Open Table: Putting the squeeze on restaurants

Remember when…
It started with a well-timed phone call—if you made it too early, no one was there; too late and the dinner rush was under way. Maybe there were a few busy signals before you got through to the reservationist who promptly put you on hold, leaving you hanging with a little smooth jazz to keep you company. Then she came back to you for a spin through the reservation book. Friday at 8? Sorry, nothing till 9:30…

That was then.
Since the advent of Open Table, you can immediately see what’s available and when, and book a table with a firm confirmation any time, day or night. Friday at 8 is still a tough get, but now you just move down the list of available tables without doing another dance with another reservationist.

Win-Win, right?
It’s true that there are two real winners in the transaction: the diner gets the ease and convenience of going online, and Open Table makes a little pocket change on each reservation. The problem is that there are three parties to the transaction, and the advantage to the third—the restaurant—is not so clear.

When a restaurant signs on with Open Table, it pays a set-up fee that hovers somewhere around $1,000. For that it gets a rented terminal connected to the Open Table network and system training for employees. It costs the restaurant $199 each month to stay connected, plus it pays a fee for each seat at a table booked through the service—$1 per diner if the reservation was made through the Open Table website and 25¢ per seat if it was made through the ‘online reservations’ link on the restaurant’s own website.

There’s always been grumbling about the one-size-fits-all fee structure.
The 30-seat neighborhood spot pays the same $199 monthly fee as the 300-seat corporate-owned chain, which can be punishing to the bottom-line of small, low-volume restaurants where the charge is spread out among few diners. And the same dollar-per-diner charge that is inconsequential to a high-end restaurant with $30+ entrees is eating up a big share of the revenue at a modestly-priced bistro.

Open Table does have its advantages.
The arrangement benefits the restaurant in three ways: the restaurant can cut staffing costs by reducing or eliminating the reservationist function; it manages reservations in a way that optimizes the seating chart; and it creates a customer database full of food, wine, and seating preferences, ordering history, and significant dates like birthdays and anniversaries.

What it doesn’t seem to do is bring in more diners.
Few restaurateurs credit Open Table with adding to their customer base. The difference, they say, is that thanks to the subscriber fees, they are now earning less on the same business. Busy nights are still busy and off nights are still quiet.

About 14,000 U.S. restaurants—one-third of all those that accept reservations—use the service, which seats more than 4 million diners every month.
Open Table has become the gatekeeper to the nation’s restaurant seats, and for the restaurants, it’s become the pathway to both old and new customers.

The service has become indispensable for the way it has inserted itself in the middle of a restaurants’ relationship with its customers.
Diners used to ask “Where would you like to eat?” Now they turn first to Open Table and ask the question “Where can we eat?”

 

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One Response to Open Table: Putting the squeeze on restaurants

  1. Ivan says:

    We are getting more and more calls at Reservation Genie because Open Table is getting too expensive for restaurants. It was a really smart plan they implemented that is starting to catch up with restaurants. They convinced the restaurant to send them website users and then charge them for them the next time they skip the restaurant site and book directly through Open Table. We designed our pricing structure to avoid this issue for our clients as we just do not think it is fair. We do not charge for reservations from the restaurants website, people who return to book directly through our website to get access to our restaurant perks, and we let the restaurant add a booking link to any website and those reservations are free too.

    You can learn a little about the free booking link here
    http://www.reservationgenie.com/video_demos/website_tracking_link

    You visit our tour page here
    http://www.reservationgenie.com/tour

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