The new iPad “newspaper” the Daily profiles Next Restaurant and their fixed-price online reservation system. As we blogged before, the tickets sell out in seconds and there is a huge resale market with $85 tickets selling for thousands of dollars in the resale market. The excess demand implies the tickets are underpriced from a pure profit-maximization perspective. But Nick Kokonas, one of the partners in Next and the person responsible for the innovative pricing scheme, is reluctant to use an auction to capture the surplus Next is generating for scalpers. He is worried about price-gauging. We have suggested one solution: impose a maximum price/ticket, say $150.
There is a new idea reported in the Daily: Next will offer “season tickets” in 2012, allowing dinners to come four times/year, each time the restaurant changes theme, going from say French early twentieth century to South Indian mid-twentieth century (just a suggestion!). The usual motivation for season tickets is to offer a “volume discount” and extract more surplus from high willing to pay customers. Another is to have demand tied in. Next has no need to offer volume discounts, if anything the tables are priced too cheap. Perhaps there will be a volume premium for guests privileged enough to be able to go to four meals at Next rather that try to find four separate reservations? I guess the season tickets make it even easier to fill up the restaurant for the year and reduce the reservations hassle factor for the restaurant. Looking forward to hearing the details….