If your restaurant takes reservations you must have at least considered online booking. The pitch is enticing; free-up the staff, dump that 19th Century paper and pencil and use the application to reach savvy professionals who prefer booking their restaurant reservations online. So, what's the catch?
For starters, online booking isn't free. The largest provider of online booking is OpenTable (OT) and their hefty set-up and monthly fees can significantly cut into your margins. Furthermore, OpenTable loves to tell restaurants that their application provides you with a competitive advantage while they're actively trying to sell that same advantage to your competition.
The costly fees of OpenTable are a problem but that's just the beginning. A stated objective of the company (from their S-1) is:
"Continuing to attract diners to our [OT] website by offering the best reservation experience through enhanced ease of use and restaurant content, thereby increasing market adoption of our [OT] solutions, building our [OT] brand awareness and driving word-of-mouth referrals to our [OT] website."
Did you catch the nuanced objective to drive traffic to the OpenTable site, not your restaurant's website. Why would OT do that? They do it because OpenTable wants to be the portal for all consumer reservations. If they own the customer relationship you will have to pay their fee to access all diners looking for a table. In addition, their points program builds loyalty for OpenTable, not your local restaurant, and you get to pay for it.
It's very important to ask yourself whether it's fair for your restaurant to be required to pay for online reservations generated from your own website or Facebook page. OpenTable currently charges a fee for reservations from your own network and we don't think that's fair at all.
In the next couple of weeks, we are going to examine alternatives to OpenTable and analyze the economics of online reservation systems. Please post your questions and comments.