(This blog post was featured in Silicon Alley Insider’s 10 Things Investors Need To Know Before OpenTable’s IPO)


Online restaurant reservations company OpenTable filed for an IPO on Friday, revealing their finances for the world to see.  The SEC filing contains all the financial figures you would expect: revenue, expenses breakdown, details of the public offering, and also operational data.  Financial Figures

Brett Emerson wrote a fantastic blog post a few months ago (Behind the Curtain: Open Table) which gives a thorough evaluation of OpenTable from a restaurateur’s point of view.  Emerson is in the process of opening Contigo, a new restaurant in San Francisco and he lays out the pros and cons of OpenTable and shares his cost and volume expectations from the service.  Viewed from a restaurant’s pespective, the operational data in OpenTable’s finances gives an amazing amount of insight into the OpenTable system, especially when some analysis and number crunching is applied.


OpenTable Web Traffic and User Behavior

OpenTable makes their money from restaurants that pay a one-time installation fee for reservation software/hardware, a monthly subscription fee, and a fee for each restaurant guest seated through the service.

It’s public knowledge that OpenTable charges $0.25/diner booked via the restaurant’s website and $1/diner booked directly through opentable.com (the higher charge reflects opentable.com’s value as a customer referral tool).  The SEC filing tells us that these fees resulted in $17M of reservation revenue from 25M diners.  Pulling out my trusty TI-83 and solving this linear equation  ( 1*a+ .25*b = $17M  and  a + b = 25M diners) leads to the conclusion that 57% of diners book via opentable.com, and the remaining 43% book via the restaurant website. This tells us about the value of OpenTable as a marketing tool: being part of the OpenTable network yields roughly twice as many online reservations as a stand-alone solution.

Per-Restaurant Data

Excluding one-time installation revenues, total North American revenues for the first nine months of ’08 were $37.5M across 8,090 member restaurants, so the average restaurant pays OpenTable $515 each month (N.B. 8,090 restaurants is the midpoint figure across the reporting period: OpenTable began 2008 with 7,391 restaurants and grew to 8,788 restaurants.  I assume linear growth).  Broken down, this $515 consists of $281 in monthly subscriptions charges and $234 in monthly reservation booking fees.

For the reporting period, one-time installation revenues were $1.7M and there were 1,397 new restaurants.  Each new restaurant therefore pays an average of $1,240 in installation fees (this assumes no churn, that all growth is from new customers).


Does OpenTable deliver?

OpenTable seated 25M diners across 8,090 restaurants in the reporting period which means for the average restaurant, OpenTable fills 345 seats monthly or 14 daily (assuming the restaurant is open six days a week).

One of Emerson’s main concerns is the high cost of reservation fees:

Let’s assume most of the other two thirds of the restaurant’s guests book through Open Table. If successful, a 60-seat restaurant like Contigo could easily pay $1,000-1,500 a month to Open Table in cover charges.

Let’s examine this concern in detail.  Contigo has 60 seats.  Assuming tables can be flipped twice, 120 diners can be served each night.  We know OpenTable on average fills 14 seats a day, so OpenTable would be filling about 12% of the restaurant.  Earlier it was calculated that the average restaurant pays $234 in reservation fees.  Emerson’s figures (66% fill rate, $1000+ monthly fee) therefore probably overestimates OpenTable’s ability to fill tables.

International Figures

OpenTable has mainly concentrated their international efforts in Germany, Japan and the United Kingdom and so far international business represents a mere 5% of total revenues.  For the reporting period, an average of 696 restaurants were signed up, producing $1.7M in subscription revenue, $282K in reservation revenue, and a mere $76K in installation revenue.

Dividing the installation revenues across the 451 added restaurants shows an average installation fee of $155 which is significantly lower than the $1,240 that domestic restaurants pay.  This likely signifies that OpenTable heavily subsidizes equipment and installation costs in an attempt to gain traction overseas.

The monthly subscription charge that each restaurant pays is comparable ($270 internationally versus $281 domestically), but as you might expect given the early stage of international adoption, monthly reservation charges are significantly lower ($45 versus $234) and fewer diners are seated through the service (60 diners per month versus 345 diners.)

