The the real cost of Open Table

November 15, 2010 11:57 AM

A glimpse into the business relationship between restaurants and Open Table. It is not the glowing review you were possibly imagining. This will probably make you think twice next time you go to use it.
posted by halseyaa (101 comments total)

I'd settle for just having restaurants that take reservations at all.

Around here, they either don't take them or have absurd requirements (reservations for 8 or more only, all members must be present before you are seated, etc)
posted by madajb at 12:01 PM on November 15, 2010

I don't get it. They say they feel trapped because their business would suffer if they ditched Open Table, but it seems to be some nebulous fear with no one having the guts to actually do it. If working with Open Table is a profitable proposition for you restaurant, then there's no problem, and if it isn't why the heck are you still working with them?!
posted by juv3nal at 12:04 PM on November 15, 2010 [13 favorites]

Boy that was long-winded.

So the primary issue is that it's too expensive?
posted by mr_roboto at 12:04 PM on November 15, 2010

Thanks for this - very interesting. I use Open Table on occasion and often it's because so many restaurant websites are, to me, annoying as all Hades and very irritating on a cell phone. Too much flash, too many pictures, too many clicks to get to the important stuff: hours, address, phone number. I wonder if Incanto has such an easy to use site because they don;t use Open Table or if that's a coincidence?
posted by pointystick at 12:05 PM on November 15, 2010 [3 favorites]

OpenTable + Groupon = Money Pit?
posted by gurple at 12:05 PM on November 15, 2010 [1 favorite]

juv3nal, would you really want to be the one to make the first move?
posted by saturday_morning at 12:06 PM on November 15, 2010

I love OpenTable, and will continue to use it whenever I can. I'm more likely to try a new restaurant if I can make the reservation online. If their problem is that it's too expensive, have no fear- someone will come along one of these days with a cheaper, better version, and OpenTable as it is now will become a thing of the past.
posted by ThePinkSuperhero at 12:07 PM on November 15, 2010 [2 favorites]

Open Table has been around for 12 years? I never heard of it until this year and thought that is was just another iPhone/Android app company like Four Square. I installed it on my phone but almost never bother to make reservations at restaurants; I seldom plan that far in advance and seldom have had to wait very long if at all for a table.
posted by octothorpe at 12:09 PM on November 15, 2010

often it's because so many restaurant websites are, to me, annoying as all Hades and very irritating on a cell phone. Too much flash, too many pictures, too many clicks to get to the important stuff: hours, address, phone number.

You know somethings wrong when I breathe a sigh of relief when a Restaurant's web site is a blogspot.
posted by wcfields at 12:09 PM on November 15, 2010 [7 favorites]

I assume that tables at restaurants are harder to get in coastal cities.
posted by octothorpe at 12:10 PM on November 15, 2010

I know the first place I go for a reservation is OpenTable so if you aren't listed on there chances are you won't be getting my business.

This article also seems to miss the fact that restaurants get the option to remove inventory from OpenTable so if they really think they can fill the tables without it then there is no reason they couldn't just block off x number of tables. Then they can determine if they can make do without it whilst still being visible.

From a customer perspective it's fantastic.
posted by zeoslap at 12:13 PM on November 15, 2010 [1 favorite]

I would see this as a great opportunity for somebody to make a new type of Opentable site that doesn't charge the restaurants as much, or doesn't charge at all. An OKCupid of reservations, if you will.

Or maybe like, Yelp or Foursquare can add that? They could both do some cool location-based stuff with the reservation system too.
posted by Threeway Handshake at 12:13 PM on November 15, 2010

Hmm..most of the restaurants I have booked at lately use LiveBookings.
posted by vacapinta at 12:14 PM on November 15, 2010

(please excuse the horrendous grammar in my last comment thx)
posted by zeoslap at 12:15 PM on November 15, 2010

I've never used Open Table, but then I don't know how popular it is outside of the US (I'm in Canada). Of course, I never really have trouble just calling restaurants to get a reservation on the occasion when I do need to make one, so I guess I'm not in their demographic either.

$10.40 per table of 4 though... That *does* seem particularly expensive.
posted by antifuse at 12:18 PM on November 15, 2010

Wow does this make me feel like an old "kids these days" type - what exactly is the problem with just calling a restaurant to make reservations? I had no idea that OpenTable was this popular.
posted by odinsdream at 12:18 PM on November 15, 2010 [10 favorites]

Zeoslap, I find your perspective fascinating--I am much less likely to make a reservation on OpenTable than otherwise. I would much rather call the restaurant and make a reservation than book it online. And I'd never choose a restaurant based on OpenTable's listings.
posted by Admiral Haddock at 12:20 PM on November 15, 2010

what exactly is the problem with just calling a restaurant to make reservations?

A place would have to pay a person to sit and answer phones.

As somebody nearing middle-age, I would never, these days, actually *call* a place to make a res. That just sounds crazy to me.

