The most market-driven restaurant
Uniswap for restaurants
Vitalik Buterin, the founder of Ethereum recently tweeted how the concept of Uniswap could be utilized in the restaurant business.
I want to see a restaurant use @UniswapExchange-style pricing. Pay more the more people are already in the restaurant, starting low when no one else is there (3PM linner, anyone?) and going up to infinity as it reaches full capacity.— Vitalik Non-giver of Ether (@VitalikButerin) October 2, 2019
Uniswap is an automated token exchange running on Ethereum blockchain that guarantees liquidity of an asset trading pair by automatically adjusting the prices of assets according to supply and demand. To put it simply, Uniswap increases the price of an asset towards infinity if the demand increases and reduces the price towards zero if the demand is low.
As Vitalik mentioned, a constant product market like Uniswap could be utilized in pricing of tables in restaurants. Imagine a buffet restaurant where the prices of tables are not the same for everyone but they would adjust according to the customer demand. If there's a very high demand for tables the prices simply go up and the customers coming later would be charged more. This would allow you to enter the restaurant at almost any time if you are willing to pay for it as there probably would always be more expensive tables available. The last tables at hand would most likely to be left for customers who would really value eating at the restaurant and are ready to pay for it. On the other hand, if the restaurant is empty the tables would be selling at a cheap price. It's beneficial for the restaurant that customers come to eat even though they might not get too good price for it as the restaurant needs to pay rent, salaries etc anyway.
Non Fungible Tokens work better with restaurants
While a constant product market works well with fungible tokens, restaurant tables are actually non fungible. Table tokens differ from each other by the dining time, by restaurant and by table location. One table Non Fungible Token (NFT) would represent the customer an option to dine at a specific table in a specific restaurant at a specific time. Restaurants can presell these tokens to customers with different prices and the buyers could either redeem the tokens at the restaurant or sell them forward to other hungry customers.
These tokens would also allow completely new restaurants to start from scratch by conducting an Initial Coin Offering (ICO) with the tokens and fund the entire restaurant. Investors are then able to either redeem a nice dinner with the tokens or sell the tokens forward with a possibility of a profit. The price of the tokens might go up or down depending on how popular the restaurant is, how good reviews it has gotten and so on. NFT's for New Years or Christmas are also more likely to be valued higher than ones during normal days.
A restaurant could try to price the initial tokens themselves or sell them directly to market making services that would buy all the restaurant’s tokens and then handle the selling of tokens on the market. This would completely eliminate the restaurant’s risk regardless if people show up or not, as the inventory is already sold out from their perspective.
This kind of concept would work the best for buffet restaurants as the food is included with the table and it makes sense that the table costs something. However, one could also have separately priced food items in addition to the price of the table.
Food ingredients can be tokenized too
Valuable food ingredients could also be priced dynamically as there is a limited amount of ingredients available at the restaurants for each evening. This would allow restaurants to almost always have availability for all the menu items, but you might need to pay more for it at times if the supply is running low. This would work best with expensive ingredients that go bad easily, e.g. fresh tuna, which prohibits you from keeping a large inventory. It might be difficult to estimate how much of fresh tuna is sold everyday, but with dynamic pricing you could easily guarantee that even the late comers could be offered such foods.
Tokenized table reservations also allow nice a cancellation policy for the customers. If a customer gets sick and is unable to participate, the customer could sell the reservation NFTs on the market and get some money back or even profit.
To sum it up, these mechanisms could introduce the following benefits to the restaurant industry:
- Always have a table available for a customer
- Always have every food item in the menu available
- Efficient markets would allow better price discovery for the restaurant and potentially allow for more profit for the restaurant
- Allow restaurants to fill their tables even during low demand times by pricing tables cheap
- Allow restaurants reduce their risk by pre selling their inventory to speculators
- Allow restaurants to completely fund themselves by preselling table NFT's
- Allow restaurants to better estimate their demand
- Allow users to cancel their reservations by selling their tokens back to the market
- Make tables of restaurants highly liquid on a global market
What makes this concept even more interesting is that it is not limited to the restaurant industry, but it can be utilized in other booking based industries as well, such as hotels, trains and flying.
Thanks to @Micah for brainstorming and helping with the article.
Questions? Reach out to @Qhuesten (Kimi Ylilammi) on Twitter.