When both subscription and reservation charges are factored in, it’s revealed that although the average international restaurant spends less with OpenTable per month ($315 versus $515), they pay substantially more for each customer ($5.29 versus $1.49).

OpenTable has emerged as the leader in the US market, surviving the first dot-com bubble, gaining traction with restaurants, and beating out the competition (DinnerBroker.com, Foodline.com, Ireserve.com, iSeatz.com, and RestaurantRow.com and others).  It should be noted that OpenTable operates very profitably within the US — $6.7M profit on $39M revenue, a 17% margin.

Is another victory in the cards?  It’s certainly going to be a tough fight.  OpenTable lacks the first-mover advantage and faces intense competition.  There’s also a strong network effect working against them.  Already OpenTable has conceded Spain and France, closing their offices which had only recently opened in 2007.  OpenTable appears to be pouring every dollar they can into their international expansion and heavily subsidizing equipment costs which is the reason why the company as a whole appears to be unprofitable (and I suspect is the reason for filing for an IPO — to raise more money for their international push).  Looking at their international business, OpenTable posted losses of $6.5M on $2M revenue in the first nine months of 2008.  OpenTable, I wish you luck!

Market Sizing and Market Saturation

OpenTable includes some interesting estimates about the size of their market:

We believe based on our internal estimates that there are approximately 30,000 reservation-taking restaurants in North America that seat approximately 600 million diners through reservations annually.

Considering that OpenTable has signed up close to 10,000 restaurants, they have captured roughly 1/3 of the possible restaurant market — pretty impressive!

Extrapolating through the end of 2008, OpenTable seated 33.5M diners which means that 6% of all restaurant reservations are made through OpenTable — also really impressive!

dinner-tableQuantifying OpenTable’s Marketing Power

Advertising a restaurant in an effective manner is a difficult task.  Press, buzz, and word of mouth recommendations are great, but these aren’t something a restaurant can control.  Besides buying ads on Citysearch or Yelp, there’s not much to be done online (although Russ & Daughters did recently join Twitter!).  Unfortunately launching a search marketing campaign around the keyword “restaurant” doesn’t work too well.  OpenTable clearly realizes the tough position that restaurants are in:

Cost-effective marketing opportunities are limited. Typically, restaurants promote themselves through magazines and newspapers as well as online dining guides and directories. However, restaurants generally do not have the ability to track the number of people who ultimately dine in response to their advertisements, nor are the costs of these advertisements tied to the number of diners they attract. Therefore, restaurants usually are unable to measure or compare the effectiveness of these marketing channels.

Is OpenTable’s $1/diner fee fair?  Emerson suggests that it’s too high:

When a diner pays $40 to eat at Contigo, that dollar [fee per diner] equals about 2.5% of the cost of the meal. That’s significant in an industry where the average profit margin is less than 5%.

Interesting point.  But if you bought a $300 newspaper advertisement which caused 300 new customers to walk into your restaurant, wouldn’t you consider that a phenomenal return on your advertising spend?

The average restaurant spends $515 with OpenTable and gets 345 diners each month, so when all is said and done the true cost of the service is closer to $1.50/diner.  But keep in mind that 43% of the OpenTable bookings come through the website of the restaurant — these 148 diners have already decided to eat at the restaurant!  These customers exist regardless of whether the restaurant is subscribed to OpenTable.  The real value that OpenTable delivers, therefore, is the 197 NEW customers generated due to the marketing exposure on opentable.com.  Restaurants are really paying $515 to gain 197 new customers, which comes to $2.61 per customer.

Concluding his blog post, Emerson writes:

In my mind, the question of whether or not to sign up for Open Table boils down to whether or not I feel Contigo needs to take advantage of Open Table’s substantial marketing power.

The question restaurant owners should therefore ask themselves is this: Is acquiring customers at $2.61 per head a worthwhile investment?  And is there another method that can acquire customers for less?

Well there you have it!  A fascinating look at the business of online restaurant referrals and the insights derived from very basic operational data.

I’ll leave you now with this amusing quote from the SEC Filing about OpenTable’s competition: “Currently, our primary competitors in North America are the pen-and-paper reservation book used by most restaurants and the phone used by diners.”

