The Tech Bet

App outrage over San Francisco start-ups

Christina Medici Scolaro and Mark Berniker
Tech Yeah! App outrage

There's finally a way in to the trendy restaurant that's been booked for months, but it'll cost you.

Reservation Hop is an app that makes restaurant reservations under false names and then sells them for $10 to $12. It's also at the center of a huge debate, and one writer at Wired magazine has called the app "irresponsible and sleazy."

Reservation Hop is igniting outrage because the company is trying to make money off of something that's free: making a dinner reservation. If people don't show up for their Reservation Hop, then restaurants lose out on the money that they could make if they gave the table to another customer.

"The biggest challenge in the restaurant industry are no-shows because you hold the table and expect them to turn every 90 minutes," said Gwyneth Borden, executive director of Golden Gate Restaurant Association, a bay area group that represents restaurant owners.

"When you hold the table off for a reservation that doesn't show up, it's a huge economic impact," she said.

Apps that charge for items that are open domain, or don't actually belong to anyone, are being called illegal, immoral and sleazy.

"I think these apps are really taking advantage of the market place. They're giving incentives and advantages to the rich people," said Jill Duffy, analyst at PC

A row of parking meters on O'Farrell Street in San Francisco.
Getty Images

San Francisco just successfully shut down Monkey Parking, which auctioned off vacant parking spaces to drivers willing to leave their on-street spots.

The city is not doing enough to help with parking claims Duffy. "This is a municipal issue. It's very important for the city of San Francisco to have some control and regulation over its own public parking, whether its free parking or metered parking," Duffy said.

Duffy suggests the city of San Francisco issue a challenge to developers to make apps that solve problems for the users. More competition among developers leads to more solutions.

Finally, people should speak with their wallets, don't use these services if you don't believe in them, Duffy said.

City Attorney Dennis Herera said his office doesn't have any jurisdiction over apps that are trying to resell dinner reservations.

—By CNBC's Christina Medici Scolaro and CNBC's Mark Berniker. Follow Mark @markberniker