An empty restaurant on a rainy evening in the middle of the week is the epitome of a lose-lose situation for the business. People rarely want to go out to eat at a restaurant on a rainy day when they can stay home. But even on a slow night, restaurants owners have to worry about paying for rent, food and the employees’ salaries.
A new app coming to Baltimore wants to fix that problem.
With an interface similar to a game of wheel of fortune, Spotluck has a pricing model for the restaurant world that is common in the airline industry, where prices are adjusted based on demand.
“It aims to fill those seats at varying prices to maximize profitability,” said CEO and co-founder Cherian Thomas.
But the discounts are meant to cater to the merchant’s needs. The app offers discounts to drive traffic to restaurants when business is slow, similar to how airlines offer steeply discounted tickets to fill seats on an empty flight.
Based in Bethesda, Spotluck has more than 100,000 downloads and 400 participating restaurants in Washington and 180 in Philadelphia. The company hopes to have around 60 participating restaurants across Baltimore’s Hampden, Fells Point, Canton and Federal Hill neighborhoods and in Towson at the end of October. The app is focused on promoting local eateries and does not allow chains on the platform.
Thomas came up with the idea for Spotluck while working on a thesis project at Georgetown University McDonough School of Business. He brought co-founder Brad Sayler on board, and the two of them left corporate jobs to work on the app full-time. Thomas also works with the business school’s startup program, where he helps students build apps.
Spotluck has 17 employees across offices in Bethesda, Philadelphia, New York City and San Francisco.
The app’s user base has been growing at a rapid rate, even getting downloads in markets that do not have Spotluck’s discounts. The app’s user base has grown by 700 percent year over year, factoring in both users and participating restaurants, and it had more than 75,000 spins last month. The average Spotluck user is 33 years old.
The app is slated to launch in New York City next.
When the app was first introduced in Rockville in 2014, it had eight restaurants the founders courted by going door to door, a necessary but highly inefficient strategy. However, once the app had that initial merchant base, it spread to other restaurants through word of mouth. Now the app gets about five requests from merchants a day and less than 4 percent of merchants have left the platform. Spotluck also has sales team that works with merchants, said Thomas.
“Having a great product means nothing. You have to have restaurants, you have to have users,” he said.
Merchants sign a partnership agreement with Spotluck, which includes a sign-up fee and fee for every diner brought into the restaurant by the app; those fees are the app’s primary revenue source, but that will likely change in the future, said Thomas.
Spotluck also does targeted advertising for restaurants holding special events. The merchant version of the app offers detailed analytics, including the number of customers brought in by the app, how the restaurant is doing compared to competitors, the average age of patrons and how many people saw the restaurant on Spotluck but decided to go elsewhere.