As always, readers, I’d love to hear your comments and thoughts!

39 Responses to “OpenTable and Restaurant Marketing”  

  1. 1 Brett

    Great analysis, Jonathan. We've decided to not enroll in Open Table's service the first few months that Contigo is open. We will then reevaluate whether OT would be a worthwhile investment. I'm sure we will return to your incredibly thorough analysis at that time!

    I do want to make one point. My estimate of 1,000 OT reservations/$1,000 per month is based on my experience at other comparable-sized restaurants in the San Francisco Bay Area. While OT fills just 14 seats per day on average nationwide, in SF I imagine the averages are much, much higher. We are very tech savvy here and making reservations online is extremely common, much more so than in other markets I am guessing. If my restaurant were open 7 days, $1,000 per month translates to just 33 seats per day, about 28% of the 120 diners. (Granted, that doesn't account for the reservations made through the restaurant's website. I'll let you do the math for that one!). My guess based on experience would be that 40% or more of the typical SF restaurant's reservations come through OT's system. I would be interested to see a breakdown of the numbers for various markets where OT is used.

    Our final decision? Not only have we decided not to open with OT, we've decided to open without taking reservations unless your party includes 6 or more people. We can always add OT at a later date if we feel that it will make sense to pay $2.61 per head for new customers.

    Thank you, Jonathan, for providing us restaurateurs with a thorough analysis to help us make financially prudent decisions.

  2. 2 Mark

    Please take a look at http://www.livebookings.net the leading solution for Restaurants in Europe and maybe the answer to why OT has found a success in Europe.

    They during January 2009 started to provide their solution in the US via http://www.Fishbowl.com. Already hundreds of restaurants that have joined. For an example look at http://www.montebellonyc.com in New York (that also uses OT).

  3. 3 Mark

    Jonathan – great information but your trusty TI-83 calculator must use correct input to bring us the real facts.

    The problem is that a lot of the traffic that originate from the restaurants own websites may be counted as bookings from OpenTable.com.

    It would be interesting to see what the conversion and source of traffic to OpenTable.com is.

    As a restaurant your help OT to build their brand instead of your own.

  4. 4 jwegener

    “The problem is that a lot of the traffic that originate from the restaurants own websites may be counted as bookings from OpenTable.com.”

    To clarify, OpenTable bookings can originate with a web visitor going to opentable.com looking for a restaurant, or a web visitor going to a specific restaurant website and making an OpenTable booking there (which still goes through the OpenTable system and is counted as a booking). The point of my calculation was to tease out and quantify these two separate streams of customers. Am I not understanding what you're saying..

    “As a restaurant your help OT to build their brand instead of your own.”
    Yes, yes, yes — good point. This is a more general issue of competitive dynamics that I will write a future blog post on. Here's a quick summary of my thoughts:

    Tension always exists between 'aggregators' (like OpenTable) and their 'constituents' (in this case, restaurants). Let's consider Google News, which is increasingly the starting point for people looking for news on the internet. Newspapers hate that Google News is scraping their content and eroding their brand value — but at the same time, Google News drives a significant proportion of their web traffic and they'd be stupid not to want that traffic. But as part of Google News service, they're helping build the Google News brand and shooting themselves in the foot.

    The same is true of ad networks — web publishers want to monetize their unsold ad inventory so they push it out to ad networks. They're working to maximize their own profits. But the more publishers that do this, the less incentive there is for advertisers to buy premium ad space. Increasingly, ad networks are cannibalizing the premium ad inventory.

    There's a thousand types of aggregators like this both for content and customers (Digg.com, Lendingtree, Servicemagic, Zocdoc, GymTicket, Expedia, Meetup.com, even the Google search engine itself). In general the aggregator (in this case OpenTable) has the upper hand because all the individual entities are acting in their own self-interest and remain part of the network. It's unlikely that all the restaurants are going to band together and start their own version of OpenTable, or that all the newspapers in the world are going to mutiny against google news and ruin it.

    It's a classic case of the tragedy of the commons and the aggregator usually benefits handsomely.

  5. 5 bhart

    jweg, you have too much time on your hands.

    but then, so do i.