Do you also think it is crazy to order books online from Amazon, for instance?
posted by Threeway Handshake at 12:21 PM on November 15, 2010 [1 favorite]

I just looked for restaurants in my city on Open Table and they only list a grand total of 54 while Yelp lists >1300 so it doesn't look like they've bother to expand much in small cities. I'll stick to making a phone call to the restaurant.
posted by octothorpe at 12:21 PM on November 15, 2010

If their problem is that it's too expensive, have no fear- someone will come along one of these days with a cheaper, better version, and OpenTable as it is now will become a thing of the past.

Um... this shows slightly too much faith in the perfection of the free market if you ask me. Or to put it another way: Ticketmaster.
posted by game warden to the events rhino at 12:21 PM on November 15, 2010 [20 favorites]

This means that a table of 4 spending $200 on dinner would generate a $10 profit.

I find this absolutely absurd. Can anyone who works in the restaurant business confirm this? No one in their right mind would go into a business with such a ridiculous profit margin.
posted by dobbs at 12:22 PM on November 15, 2010 [3 favorites]

I worked for OpenTable for almost 4 years. Frankly, I left the company feeling kind of grumpy, though not disgruntled, and I can honestly say that I would definitely be an OT subscriber if I ever opened my own restaurant. (Full disclosure, if anyone cares: I own some stock.)

This fellow, Mark Pastore, is correct when he says he's not the only restaurant owner who feels this way about OpenTable. However, my experience was that the vast majority of OT-subscribed restaurants saw value in the system far beyond the marginal bookings they would get just by hooking the thing up and taking online reservations.

The fact is that the system has a database in which customers are stored and tagged in order to generate reports that give a deeper view into how a restaurant is operating. OT refers to this as "table yield management." If you work for a data-driven business, you know how big of a deal this can be. Lots of people who get into the restaurant don't have the kinds of personalities you would associate with, say, a Google engineer, so you don't usually hear them evangelizing the value of data.

Additionally, the OT system has marketing functionality in it including the ability to send a mass email. (Lett's Law - all programs will evolve until they can send email.) So if you're a small restaurant owner and you want to let your customer base know about the new white truffle blah blah blah on your menu, you don't have to subscribe to Vertical Response or Exact Target to do it.

I'm not suggesting that every restaurant that has OpenTable actually needs it, or that restaurants that don't have it ought to get it, but I do think the system has tremendous value beyond marginal reservations. I agree with Pastore that the company and software would probably benefit from competition, but I think his post ignores a lot of relevant information.
posted by ben242 at 12:22 PM on November 15, 2010 [14 favorites]

This is pretty well-written for a narrowly focused rant from a non-literary business. I'm guessing that with the recession and all, restaurants in the SF area have lots of talented writers waiting tables or otherwise hanging around. As an employer of last resort, the restaurant business may soon have more than its share of well-educated types not only waiting tables, but managing and rising up through the ranks. We can look forward to a wave of innovation from that quarter.
posted by Faze at 12:23 PM on November 15, 2010

Restaurants pay $10.40 per reservation to offload reservation-taking to OpenTable? No way. Absolutely no way. That number has to be an average of the entire list of places that use them. OpenTable catalogs places where the average tab per person isn't that high. Even for more expensive places where most tables are for 2 or 4 people, $10 per reservation would be a mortal wound. And it's not a one-time cost, like Groupon; once you make one reservation for a new place through OpenTable, you're probably going to keep using the service, because you earn small rewards for doing so.

That said, I hate making reservations over the phone. Finding a mutually acceptable time can take 5 minutes of back-and-forth, and no one ever seems to transcribe my name and the time correctly, and I don't get automated email reminders about reservations I make myself. However, all a restaurant has to do to get me back is to offer some sort of lo-fi calendar-chooser/form-entry page for me to make my reservations through their site, and I will use that instead. But if I instead get treated to a masturbatory Flash interface that I can't skip, and form entry fields that don't listen to me hitting the tab button, I'm using OpenTable.
posted by Mayor West at 12:23 PM on November 15, 2010 [4 favorites]

juv3nal, would you really want to be the one to make the first move?

Well you wouldn't necessarily be the first. For one thing, Incanto (from the OP), for instance, is able to do without it.

Plus you know how much business you were doing before/after you signed up with Open Table.

I don't see how it's markedly different from any other promotional campaign (advertising, say) where you reevaluate how much business it's driving your way versus how much it costs and decide whether to continue using it or not. You wouldn't sign up for an ad campaign and say "This television spot is too expensive but we have to stick with it because we're afraid we'd lose too many customers if we stopped it." I would hope a sensible business wouldn't anyways. I mean, you have numbers to back up your decisions, no?
posted by juv3nal at 12:25 PM on November 15, 2010

Do you also think it is crazy to order books online from Amazon, for instance?

