When American Express announced its purchase of Tock earlier this month, it signaled that it is doubling down on delivering premium experiences to its clients, analysts said.

Tock works with high-end restaurants, and the $400 million acquisition is neatly aligned with Amex's penchant for dangling luxury experiences in front of its card holders.

Amex said last week that it plans to buy Tock from Squarespace, which bought the reservation platform in 2021 for around $400 million. The credit card company also said it plans to buy the Washington D.C.-based payments platform Rooam for an undisclosed sum. Rooam offers point of sale software to restaurants.

The credit card company is looking to cast its lot with an industry that is expected to see a banner year, analysts said.

A recent projection from the National Restaurant Association expects Americans to spend $1.1 trillion at restaurants in 2024, the largest total since the group started making projections in 1970.

That figure is due at least in part to inflation, but the restaurant association says the industry has continued to grow, even on an inflation adjusted basis. And in absolute numbers, more consumers are expected to patronize restaurants this year.

“Amex’s business is still primarily driven by spending volume,” said Michael Miller, an analyst with Morningstar who follows American Express. While it’s difficult to divine the card company’s precise motivation, “if they expect their card holders to focus more of their spending on restaurants it makes sense that they would want to bolster their position,” he said.

American Express also wants to help its customers get into hard-to-access places, William Blair analysts said in a note to investors.

“The acquisitions are consistent with American Express’s focus on providing premium experiences (e.g., access to high-end tables) to its customer base,” they wrote.

Tock got into the business of reservations with Alinea, a three-star Michelin restaurant that is part of a group of ultra-expensive restaurants and cocktail lounges in Chicago. Alinea, nestled between picturesque houses in Chicago’s Lincoln Park neighborhood, is the kind of restaurant that doesn’t put prices on its menu.

Tock’s handles reservations for more than 7,000 establishments across 51 cities in 14 countries, the company’s website says. That list includes restaurants, bars, wineries and pop-ups.

With its pending acquisition of Tock, American Express is building off the success of similar purchases, the William Blair analysts wrote. American Express bought Resy, another high-end reservation service, in 2019, and has seen engaged diners on the platform grow three times larger since then, the analysts said.

Amex’s purchases, they added, could also broaden the number of restaurants that accept American Express cards.

The credit card company is hardly the only player in the payments space making such a move. Earlier this month Shift4 said it is purchasing the German point-of-sale Vectron Systems AG, one of the largest European suppliers of point-of-sale systems for restaurants.

An Amex spokesperson declined to comment for this article. He previously said the Tock deal is subject to purchase price adjustments, but the company expects to close the deal by the end of the year.

By Patrick Cooley on June 26, 2024
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