Nick Kikonis is co-founder of three world-renowned establishments: Alinea (once ranked #1 restaurant globally), Next, and The Aviary, plus CEO of TOC, a comprehensive restaurant booking system. A philosophy major turned derivatives trader, Kikonis brings Wall Street thinking to hospitality.

The conversation explores how Kikonis applied 'casino economics' - making lots of decisions with measurable outcomes to achieve 51%+ success rates. From Alinea's innovative tableside dessert presentations to TOC's COVID pivot generating billion-dollar GMV, the discussion reveals how treating restaurants as businesses first enables both artistic excellence and financial success.

Key topics include restaurant ticketing systems that eliminated million-dollar revenue losses, dynamic pricing strategies, self-publishing ventures with superior margins, and the COVID response that transformed TOC from supplemental software to essential infrastructure for 3,000+ restaurants.

Own Something, Make Decisions, Repeat: The Casino Economics Philosophy

Kikonis's business philosophy centers on ownership for wealth creation: 'I want to own things for two reasons. One, because that's a more likely path to wealth creation. And two, I want to own it because I want to have responsibility for it.'

The 'casino economics' approach means making thousands of decisions with measurable outcomes, needing only 51% success rate: 'You could be wrong an awful lot and still come out ahead... You don't need a lot of edge in running a blackjack game. You just need a little bit, and then you need a lot of players.'

This contrasts with typical startup approaches focused on drawing logos rather than testing products with real outcomes and customer feedback.

Building Alinea as Business First, Art Second

Kikonis structured Alinea like a startup with aligned investor interests: 'I set up the structure of the business more like if you were setting up a startup. There was an investor group LLC, there was the restaurant itself... 15 years later, the investors in Alinea still get a really nice check every year.'

The marketing strategy avoided alienating words like 'avant-garde' and 'science,' instead emphasizing 'fun and delicious' in every interview to broaden customer appeal beyond food enthusiasts.

The famous tablecloth dessert emerged from asking 'when in your life do you feel like something's new?' - seeking to make adults feel childlike again through innovative presentation methods.

Restaurant Ticketing Revolution: Eliminating Million-Dollar Revenue Losses

No-shows and party size changes cost Alinea over $1 million annually: 'You multiply that out over the course of the year, and we were losing over a million dollars of revenue through those two things happening.'

Despite industry resistance, Kikonis implemented restaurant ticketing at Next, selling $562,000 in tickets on opening day: 'I turned on this thing and people did it... I have a time machine. I can run my restaurant in a way that no one else in the world can't.'

The system enabled 30%+ margins in year one with $85 twelve-course menus, proving ticketing worked beyond high-end establishments through variable pricing principles.

TOC's Strategic Focus: High-End First, Then Scale Down

TOC targeted high-profile restaurants first, rejecting the typical 'give it away free' competitor strategy: 'If you give something away from free, the people that you attract are the people who need free... you get the worst customers.'

The Tesla-like approach focused on proving ROI for premium clients before expanding: 'Let's build the fancy car first and then work our way down market... we'll get our first million users for free.'

Engineers worked as restaurant hosts to understand end-user needs: 'These are people who spent their time staring at a computer screen or suddenly checking people in at a restaurant. So they suddenly had empathy for the end user.'

COVID Pivot: From Crisis to Billion-Dollar GMV

Kikonis recognized COVID's existential threat by March 8th, implementing temperature checks and hand washing protocols weeks before shutdowns: 'Anyone who doesn't do it is fired and you won't have a job for two years anywhere, because that's how serious this is going to be.'

TOC pivoted to carry-out in one week, leveraging existing dynamic pricing infrastructure: 'Because we built our data around dynamic and variable pricing for time-slotted businesses, carry-out food is also a time-slotted business.'

The 3% fee structure versus competitors' 30% enabled rapid adoption: 'Since March, we've signed up over 3,000 restaurants. Our business will be at a billion dollar GMV run rate by the end of the year.'

Revenue Optimization: The Seven Things Restaurants Already Know

Restaurants typically sell 7-10 different experiences but only market 'food': Gramercy Tavern sells 'the bar, the casual, the a la carte, two prefix menus, private dining, and merchandise' but customers only say 'I want a table for four.'

Prepaying vendors eliminates waste and reduces costs dramatically: Premium beef dropped from $36 to $18 per pound when Kikonis offered to prepay four months ahead, saving the vendor from selling aged beef 'for a dollar a pound for dog food.'

Dynamic pricing should apply to all time-slotted businesses: 'Any business that's time-slotted should be dynamically and variably priced, right down to your lawyer, frankly, your dentist.'

Self-Publishing Success: Owning the Full Value Chain

Traditional publishing offers terrible economics: 'A $50 retail book costs about $2 to print and you're going to get 10% of cover price' while publishers require authors to buy 5,000 copies for their own lists.

Restaurant book publishing generates millions annually with superior margins: 'Last week sold $120,000 of books in a week for a restaurant with margins much better than the restaurant, but we actually sell them ourselves.'

The key is having an existing audience and direct marketing capabilities through email lists, websites, and social media rather than relying on publisher distribution networks.

Resources Mentioned

Picasso Documentary (1920s)

Nick Kikonis showed this 1920s documentary of Picasso painting to Grant Achatz when starting Alinea, using it as an example of how even the greatest artists promoted themselves and their process, which influenced their restaurant's marketing approach of avoiding words like 'avant-garde' and 'science' while emphasizing 'fun' and 'delicious'.