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


Red Lobster crafts new, high-end image

Red Lobster will nix low-price specials and focus on flourishes like plating in order to reshape itself as a cut above dine-i -More

The Year of the Instagram Strategy
Managing the Instagram channel has become a strategic imperative for any brand or small business, and the urgency grows daily along with its user base. During this webinar on August 12 you'll hear how brands such as Disneyland Resort, JCPenney, and The Coffee Bean & Tea Leaf are utilizing this platform to connect with their customers in an authentic, relevant way. Register today!

The tweet's the thing

Everyone’s atwitter about the NRA's Kids LiveWell Twitter party, held in celebration of the program’s third anniv -More

Arby's meaty campaign highlights protein lineup

Arby's new campaign, "We have the meats!," focuses on the chain's new limited-time menu offering, the Mega Meat Stack, which  -More


Posting a job or finding a job starts here at FohBoh. Call us about special $50 posting packages to syndicate across all major jobs boards.

National News

Restaurant Trends - Growing And Emerging Concepts - Change and Activity July 29, 2014

Update from on growing and emerging restaurant concepts

Gen Z, the First True Digital Generation, Represents the Future Foodservice Consumer

Gen Z, the first true digital generation, represents the future foodservice consumer. They're a generation on the move that strongly prioritizes speed of service, technology, and having what they want, when they want it. Millennials, more so than older generations, prefer to visit restaurants that offer new and unique foods and flavors. Gen X and Boomers converge on several preferences—such as the importance of a convenient location.

Red Robin Gourmet Burgers Celebrates Its 500th New Restaurant Opening

Red Robin's 500th new restaurant opening will open on Aug. 4 at 11 a.m., in Milpitas, Calif. at the Great Mall of the Bay Area.

Darden Completes Sale Of Red Lobster To Golden Gate Capital

Darden Restaurants, Inc. (NYSE: DRI) and Golden Gate Capital today announced that Golden Gate has completed the acquisition of the Red Lobster business and certain other related assets and assumed liabilities for approximately $2.1 billion in cash.

Dunkin' Donuts Announces Plans For Seven New Restaurants In Duluth, Minnesota With New Franchisees Brian And Sharon Weidendorf

Dunkin' Donuts announced today the signing of a multi-unit store development agreement with new franchisees, Brian and Sharon Weidendorf, to develop seven restaurants in Duluth, Minnesota and the surrounding areas. The first restaurant is planned to open in spring 2015.


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: Ze Frank: Are you human? - Ze Frank (2014)

Have you ever wondered: Am I a human being? Ze Frank suggests a series of simple questions that will determine this. Please relax and follow the prompts. Let's begin …

TED: Heather Barnett: What humans can learn from semi-intelligent slime - Heather Barnett (2014)

Inspired by biological design and self-organizing systems, artist Heather Barnett co-creates with physarum polycephalum, a eukaryotic microorganism that lives in cool, moist areas. What can people learn from the semi-intelligent slime mold? Watch this talk to find out.

TED: Shih Chieh Huang: Sculptures that’d be at home in the deep sea - Shih Chieh Huang (2014)

When he was young, artist Shih Chieh Huang loved taking toys apart and perusing the aisles of night markets in Taiwan for unexpected objects. Today, this TED Fellow creates madcap sculptures that seem to have a life of their own—with eyes that blink, tentacles that unfurl and parts that light up like bioluminescent sea creatures.

TED: Nikolai Begg: A tool to fix one of the most dangerous moments in surgery - Nikolai Begg (2013)

Surgeons are required every day to puncture human skin before procedures — with the risk of damaging what's on the other side. In a fascinating talk, find out how mechanical engineer Nikolai Begg is using physics to update an important medical device, called the trocar, and improve one of the most dangerous moments in many common surgeries.

© 2014   Created by FohBoh.

Badges  |  Report an Issue  |  Terms of Service