Gustavo Jabbaz

10 Mar 2014

OpenTable is not for every Restaurant

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Author: Pilar Galiana


OpenTable (restaurant management software) is quite the success story from its launch in 1998; it has grown into a company that generated 39.4 million of revenue in the first quarter of 2012. Today it has what feels like a bit of a monopoly of online reservations - according to some reports they control more than 90% of online reservations.
OpenTable lists over 25,000 restaurants worldwide and seats 9 million diners each month.

OpenTable works for diners
For the end user, like you and me, looking to make dinner or lunch reservation - the system is a win-win. There are various search options - you can search by restaurant name, you can explore a neighbourhood, and you can even search type of food. Wondering where you can have dinner at 7 pm? They can search that for you too. The system includes user reviews and even a point system that benefits the reservation maker. All this for free.

OpenTable isn’t Free for Restaurants
This excellent tool that revolutionised dining reservations is far from free for restaurant owners. For the reservations that come directly via the OpenTable website (or app), restaurants pay $1 for each in a reservation - that means $6 for a party of six. If the reservation comes from the restaurant's website (still linked to OpenTable) the reservation is only .25 for each reservation - so $1.50 for a party of 6. But that is only part of the cost. To use OpenTable for online reservations, you also need to use their booking system in-house - and that costs money too. Average set up fees are around $650, and the monthly payment for the Terminal use is about $270. Open table says that on average they receive $635 per month from each participating restaurant. For some restaurants, the monthly fees paid to OpenTable are in the thousands.
To know if it is worth it, you would have to crunch the numbers. Some restaurant owners will tell you that OpenTable brought in reservations that they wouldn’t otherwise get - and if that is the case, maybe it is worth it.
The restaurant owner, Mark Pastore of Incanto in San Francisco wrote what has become a widely republished article against the use of OpenTable, “Is OpenTable Worth It”  if you want to hear an actual restaurant owner’s perspective, I suggest you give it a read.

OpenTable’s technology makes it worth it
OpenTable does provide restaurants with a system that facilitates reservations and enables restaurants to track things like diner’s preferences. If you make proper use of the platform, you can also use the tool to promote events and even market to your database of customers through OpenTable (although that will cost you more).
For another restaurant owners perspective, I suggest you read, “Is OpenTable Worth It? Founding Farmers says ‘Yes’”. These OpenTable users spend $6000 a month on the service but found by genuinely utilising the software they have come to love the tool and the value it adds to their business.

Alternatives to OpenTable
Competition in the online reservation world is starting to emerge, websites like Seatme.com (which was purchased by Yelp) charge a simple $99.00 monthly fee and strive to address the many frustrations smaller restaurant owners have with OpenTable. In Canada, Urbanspoon’s online booking service, Rezbook looked like it was making headway by attracting restaurant owners looking for a cheaper and easier to manage alternative. But as of July 31, Rezbook has been purchased by OpenTable - existing Rezbook contracts will be honoured and no more new registrations.

Creating your own alternatives to OpenTable
The good news is that according to a recent Cornell University School of Hotel Administration’s Centre for Hospitality Research study, 71.7% of all dining reservations are still made over the phone. Make sure your website is optimised by ensuring your phone number, and address is easy to find. Make sure your site is optimised for local search, and you are set up in Google +. Not everyone is using online reservation systems when they don’t make sure your site is easy to find and easy to use.

I have never been much for using OpenTable, now that I know how much it costs a restaurant for a reservation each time, the next time I will pick up the phone - what will you do?

I'm pleased to have Pilar Galiana as a guest blogger. She is a digital marketing strategist who has worked with brands like Four Seasons Hotels and Resorts, Nokia Canada and TD Bank to mention a few. These days she runs her own small business, you can find her website here, www.ellasays.ca.

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