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‘Here we go again’: Seated co-founder details Omicron's impact on restaurant dining trends

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Bo Peabody, Seated Co-Founder and Executive Chairman, joins Yahoo Finance Live to discuss how the Omicron variant is affecting high-end restaurant reservations and how restaurants are adapting to changing dining trends.

Video transcript

AKIKO FUJITA: --Live. Restaurants in New York City are facing a dramatic drop in reservations as Omicron fears start to keep customers at bay. Data from OpenTable points to a 46% drop in the week leading up to December 19. Let's bring in Bo Peabody. He's Seated co-founder and executive chairman. We've also got Yahoo Finance's Brooke DiPalma joining in on the conversation.

Bo, it's good to talk to you. You've got a pretty good view here of the sentiment around this variant as it relates to restaurants. And I know a lot of restaurant owners are looking at the headline, saying, here we go again. What does your data--

BO PEABODY: Yeah.

AKIKO FUJITA: --say about the drop-off they've experienced since Omicron first made the headlines after Thanksgiving?

BO PEABODY: It's saying, here we go again. [LAUGHS]

The data is pretty stark for the last two weeks in New York. It's a little less in Boston, which we're sort of surprised by, but, still, a fair bit of a drop. Much less in some of the southern cities we operate in like Atlanta and Dallas, but it feels very similar to the onset of Delta.

A lot of information in the media. Hard to know what to believe. So best thing is just to be safe and to postpone your event.

The hard part is the first week or two, when a lot of reservations had been made, and then people are canceling and in many cases doing it last minute because they obviously don't want to. And that's been really hard on the operators.

AKIKO FUJITA: Yeah. I mean, how are they coping? And I wonder, if we're talking about New York City still seeing the biggest drop, how much of that is kind of a leading indicator of what's to come in other major cities in the US, given that this latest wave really took hold first in New York?

BO PEABODY: Yeah. Well, it's going to sweep. I mean, it's already started. You can see it in the CDC numbers. If you look at the numbers in South Africa, it's already leveled off. And so the hope is that this is sort of what was supposed to happen.

And I know-- I'm not a scientist, and I don't pretend to be one. But if everybody's vaccinated and this variant is contagious, but less severe, hopefully, we move through this, and it's another step in getting to the end. I realize that not everybody views it that way, but I think restaurant operators are taking an optimistic view, obviously, for their business and hoping that this sort of comes and goes quicker even than Delta did.

BROOKE DIPALMA: And Bo, the Seated app helps to fill both indoor and outdoor dining. We saw a bit of an increase as people fleed or, rather, came to restaurants. Now, in major cities like New York, the DOT is trying to figure out permanent plans for outdoor dining, yet community boards are hoping to have more of a say. What's your take on the longevity of outdoor dining?

BO PEABODY: Well, I think it's here to stay. I think more people are for it than are against it. Obviously, with any regulatory thing like this, you have a vocal minority that can be powerful in effecting policy around these issues.

But I do think that it's been good for the city. It's been good for restaurants. There are some downsides. I live in the city. I recognize what they are.

I think the biggest thing is just making sure that everybody stays safe, not necessarily safe from COVID, obviously, but safe with regard to heaters, with regard to the placement of these structures on streets. I think if we can keep people safe, the upsides far outweigh the downsides.

AKIKO FUJITA: Bo, we heard from Danny Meyer yesterday with, obviously, Union Square Hospitality Group say that he will now require boosters for his employees and then for customers come January. I realize part of this is to keep workers safe at a time when he doesn't have as many workers with the labor shortage, but do you think that's something that other restaurants should adapt? Are we moving in that direction?

BO PEABODY: So I sit on the board of Boqueria. We have about four locations in New York, and we're in a few other cities. And we're having the same conversation.

I love Danny on these topics, right? He's always out in front. He understands the position he's got in the industry to be a standard bearer, and he does the right thing almost every time. So I like that he's out there with that message.

We're discussing it at Boqueria. We've decided to close for a couple days around Christmas, which just makes sense, and sort of let things settle down and play out. But I think that it's the only way to go, right?

We've got to mandate that people take the vaccine, they take the booster. It's going to be just like the flu, where you got to take a booster once a year and maybe once every six months. And the statistics are remarkable about how well those do work.

BROOKE DIPALMA: And Bo, in recent months, supply chain has really been on top of mind for restaurant owners. Now, as people begin to reschedule, what's your advice for small restaurant owners as they try to figure out how much they need in inventory and make way towards the New Year?

BO PEABODY: So Seated has a really great feature called the Walk In, which allows a restaurant operator to incentivize people to actually do a walk-in visit versus a reservation. I think walk-ins are going to end up being a really important thing in January and February, where people are going to make decisions a little bit last minute. They're going to make decisions that are based on the weather. They're going to make decisions that are based on their party size.

And if they can walk in, the restaurant's not necessarily expecting them, but is thrilled to get them if they do make the decision to dine out. So we've been encouraging our 1,500 operators in New York to really utilize our walk-in feature to incentivize as much business as they possibly can get that isn't based on a reservation so that they don't have to plan and then-- and hold the table and then get-- and then give it up and all the rigmarole that goes on with reservations.

BROOKE DIPALMA: And Bo, speaking of Seated, we've seen so many tech players really emerge during this COVID-19 pandemic, including many AI companies. And on Wednesday, we saw McDonald's sell off dynamic yield to Mastercard after franchisees reported that the AI technologies just didn't really work, and it fell short of expectations. So with so many emerging players in this field, how do you think restaurant chains should be navigating who they're partnering with?

BO PEABODY: Well, AI is a really tricky one. The hospitality business, even at the level of McDonald's, right, is in some part just driven by sort of human artistry and human preparation and dialogue between humans. And it's just really hard to pick up that nuance with AI.

Food is a very nuanced thing. Even at McDonald's, when you're ordering what you want, it's not a very-- it's not straightforward all the time. And so I'm not surprised to see a lot of the AI not quite meet expectations.

And remember, if you institute something like that, you will watch your revenue either stay the same or drop the day after you implement it. So it's very, very easy to see whether these sort of human replacement technologies are working. And I think for the most part, they're not-- the juice is not worth the squeeze.

AKIKO FUJITA: And Bo, finally, you've got a good pulse on the VC space, as well, obviously, as a board partner over at Greycroft. And as Brooke talks about some of these startups and, really, tech disrupting this space, what does the private funding environment look like right now? We've seen so many companies come to market this year to tap into the public side, but I wonder what your outlook is as we kind of look to 2022.

BO PEABODY: Yeah. Technology disrupts, and venture capital is the fuel of that disruption. And big, big markets, particularly ones that have frequency like food, whether it be dining or grocery, are the first targets for technology disruption and venture capital. And I think that's what you're seeing.

The venture capital community sees this as an opportunity to throw everything up in the air and redefine what it means to eat out, what it means to order out, what it means to get food delivered, whether it's prepared food or groceries. And they're going to keep funding that disruption just like they have for the last 30 years.

And a lot is-- a lot good comes of it. But whenever you have disruption, it-- a lot bad comes of it or a lot of dislocation. I think we're going to continue to see massive investment in the space. I think we're going to continue to see great things come. And we're going to see certain categories and certain businesses that are going to be disrupted. And that's a difficult part about the technology economy that we have in the US.

AKIKO FUJITA: Well, Bo, we'd love to have you back on the show again soon. Bo Peabody, Seated co-founder and executive chairman alongside our very own Brooke DiPalma.

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