Lawmakers advance bill aimed at curbing third-party restaurant reservations
A bill heading to Gov. JB Pritzker's desk is aimed at protecting local restaurants from third-party vendors that buy and resell reservations, which proponents say can lead to costly no-shows and consumer fraud.
If the measure is signed into law by Pritzker, Illinois would join states including New York and Florida in attempting to bar third-party reservation services from listing, advertising, promoting or selling reservations without a written agreement with the restaurant.
The measure, which the House passed last week without any no votes after an earlier overwhelming show of support in the Senate, opens the third-party vendors to litigation and provides for civil penalties of up to $1,000 per violation.
According to Rep. Margaret Croke, a Chicago Democrat who sponsored the bill in the House, the third-party vendors hurt restaurants by grabbing reservations at popular places, sometimes using automated bots, as soon as they are released on platforms such as Open Table that have an agreement with the restaurant. That makes reservations on the site the restaurant is working with look unavailable when they're actually being sold on another platform.
Restaurants plan their nights based on the number of bookings and staff accordingly, but the third-party reservations are often no shows, Croke said.
'They're booked so the restaurant thinks they got the reservation, but maybe someone didn't buy it on the third party,' Croke said. 'They have no way of knowing that the reservation was purchased because now the third party is technically the holder of that reservation.'
Third-party reservation platforms often charge high fees to secure a table, Croke said, adding that she found one vendor selling a reservation for the Ralph Lauren restaurant in Chicago for $700.
'It was ridiculous,' Croke said. 'I thought, 'You're taking something that is free, something that everyone should be able to enjoy and pricing it up.' None of that money is going to the restaurant.'
While no opposition was formally filed against the bill in Illinois, the founder of one third-party vendor, Appointment Trader, said his platform does not use automated bots.
'It's just a clearinghouse to transfer an appointment,' said Jonas Frey, who acknowledged receiving many 'cease-and-desist' letters from restaurant owners. 'We don't sell any reservations. We literally do not source reservations. We do not list reservations, and we also do not sell them. It is 100% user-based.'
Users can make reservations, upload them to Appointment Trader and resell them, Frey said. The company takes a 20-30% cut of the selling price. If a user exceeds a set limit on the number of reservations that go unsold, their account is banned.
According to Frey, the company's 'no-show' rate was less than 1% across the last 50,000 reservations they recently acquired on the platform.
But Sam Toia, president of the Illinois Restaurant Association, which worked with Croke on the bill, said the third-party reservation operations have been a rising problem for restaurants since the pandemic. The bill requires a written agreement between restaurants and reservation platforms, which allows restaurants to have more control over their costs and expected reservation numbers, he said.
'This is a major win for restaurants, as it cuts down on a number of double bookings or phantom reservations,' Toia said.
Croke said the bill could also give people more opportunities to get a seat at popular restaurants, where customers are often deterred with the thinking, 'I don't even want to try that restaurant because I know they're always booked.'
'When you are walking down the street and thinking about trying something, it's such a disincentive to see a bunch of people waiting because the restaurant thinks they have reservations so they can't take walk-ins,' Croke said.
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