Amex buys all the restaurant reservation apps so it can save seats for its ritziest cardholders
American Express spent $400 million to give more seats to its highest-paying members.
A couple of weeks ago, American Express announced that it acquired Tock, a high-end reservation and table management app that offers bookings at more than 7,000 restaurants and wineries, for an astounding $400 million, or $57,142 per restaurant that it’s partnered with. This comes five years after it purchased Resy for ~$200 million.
Why would a credit card company spend more than half a billion dollars on two restaurant reservation apps? So it can reserve a subset of reservations for holders of its most expensive credit cards. From Amex’s press release:
“Restaurants are one of our largest Card Member spending categories within Travel and Entertainment, with $100 billion in volume in 2023,” said Howard Grosfield, President, U.S. Consumer Services, American Express. “We’ve been offering unique dining benefits, exclusive access, and special experiences to our Card Members for years through Resy and Global Dining Access by Resy. Now, we can connect even more premium customers with the most exciting restaurants, while providing merchants and restaurants more technology to help their businesses thrive.”
According to American Express’s website, its “Global Dining Access by Resy,” where the company offers exclusive reservations to different restaurants, is available to account holders of some of Amex’s most expensive cards, such as its Hilton Honors Aspire Card ($550 annual fee), Platinum Card ($695 annual fee), Delta SkyMiles Reserve Card ($695 annual fee), and Centurion Card ($10,000 initiation fee, $5,000 annual fee).
This really is a galaxy brain move by American Express. Apps have made it virtually impossible to get a reservation at half of New York’s nice restaurants, but if you own the apps, you can then save a portion of available reservations each week for your highest-paying customers, enticing new diners to shell out $695 for a Platinum Card.
“Oh, you can’t get a reservation at 4 Charles Prime Rib? That sucks. We have 20 tables available this week if you upgrade from your Gold Card. It’ll only cost you $695.” For some diners who are already considering paying $1000 for a table at Carbone, it’s a bargain! If American Express can upsell enough customers, then the $400 million sticker price will more than pay for itself.
My takeaway from this is that, if you’re a startup founder, perhaps you should focus on building a reservation service for Michelin Star restaurants, not the 47th Gen AI platform of 2024.
