OpenTable: Gift from the Tech Gods or Trojan Horse Designed to Steal Profits?

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.

Views: 334

Tags: opentable, reservations


You need to be a member of FohBoh to add comments!

Join FohBoh

Comment by Seth Gardenswartz on January 20, 2012 at 3:20pm

If you would like to see the webinar we did no this subject you can watch it here. The webinar is 30 minutes and does a nice case study on a real restaurant using OpenTable.

To see the webinar, click here.

Comment by Iñaki Zarate on January 19, 2012 at 12:57am

I think Opentable has enjoyed an almost monopolistic situation in the USA, however, with the tech. cost of entry into the arena not being brutal, we will see small localised players entering the market as well as other competitors doing their trade in other countries, that currently have null or a testimonial presence having a go at the american market.

I guess freebookings (  would be quite an affordable option for those local restaurants, maybe it lacks the functionality other providers offer in their electronic reservatrion books, but for a large share of restaurants, it will provide the functionality they are looking for at 0 cost and still providing consumers with more than capable online reervation tools. 

Comment by Ivan Collins on January 18, 2012 at 7:55am

Hi Seth,

I spend a lot of time explaining the same points to prospective clients.   We have built a lot of the features of Reservation Genie based on areas that we felt Open Table was operating as a Trojan Horse.  These are some examples:

  1. We never charge cover fees from our network. 
  2. We enable the restaurant to add reservation links to any website in their network, book reservations without cover fees, and compare website results in convenient graphs. 
  3. We offer a loyalty program where customers compete for VIP status and the restaurant offers VIP's a perk if they stay on the VIP list.  This model creates a network around each restaurant, eliminates couponers from the equation because the incentive is only given to repeat customers, and cuts out middle man fees as they pass the perk directly to the guest.  You can see it in action here.
  4. We offer an off peak hour program kind of like 1000 point tables, but again the restaurant gives an incentive directly to the guest so there are no middle man fees.  Plus they can enter whatever perk they want so that it matches their brand.

I'd love to talk to you more about it.   Please do get in touch when you start examining alternatives.


Ivan Collins

Reservation Genie




Social Wine Club for Craft Wineries


Taco Bell takes on fast casual with U.S. Taco Co.

Taco Bell will test a new fast-casual concept called U.S. Taco Co.  -More

Avocados From Mexico: All New Recipe Brochure
Looking for the sweet spot between indulgence and fresh appeal? Say yes to fresh Avocados from Mexico, all year long. So rich and creamy, use them as a substitute for mayo to create a craveable crab salad sandwich that will make others green with envy. Discover more culinary inspirations and recipes here!

Ronald McDonald gets a makeover for social media debut

Ronald McDonald is giving off less of a clown vibe with a makeover that keeps the color scheme but adds a blazer, a yellow ve -More

Animal fats ramp up flavor

Chicago hot spots are serving up savory dishes flavored with animal fats such as Stephanie Izard's confit goat belly at Girl  -More


Posting a job or finding a job starts here at FohBoh. Call us about special $25 posting packages to syndicate across all major jobs boards.

National News

Dunkin' Brands Reports First Quarter 2014 Results

Dunkin' Donuts U.S. comparable store sales growth of 1.2% - Added 96 net new restaurants worldwide including 69 net new Dunkin' Donuts in the U.S. - Revenue increased 6.2%

Hurricane Grill & Wings Signs Franchise And Multi-Unit Development Agreements For Additional 22 Units

Hurricane Grill & Wings, a restaurant franchise known for its never-frozen jumbo wings and more than 35 signature flavors, announced today the signing of five multi-unit development agreements, representing 22 new locations. The Florida-based brand opened two locations in early 2014, with plans for a total of 14 new units by the end of the year.

Dunkin' Donuts Announces Plans For 20 New Restaurants In South Orange County And The San Fernando Valley

Dunkin' Donuts announced today the signing of multi-unit store development agreements with two new franchise groups to develop 20 new restaurants in South Orange County and the San Fernando Valley area over the next several years.

Brinker International Reports Increases In Third Quarter Fiscal 2014 EPS And Comparable Restaurant Sales

Earnings per diluted share, excluding special items, increased 16.7 percent to $0.84 compared to $0.72 for the third quarter of fiscal 2013

Togo's Inks Deals In Idaho And Utah To Develop 13 New Restaurants

Togo's Eateries, Inc. announced it has signed franchise agreements to develop five restaurants in Eastern Idaho and eight locations in Salt Lake City, Utah. In 2014, the brand will also mark its entry into Colorado, Idaho, and Utah with restaurant openings planned over the next few months.


If you are looking for capital to start or grow your restaurant, create the next 501c3, develop and launch the next app for the restaurant industry,or want to help your peers in some meaningful way, we want to know about it.


TED: James Patten: The best computer interface? Maybe ... your hands - James Patten (2013)

"The computer is an incredibly powerful means of creative expression," says designer and TED Fellow James Patten. But right now, we interact with computers, mainly, by typing and tapping. In this nifty talk and demo, Patten imagines a more visceral, physical way to bring your thoughts and ideas to life in the digital world, taking the computer interface off the screen and putting it into your hands.

TED: Hamish Jolly: A shark-deterrent wetsuit (and it's not what you think) - Hamish Jolly (2013)

Hamish Jolly, an ocean swimmer in Australia, wanted a wetsuit that would deter a curious shark from mistaking him for a potential source of nourishment. (Which, statistically, is rare, but certainly a fate worth avoiding.) Working with a team of scientists, he and his friends came up with a fresh approach — not a shark cage, not a suit of chain-mail, but a sleek suit that taps our growing understanding of shark vision.

TED: Michel Laberge: How synchronized hammer strikes could generate nuclear fusion - Michel Laberge (2014)

Our energy future depends on nuclear fusion, says Michel Laberge. The plasma physicist runs a small company with a big idea for a new type of nuclear reactor that could produce clean, cheap energy. His secret recipe? High speeds, scorching temperatures and crushing pressure. In this hopeful talk, he explains how nuclear fusion might be just around the corner.

TED: Sarah Lewis: Embrace the near win - Sarah Lewis (2014)

At her first museum job, art historian Sarah Lewis noticed something important about an artist she was studying: Not every artwork was a total masterpiece. She asks us to consider the role of the almost-failure, the near win, in our own lives. In our pursuit of success and mastery, is it actually our near wins that push us forward?

© 2014   Created by FohBoh.

Badges  |  Report an Issue  |  Terms of Service