  6. 6 jeffreysummers

    News is a commodity business whereas restaurants aren't (shouldn't) be. The whole point of branding is in it's ability to differentiate a business. OT defeats that for operators. A smart and savy operator can garner just as many if not more reservations by building a branded system that relies on building personal relationships. You can't get that with OT.

    Jeffrey Summers, President
    Restaurant Coaching Solutions

  7. 7 jwegener

    Hey Jeffrey,
    Thanks for the comments. What do you mean by 'building a branded system that relies on building personal relationships'? Are you talking about building a branded online reservation system? Or building relationships with your customers to get word of mouth referrals? Or neither of these things..

    Ideally, news isn't a commodity business (certainly the NYTimes has a strong brand..) but aggregators are increasingly making it one.

  8. 8 jwegener

    Hey Brett,
    Glad you liked the analysis. You're definitely right that San Francisco restaurants might get significantly more volume through OpenTable than other locations but open table responsible for 40+% of reservations in the restaurant? Wow! Never would have guessed..

    For a new restaurant that expects to be crowded, not taking reservations does seem like the best decision (at least from a business perspective) so there's no wasted time between tables or risk of a party not showing up.

    Best of luck with Contigo!

  9. 9 jeffreysummers

    You're welcome.

    I mean the systems used by a restaurant's branding efforts to create relationships so good that guests wouldn't think of using OT to get a reservation because they wouldn't dream of either being disloyal or forgoing the personalized service they would get by choosing to contact the restaurant to begin with. All systems are a branding effort.

    Ideally, news would be news but oh well. Lots of “strong” brands going broke these days. Which begs the question of them being strong brands don't you think?

  10. 10 Edward

    Mark seems to have an issue with OT. His comments read like he might be a Fishbowl employee.

  11. 11 Patrick

    I like the updated sidebar. You certainly thought (too) much on this one.

    So here's the question… If you were (are?) in the IPO-investing market, would you invest in OpenTable? Personally, I don't like the sound of a company that needs to raise money in this economy to support a consumer luxury industry product and, specifically, one that's planning to use those funds to expand a money-bleeding international segment.

  12. 12 Mike Stewart

    Some thoughts

    If you are a restaurateur and have a strong offer and strong demand it may be best to spend your marketing dollars to drive traffic to your own web site / reservation team and use your own reservation solution – there are several ASP solutions available now – with in built table management, restaurant yield management, CRM and e-marketing and they usually provide a free hyperlink for the operator's own web site.

    There are Guestbridge, ReservationGenie, Efficient Frontiers, TableBoss and many others,

    Build your own brand!

    If you use Opentable you will find that if you are full then reservation enquiries are being switched to your nearest competitor and you might even find Opentable marketing your biggest competitor on a mail shot.

    Despite what Opentable would like you to think their system is distinctly local as opposed to global – to sell it requires traditional selling skills and routes to market are traditional. Overheads that come on two legs are very expensive and Opentable needs lots of them.

    Every new market could be a battlefield with the only outcome a Pyrrhic victory.

    It cannot be assumed Opentable will ever return a 17% margin in Europe as they have done in the US (they have lost $57m since start up). In Europe, there are different dining and reservation habits, as Opentable has found out in France and Spain and there are strong comeptitors in Livebookings, Toptable and restaurantdiary.com.

  13. 13 dremoran

    Great post. The thoughtful analysis is appreciated.

    How do you know about GymTicket? Do you know Howard Lerman? I ask simply because I met him a couple years back but have not seen anything written about the company until your mention of it in the comment above.

  14. 14 theschnaz

    Great post. I think you underplay the convenience factor a bit. When OpenTable provides 197 new customers, that's clearly valuable for the restaurant. On the other hand, making it easier for me, the customer who already eats there has value too. It's like ordering food from delivery.com vs. calling. For me, delivery.com is more convenient.

