[keehun]

I would agree with you, but you missed the point where he said that he cancels all of his reservations within a certain amount of time before the reserved time (he did not say how long) so that somebody else may use that slot. According to him, he does not let a reservation be used to hurt the restaurant to the best of his ability.

If someone buys a reservation from him and doesn't show up at the restaurant, I'm not sure if it's entirely his fault. With that kind of disregard for reservations, there's a big chance that they would've stood up on a reservation they made themselves for free.

[vacri]

I’m canceling the reservations 4 hours before if they don’t get bought

4 hours.

somebody else may use that slot

Emphasis on 'may'. The restaurant may also not get a last-minute call for a booking or a walk-in client at the right time.

[51Cards]

How much extra work is it for a restaurant to manage all the cancellations? How many times will a reservation be cancelled and never filled when it would have been filled in advance? There is no scenario here where the restaurant comes out ahead. No matter how you slice it they loose, just to varying degrees.

[mvid]

They would lose, assuming that they were not popular enough to fill seats with walk ins, which wouldn't be a restaurant that necessitates purchasing a reservation for anyway.

[aaronwall]

Even if they were popular enough to fill the seats they still lose, as they still lose those employees spending time on the phone to take the initial arbitrage reservation & then they lose time on the phone once again when the employee takes the arbitrage reservation cancellation call.

[mvid]

Yes, and they would lose this time with the man who books 3 restaurants because he doesn't know which one his girlfriend wants to dine at for their anniversary, 10 fake reservations from a competitor trying to block out a weekend night, etc.

Managing reservations and paying employees to man phones is part of the operating cost of a restaurant. Not to mention, this could be automated with software that ties customers to credit cards and reservations.