Taking Forced Scarcity to the Extreme

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"Forced scarcity" is one of those business strategies that seems easier said than done. Book publishers are thus encouraged to sell limited editions and wineries are urged to pursue small-batch vintages. A few companies—Ty Inc. (of Beanie Babies fame), Disney, the haute couture fashion houses—have grown quite large by employing forced scarcity. But in recent years, the concept of forced scarcity has lost a little of its currency. The "Long Tail" phenomenon that has been en vogue argues for the opposite of scarcity, for a ubiquity of offerings whether forced or otherwise.

But in a move that proves that old strategies never die, they just go on hiatus for awhile, a new restaurant in New York City is harnessing the power of the Internet to drum up forced scarcity.

The restaurant is called Momofuku Ko, and it's the third venture in a mini-empire of Korean restaurants run by a popular chef named David Chang. But unlike the other two restaurants, which are packed and operate under a typical first-come-first-served system, the tiny, 12-seat Ko requires reservations.

And getting those reservations is no small matter.

As restaurant critic Frank Bruni explains on his blog, the system is complicated and meant to be egalitarian (one assumes.) But it also has the side effect of turning would-be diners into obsessed competitors. Bruni breaks it down this way:

"You register to make reservations for Ko. You create a whole account with password and credit card. Only then are you ready to be frustrated.

"Because once all that's done, you're in a position to turn to the Ko reservation function and learn, at every 15-minute interval that you try, that no reservations for any time during the following week are available right then, just as no reservations were available 15 minutes before that, or 15 minutes before that.

"The reservation books for a given night don't open up far in advance. Reservations for a given Wednesday night, say, open up at 10 a.m. Eastern time the previous Thursday, and for Thursday night they open at 10 a.m. the previous Friday."

As Bruni notes, lots of people (himself and this writer included) are frustrated by the system. A reader who gave his name as Glenn Fleishman posted this on Bruni's blog: "[I]t's just a lottery system with no fairness, and no predictability."

Other critics have suggested that it would be fairer for Momofuku Ko to run a simple lottery, or to keep the current system but to make a months' worth of reservations available at a time, to mollify all those frustrated, hungry people.

Though these suggestions may have merit, it's hard to see why Chang should change the way he does things. His new restaurant is full, start-to-finish every night, and it is generating a ton of buzz. Meanwhile, Chang's other restaurants continue to do brisk business. So what do you think? Where's the line between annoying your customers and brilliantly manipulating them—and on which side of that line does Chang's experiment fall?

Mike Hofman

Mike Hofman was previously editor of Inc.com and a deputy editor at Inc. magazine, which he joined in 1996. The site was nominated for a National Magazine Award for Digital Media in 2010, and was named the best business website by Folio Magazine. In 2006, Hofman was part of a team of writers nominated for a Webby Award for best business blog. He lives in New York City.