  15. 15 Jonathan Wegener

    Thanks for the comment. Yes, you are correct: there are definitely some other factors (like convenience) that may play into a diner's decision to use opentable or a restaurant's decision to enlist. As Danny Meyer wrote in a NYT article last year about OpenTable: “In the old days, the question was ‘Where should we eat?’ Now it’s ‘Where can we eat?'” (http://www.nytimes.com/2007/06/18/business/18op…)

    Opentable (and seamlessweb) offer a combination of marketing and added convenience that makes them very attractive to restaurants. On the original Contigo post, a sales rep from OpenTable left a great comment detailing all the cost-savings and intangible benefits that OT offers restaurants. It's really interesting: http://www.inpraiseofsardines.com/blogs/2008/09

  16. 16 Rohit Thapliyal

    I've been talking to a few restaurant owner the last few months trying to see the viability of a new marketing tool for the restaurant industry. I made an interesting data point – every restaurant that had not tried openTable was very interested in it and every restaurant that had tried opentable had cancelled their service!

    Might be worthwhile understanding why they only have 9000 restaurants in 10 years of being in business!

  17. 17 Mike Stewart

    I have just got to say that's the best quote I have ever seen on Opentable – I am in the UK and am sure their “churn” rate is very high – “…….every restaurant that had not tried openTable was very interested in it and every restaurant that had tried opentable had cancelled their service!”

    Opentable as a brand and a marketing exercise is outstanding – still the company has lost $57m since start up and I have heard some other intersting quotes but do not think it would be wise to put them in writing.

    Why would smart operators (and not every restaurant owner or operator is smart) willingly pay commission on bookings from their own web site and why would smart operators allow email marketing material about their competitors to be sent to their customers?

    In the UK opentable are actually not charging for setup, training or install when coming up against competition – and their last argument against being removed from an account is “we regularly bring you XX customers per month and that's £xx operating profit you will lose on annual basis if you stop using Opentable” – it's a facile and purely subjective argument.

    Opentable are also great at producing pretty pdf's showing extravagant and ludicrous ROI and financial cost analyses based on the above assumption.

    I have got to admit I am not a fan and, having had a recent first hand experience of their marketing and sales techniques, I have no respect for Opentable as a company either.

  18. 18 Mike Stewart

    How much money do you think Livebookings will “burn” in America?

    Can they afford the cost of entering the US market?

    Are they even returning a profit in Europe (they are doing a “Gordon Ramsay” with their accounts in the UK – 5 months late and counting)?

    They have decided to attack the American market at the height of the recession – I am at a loss to see the business logic in this.

  19. 19 adem

    You can save money on online shopping by taking advantage of printable coupons, deals, discounts, promotions, and special codes at http://www.clickmycoupon.com

  20. 20 jd

    I guess no one ever accused restaurant owners of being smart business people!

    Restaurant margins are more like 30-50% so spending $1.00 to bring in an incremental diner is a steal.

    “if you are full then reservation enquiries are being switched to your nearest competitor”

    And vice versa. Diners are also being much more effectively pushed to your least busy hours.

  21. 21 Steve

    This is a great analysis, although you're missing one piece of what OpenTable does.

    They are not just a “lead generator”, they are also an inventory management system. If a restaurant didn't use OpenTable, they would have to purchase some other system. So some of that monthly fee has to be counted not towards each customer they bring in, but towards the system as a whole which they provide.

  22. 22 Josh

    Question is … at Opentable.com what % of vistors put a specific restaurant into the text field and what % use opentable to search for a resturant. From my experience and others I have spoken to, most people know what restaurant they are looking to make the reservation for (opentable.com is no Zagat when it comes to reviews). Seem to me that 90% of users paying 1 dollars are overpaying by 75 cents. Thoughts?

  23. 23 Mike G

    JD, thanks for the comment. I was reading this thinking I'm going crazy – a CPA of $2.61 per customer. Come on, that is ridiculously low. Restaurant owners unwilling to pay that for a new customer should think about firing the bar tender stealing from him. They're the ones stealing, not OT.

  24. 24 Jack

    Every Valentine's day tens of thousands of dudes drop the ball and go to google. What to they type? 'restaurant reservations' What comes up? OpenTable. What do they do? They search for whatever seat they can find…they don't type in a restaurant name – they just search for whatever they can get. Then they surprise the special lady friend with a table at some cute Greek place half way across town neither of them has ever heard of. Who saves bacon? OpenTable saves bacon and creates loyal users for life.

