The app economy is changing the ways of business in Baltimore County

The Baltimore County app economy is changing the way operators do business, both good and bad

At a Catonsville restaurant serving contemporary American fare, eight out of 10 reservations now arrive through cyberspace. A Relay home services contractor saw his annual revenues triple after signing on with a popular crowd-sourcing website. An Arbutus cabbie has had to drop rates with the arrival of ridesharing services that are a tap away on a smartphone app.

From having groceries delivered to doing virtual tours of houses for sale, sharing photos and finding love on Valentine's Day or year 'round, there's an app for just about any transaction.

The prevalence of apps, which hit the mainstream less than a decade ago, is upending the way some business is done in Baltimore County.

"Any time you have a new technology, it can be seen as threatening to current businesses," said Keith Scott, president and CEO of the Baltimore County Chamber of Commerce, a business advocacy group with more than 425 members.

"What current business owners need to realize is business will evolve and change," he said.

Scott said, for example, the use of apps could lead to a decrease in window shopping — customers browsing storefronts before buying. He said business owners need to embrace the technology, not fight it, and find ways to use it to become profitable.

Since the 2008 launch of the Apple App store, considered the pioneer in the field, the number of apps available for mobile devices hit 1 million in 2011 and soared beyond 4 million last year, according to a report by The App Association, an industry trade group.

Tools of the trade

Shortly after Kevan Vanek opened his Catonsville restaurant, Black Kettle, he signed up for OpenTable to help manage reservations after walk-in diners were being turned away.

Now, about 85 percent of reservations at the 52-seat restaurant are made online via OpenTable or through an OpenTable widget — a box link on the restaurant's website, he said.

He used it at his previous restaurant near Mount Airy, but was hesitant at first because of the fees that are included.

San Francisco-based OpenTable charges the restaurant owner $1 per person for each reservation made via its website or app, in addition to a monthly fee, Vanek said. If the reservation is made using the restaurant's website, the cover fee is reduced.

The average check at the restaurant is about $47 per person, he said, adding about 5 percent of a check is devoted to overhead costs, including a computerized ordering system, a credit card processing system and OpenTable.

On OpenTable, patrons are able to view photos, menus and reviews of the restaurant. Unlike similar services, such as Yelp, those who review on OpenTable must have dined at the restaurant they are reviewing, Vanek said.

When reservations are made, they get assigned to tables on OpenTable. Staff members are able to view a floor plan of the restaurant on an iPad to see what tables have been booked.

The investment in the app is cheaper than hiring an additional staff member to take phone calls, Vanek said.

Black Kettle is the only restaurant found on the OpenTable website when Catonsville is searched.

Vanek sees that as an advantage, particularly when drivers on the nearby Baltimore Beltway are looking for a place to eat.

"It's a pretty good resource for me," he said.

Ant Ozok, an associate professor in the information systems department at the University of Maryland, Baltimore County, said apps have become popular for several reasons. The convenience of mobility and getting services at the push of a button bring appeal, while word of mouth helps spread their popularity, he said.

Most popular apps — if they don't have a free version — cost as low as $1 to download and try.

Apps may be used less frequently in Catonsville, compared to Baltimore City, because of its smaller population, Ozok said, adding developers tend to create apps with services targeting more cosmopolitan areas with larger populations.

Close to home

Yangchen Lhamo, a 36-year-old stay at home mother of two, has rented out the basement of her Catonsville home using Airbnb, a website for booking lodging spaces.

She saw the extra space as a way to get extra money, but she didn't want to have a long-term tenant, she said.

The basement has its own entrance, bedroom and washroom, she said. She charges $40 per night, along with a one-time $20 cleaning fee. Airbnb adds a service fee that varies depending on the length of the stay.

She said the room is rented out, on average, three times a month for stays of one to three nights, apiece. Her guests — a mix of businesspeople under 40, students and tourists, normally stay on the weekends, she said.

"It works for us really well," she said.

Airbnb is among the cellphone and online apps being used to streamline transactions and communications with a few taps on a smartphone, replacing phone calls and physical trips to businesses.

Apps have staying power by providing incentives, Ozok said.

"Developers try to take advantage of that point where people love to share their social life," he said. "People love to socialize. That's where mobile apps provide that environment."

Downsides, upsides

The growth in apps transactions has drawbacks for some businesses. At the Arbutus Taxi Cab Service, business went down by about 70 percent since ridesharing services such as Uber and Lyft arrived in the Baltimore area, according to Ghazanfar Ali, one of the company's three partners.

"The bottom line is always price," he said.

In response to the lower rates of the ridesharing platforms, the Arbutus taxi company lowered rates from $2.23 to $2.33 per mile to $1.80 to $2.15 per mile.

"You have to, in order to compete," he said.

A trip using Uber from Catonsville to Baltimore can be as low as $14 and as high as $70, depending on the type of car being requested, time and traffic.

Uber did not respond to requests for comment.

Lyft does not share city-specific numbers, according to a spokeswoman, who said ridership grew eight times in its Baltimore service area, which goes as far north as Cockeysville, as far west as Columbia and as far south as Annapolis.

A trip using Lyft from Catonsville to Baltimore is estimated to cost $16 using its standard service for up to four people and $25 using its Plus service for up to six people, according to a cost estimator on the service's website.

Ali said the ridesharing services are about 20 percent cheaper than the fares his company offers. The company keeps its radius within Arbutus and Catonsville, from Route 40 to Washington Boulevard. Anything larger, he said, would result in wait times longer than 15 minutes.

"Any time over and beyond that people tend to get upset for waiting so long," he said. "It doesn't matter if you're in D.C. If you're calling a cab, they want you there in 15 minutes."

At the Arbutus company, yearly income for drivers declined between 2015 and 2016.

Unlike cabs and hotel lodging, services such as Lyft, Uber and Airbnb are not regulated in Baltimore County, according to a spokeswoman.

In Baltimore City, lawmakers have considered making Airbnb reservations subject to the city's 9.5 percent hotel tax.

Mike Liebman, Sr., owner of Designing Renovations in Relay, signed up for Angie's List, a service with an app that links customers to professional services, about a decade ago, after customers started giving him positive ratings on its website.

For a year after he signed up, he offered a deal for two hours of labor for $59. It's the deal that boosted his business, he said. He went from making $75,000 a year to as much as $386,000 a year, prior to the crash of the housing market.

In 2016, he said revenues reached $286,000

"Angie's List has been fantastic to be honest with you," he said. "They've really helped my business out quite a bit."

While the membership is free, he spends about $400 a month on advertising to get his company in front of more screens.

Liebman said he does not profit much from transactions made through Angie's List — the customer pays Angie's List, who then takes out fees before writing a check to Liebman — the initial work leads to repeat customers, who then work with him directly.

"Everybody wants a bargain," he said.

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