their product and business model.
One of the beta testers prior to Requested’s official launch was Hook & Ladder, the popular midtown restaurant and bar that occasionally lags at lunchtime and for dinner early in the week.
Hook & Ladder co-owner Jonathan Modrow said that while it is too soon to tell how well the app works, he likes the concept. He said it has the potential to be more appealing than other discount options like Living Social and Groupon, which don’t control when users can visit an establishment.
“With this, you have a barrier and it gives us control,” Modrow said. “We almost need to see it go full launch before we know how beneficial it will be. I really think this kind of pricing is the future. I expect to see it will start to fill up our Monday nights and our lunches.”
He said a typical discount has been 20 percent, but it depends on the time and size of the party.
“The benefits of putting butts in the seats, even if there isn’t a total windfall, are huge,” he said. “It allows us to be more agile in our operations.”
Call The Bee’s Blair Anthony Robertson, (916) 321-1099. Follow him on Twitter @Blarob.