  25. 25 DavidJD

    Margin is 30%-50%? If you consider just the mark-up on food & booze, sure (booze margin is usually about 50%, food ideally at 20%-30%, but that's gross margin and doesn't include any of the overhead.

    The typical restaurant margin is microscopic. Something south of 5% in most cases.

  26. 26 DavidJD

    Good analysis indeed. Here's something not being considered: OpenTable is also an integrative reservation management system which all restaurants need whether it's a person with a notebook or a different computer program. OpenTable eliminates, in most cases, the need for a reservationist (or at least a full-time one), saving on labor costs, and also provides many different ways to manage customer databases and retain customers.

    So a user who completely utilizes all the features of OpenTable will see the real cost of OpenTable be much much less in terms of money saved in time, labor, and lost business.

  27. 27 JMW

    I appreciate this analysis; as a heavy user of OpenTable for some years, it's nice to see what's under the covers, especially after today's IPO. My feelings are bearish overall, not just on the stock but the business as a whole. For a few reasons:

    The OpenTable business by its nature doesn't scale well. Aside from the fact that it relies on a sales force and “high touch” relationship management with thin margin clients, the business model is inherently self-defeating. Really great restaurants thrive on their regulars, not the aspirational folks who dine out occasionally. OpenTable increases the cost not only of first time visitors but of savvy regulars who use the system to accumulate points at places they would dine at anyway.

    Moreover, and I think this is a real killer — the places that likely generate the most revenue for OpenTable, are by their nature the most desperate and vulnerable. Consider the “1000 point curse.” A lot of restaurants that have seen their business decline will list lots of 1000 point reservation slots at peak times. Now, keep in mind, only two of these reservations means a $20 check for the diner; it's effectively a $10 discount on a meal. Of course OpenTable doesn't give away free money, so one assumes that the 1000 point slot is a real revenue (i.e. margins) generator for them.

    Furthermore, consider their target market and current revenue base. Let's face it, OpenTable is a SF company for a reason. SF has (I believe) the most restaurants per capita in the nation. Therefore by owning this local market and NYC as well (and other major U.S. cities), they perhaps have created a solid base, but hardly an assurance of avoiding market saturation. 10,000 restaurants is great; but consider that SF alone has over 3,000.

    What is the other 94% of reservation taking? Chain restaurants perhaps? That is to say, businesses with enough marketing power and internal proprietary systems knowledge that they would not outsource to OpenTable, or if they did, would have immense pricing power.

    OpenTable may very well be near market saturation _in the niche they serve well_, which I believe is moderate to high end restaurants in affluent urban settings.

    And in the final analysis, to reiterate a previous point somewhat — I am surprised at how expensive OpenTable really is. Great restaurants don't rely on leads generation or bringing in new customers, they rely on word of mouth and regulars. Literally, regulars who come back for years and years. While OpenTable costs $2.61 per head, a single satisfied customer “pays” the restaurant back many times over by growing the base that has heard of them. This is a slow process. And yet, it works, and has worked for many years. It leads me to believe that, again, the restaurants most dependent upon OpenTable are the ones least successful at word of mouth marketing, and therefore the most likely to fail. That does not bode well for their business model.

  28. 28 jack glen

    Get big Discounts on your next dining, Do not waste your money, save it! Use restaurant coupons at http://www.clickmycoupon.com.

  29. 29 Phil

    Open Table is a valuable service, but the commitment and expenses involved with retaining this service is less than favorable. While Open Table features great tools that the restaurant can benefit from, they mean nothing if the restaurant does not utilize these tools. I feel that that although the tool can be beneficial, the money for the service could be spent more efficiently.

  30. 30 James Brown

    We hear Opentable is running scared in the UK, desperately offering free hardware, installs and training to gain very expensive, non profitable market share. Opentable is scared witless by Livebookings and Toptable and to worry them even further there are rumours of a strategic alliance between Toptable and Livebookings erstwhile reservation back office partner, Quadranet. This could be a big worry for Livebookings as their own back office solution, Loghos, is not exactly fantastic and their small restaurant solution, Console, is less than intuitive.

