Tablz serves up new income stream for restaurants looking to cash in on premium seats

Restaurant reserved sign

Last week’s snazzy rooftop restaurant party in New York City represented quite an ascent for Tablz CEO Frazer Nagy and his business partners.

Their Ottawa-based startup, whose platform allows customers to take 3D online walkthroughs of restaurants and pay extra to reserve premium tables, is now in use in more than 50 eateries, including about 10 here in the nation’s capital as well as in dozens more in Toronto, New York, Chicago, Miami and several other North American cities. 

Nagy, who started the company late last year with co-founders Stef Scrivens, Andrej Sakic and Jérôme St-Hilaire, says he expects the software to be a fixture in up to 100 establishments before the end of the year. 

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The software lets restaurants place reservation fees on highly sought-after tables at prices ranging from $5 to more than $100. Nagy says the product has come along at the perfect time as inflation is chewing away at the already razor-thin profit margins of an industry that’s still struggling to get back on its feet in the wake of COVID-19.

“At a restaurant, where you sit really matters,” he says. “Every reason you’re out changes where you want to sit.”

“At a restaurant, where you sit really matters. Every reason you’re out changes where you want to sit.”

Charges for securing a premium seat vary depending on the day and time, with rates going up at peak hours similar to the “surge pricing” model used by ride-hailing services like Uber and Lyft. Restaurants keep 70 per cent of the revenue from the charges, with Tablz taking the rest.

Nagy stresses that Tablz is an optional service for restaurant guests. Fees typically apply to only a limited number of tables in prime spots – for example, a cozy corner that’s well-suited for a couple’s intimate date night or a window seat with a spectacular view of the city skyline.

“We’re not after every diner,” he says, noting most properties only apply the charges to about 15-20 per cent of their tables.

But that extra income could potentially add up to hundreds of thousands of dollars a year for a swanky downtown restaurant in a major urban centre, or tens of thousands for a sports bar in the suburbs, Nagy explains. 

“That 15 per cent of your real estate can change your life if you’re a restaurateur,” he says.

Nagy and his partners were in New York last week mingling with heavy industry hitters, including In Good Company Hospitality and Branded Strategic Hospitality, two of a cadre of U.S. investors who pitched in $3.2 million in pre-seed funding this summer to help Tablz fuel its scaleup push.

Rising from the ashes

The event was a coming-out party of sorts for the company. It also marked the latest step in Nagy and his fellow founders’ rise from the depths of the dark spring day in 2020 – April 1, no less – when they effectively liquidated their previous venture, Transparent Kitchen, and laid off all 10 employees, including themselves.

Launched in 2017, Transparent Kitchen had been conceived as a way for restaurants to better share their stories. Through an interactive online platform, patrons could browse through local restaurants’ menus, see where ingredients came from and hear what chefs were putting into their scratch dishes.

The founders later revamped the concept, attempting to do for restaurant menus what streaming services like Spotify did for music. By taking the static .pdfs sitting on every restaurant’s website and adding quality photography and tags to each of the dishes, Transparent Kitchen aimed to build a searchable online marketplace that learned users’ preferences in the same way Spotify knows customers are interested in hip-hop or heavy metal.

The company eventually landed about half a million dollars in seed funding and was used in 250 restaurants. But it struggled to reach the scale it needed to become profitable and the pandemic ultimately dealt it a knockout blow.

“We just hit that wall,” says Nagy, who worked in local eateries like Restaurant E18ghteen and Fairouz before launching Transparent Kitchen with money he’d saved from tips. “We tried a couple different business models with different levels of success, but truthfully I could never really seem to get it to land.” 

But he and his co-founders learned a lot about the industry along the way. They decided to apply that knowledge to the premium-booking concept – a business model that was entrenched in other industries like airlines and hotels, but had never really been tried at restaurants.

“We just hustled and hustled to keep the heartbeat going,” Nagy says.

He and his partners sold some of Transparent Kitchen’s platform and menu code to a payments company in 2020 and pooled that cash with their savings to start working on the software that became Tablz.

But it still wasn’t enough to cover payroll for the engineers needed to get the platform up to snuff. That’s when John Shannon, an adviser at the federal government’s Industrial Research Assistance Program, stepped up to offer a funding lifeline.

‘We needed that capital’

“They came and supported us at a time where we needed that capital to go and raise a (pre-seed) round,” Nagy says. “It wouldn’t have happened if we didn’t have the support of (Shannon’s) belief that there was still something here that we were building. Certainly, none of our Canadian investors came to our rescue.”

That injection of capital helped the small team of about a dozen people build a prototype that tested well at a handful of restaurants in Ottawa, Miami and San Francisco, paving the way for the official launch of Tablz earlier this year.

Fortified with fresh funding, Tablz is now at about 25 employees, and Nagy expects the firm’s headcount to double in short order as more restaurants join the platform. He says the fledgling startup is poised to secure another multimillion-dollar equity round in the near future as it eyes expansion opportunities in the Caribbean and Australia, among other markets.

Nagy adds he’s not worried about talk of a looming recession, arguing that pent-up demand for dining out in a post-pandemic world will provide plenty of growth opportunities in an untapped field. He also thinks the recent wave of layoffs at tech giants like Shopify and Hootsuite could actually give his firm a boost by making skilled software engineering talent cheaper and more plentiful. 

“We’re in a really strong position to grow this as a first-to-market Canadian company that has a pretty open blue-ocean opportunity here,” Nagy says. “Our destiny is in our own hands right now. For us, it’s the best time to build.”

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