    The prize they are all fighting for is the right to supply an online reservation solution to D&D, formerly Conran, in London but there are rumours D&D has decided to specify and build its own reservation and marketing solution.

  31. 31 inaki

    Interesting reflection. Would you pay then $2.61 per head for new customers if they came on party that includes 6 or more people?

  32. 32 Chris Plotner

    In this analysis, one important factor to note is that OpenTable users only receive points for a reservation IF THE RESERVATION ORIGINATES FROM OPENTABLE. I got burned by this once, where I made a reservation by linking to OpenTable from a restaurant's website. From now on, if I see that a restaurant's reservations are powered by OpenTable, I will open a new browser and initiate the reservation through OpenTable.com. This will distort the perceived value of OpenTable in generating new business. I do not use OpenTable to find new places to eat, only to gain a marginal benefit from making an online reservation at a restaurant I have already chosen.

  33. 33 brett1211

    excellent post. over the course of your research, did you ever hear how much open table pays for affiliate referrals? again, great post.

  34. 34 nikol77

    Online restaurant reservations company OpenTable filed for an IPO on Friday, revealing their finances for the world to see. The SEC filing contains all the financial figures you would expect it is very good..

    NYC Hotels

  35. 35 ryanborn

    I seriously fabulous analysis Jonathan. Totally fantastic. The trusty TI-83 comment made me lol!

  36. 36 Krishnan

    i run a small restaurant in scotland. today we had a sales chap who came by to sell his sales pitch. his figures were very interesting and tempting, until he mentioned the fee involved. hardware installation and training are free (discounted from close to £400.00). monthly fee of £99.00 (12 months contract)
    few points to be noted -
    1. every booking we get through our own site is charged at £0.25 – currently my website has an in house feature to book a table online and i receive the booking in an email format on my mobile phone. internet package comes free with my phone contract :)
    2. every telephone call booking we get, if data entered into the OT live system we are charged £0.25 – currently incoming calls are free and we write the customer's details in the diary which is later entered into my customer database on my PC. also free!!
    3. every time we have a walk in customer and if the details are entered on the OT system, we are charged £0.25 – i instead give a feedback form to the customer with a few mint chocolates and i get all details filled in. almost free, apart from the chocolates :)
    4. every time we get a booking through OT website we are charged £2.00 per person (that is about 10% of my income generated)
    mathematics -
    on n average i get about 25 customers a day. 10% regulars and 90% new (word of mouth). for entering the 90% new customer's details into the database i will be charged £5.62/day
    assuming an additional 2 customers/day from OT, i will be charged £4.00/day
    for a 30 day period – my total would be (including the monthly fee) £387.60
    total additional income from OT = £900. almost 43% of my income is lost!!! the other way of seeing it is my monthly income goes up by £512.40. the overall income per month goes up by 4.25%
    conclusion – there are plenty of ways to generate more than £512.40 with an investment of £387.60
    i am sure the OT concept will work for many business' out there, but beware it is not the best system for most restaurants. (my experience from bookings received from toptable over the last few months)
    on another note… try concentrating on http://www.tripadvisor.com
    this site has reviews and it has been working for me. check out SPICE DABBA, ABERDEEN on tripadvisor :)

  37. 37 AsiagoSF

    flawed analysis: it assumes that all OpenTable rservations are incremental. if you're familiar with rigorous business and marketing analysis you'd know this is a best-case scenario which is rarely adopted as a guideline

  38. 38 Aya

    I think there's real value in OpenTable, especially if you're not very organised… it saves so much time to have like a computer system store all booking details, but I don't see why they should charge for new entering new bookings? And I don't see the point in paying them for the opentable.com customers, they're marketing to all their restaurants, it's not like they're only doing it for me. These customers may come once and go to a different open table restaurant the second time… right?
    I came across this website http://www.eveve.com in google, it seems like they're taking on open table in Europe. Is there much competition for open table, it may be a good thing, competition means fairer pricing

  39. 39 Restaurant Booking System

    Its interesting to see the number of competitors now entering this space, (disclosure we are one of them). The fact is that the analysis above is correct, Open Table has a dated business model that has delivered the founders millions of $ but will never deliver value to the majority of their customers.

Leave a Reply