No, I have Prime and I order soap and toothpaste rather than go to CVS, but I've never had a problem calling a restaurant and having someone answer to take down my name. Is this perhaps something specific to larger cities?
posted by odinsdream at 12:27 PM on November 15, 2010

This is a very well written article, one that should serve as a model for the mainstream media (aka "real reporters") to use. The author lays out why OT has succeed, applauds them for being so successful, and then puts it right on the table exactly what the problem is and why they are not using it, and why OT is actually harming the restaurant business by taking more and more revenue away from the smaller shops, both in direct fees and indirect business (you're not on OT? Watch your traffic go to where OT is at).
posted by Old'n'Busted at 12:27 PM on November 15, 2010 [3 favorites]

I use OpenTable frequently but not exclusively, primarily because I can make a reservation on OpenTable in a few seconds. Far too many restaurants have slow-loading, Flash-heavy web site and even when I can find a phone number they force callers into phone trees or otherwise make it difficult to actually reach a human "reservationist."
posted by twsf at 12:30 PM on November 15, 2010

Is this perhaps something specific to larger cities?

That is probably the divide here. Back in San Francisco and now here in London, booking a table online is extremely common. The article is really about the tradeoffs involved for restaurants in those cities where Opentable is dominant. Arguing that this doesn't apply to your city is completely beside Cosentino's point.
posted by vacapinta at 12:32 PM on November 15, 2010

Arguing that this doesn't apply to your city is completely beside Cosentino's point.

No problem. I don't live in a larger city, so I'll step out of this now.
posted by odinsdream at 12:33 PM on November 15, 2010 [1 favorite]

One independent study estimates that OpenTable’s fees (comprised of startup fees, fixed monthly fees, and per-person reservation fees) translate to a cost of roughly $10.40 for each “incremental” 4-top booked through OpenTable.com.

Its possible, but the study (that isn't cited and whose methodology we can't examine) probably used a single small-ish restaurant or a sample of small restaurants to come to that figure. For example, did the study allocate a portion of internet connectivity costs to each reservation? We'll never know, but that same net connection is often also used for processing credit cards.

Last I knew, the one-time setup fee was about $1300 and the cost per cover was $1. In other words, if you book a table for 4 people, the restaurant owes $4 for that reservation after it has been honored. I'm skeptical about the extra $6.40 mentioned in the OP.
posted by ben242 at 12:35 PM on November 15, 2010

This sounds very similar to the complaining we in the florist business do about wire services such as 1800Flowers (Bloomlink) FTD, and Teleflora....every florist I have ever talked to that has ditched the wire services has been thrilled with the results.
posted by St. Alia of the Bunnies at 12:39 PM on November 15, 2010

It's threads like these that make me realize what a backwater burg I live in. Do you guys living in the cities have jetpacks now, too?
posted by entropicamericana at 12:40 PM on November 15, 2010 [10 favorites]

I find this absolutely absurd. Can anyone who works in the restaurant business confirm this? No one in their right mind would go into a business with such a ridiculous profit margin.

It's not that odd, profit margins below 5% are fairly common in a lot of industries. Here's an example from various Canadian manufacturing industries (just because that's what I have on hand).
posted by ripley_ at 12:41 PM on November 15, 2010 [1 favorite]

The McDonald's drive-thru never needs reservations. I'll stick with that.
posted by mrbill at 12:41 PM on November 15, 2010

The value of OpenTable for me comes from the fact that on a night when I want to eat at a restaurant, -which- restaurant is subject to some windage. There are four or six I'd go to, and calling... each... one... is a time-waster. I can pick a time on OpenTable and see who's got a table then.

The idea that OpenTable takes the customer relationship out of the restaurant's hands seems absurd at first. I don't understand that claim. If the restaurant is good, I'll be back and will be recognized. Restaurant Web sites are usually not geared to quickly checking when I can get a table, and their spam is about getting people to commit to expensive events on Wednesdays. Therefore, I don't get on their mailing lists. I'm quite sure that my phone number is recognized at the restaurants I frequent and that each one has a database about when I was there, how much I spent, what kind of food I ordered and whether I should be catered for or rejected. Whether OpenTable gets in the way of such information is the question, and it would surprise me very much if it did.
posted by jet_silver at 12:48 PM on November 15, 2010 [1 favorite]

Honestly most of the objections seem fairly nonsensical, boiling down to "I think it's too expensive but I can't afford not to use it." I mean I'd love for everything I can't do without to be cheaper too but that's life.

In other news, short sellers are betting against their phenomenally successful IPO.
posted by nanojath at 12:49 PM on November 15, 2010

This means that a table of 4 spending $200 on dinner would generate a $10 profit

I think he's failed to take into account the mark up on wine/liquor/beer. If this theoretical table did not order drinks, then yes. (I got bored with this article about half way through so if that was covered, forgive me).
posted by spicynuts at 12:50 PM on November 15, 2010 [1 favorite]

I find this absolutely absurd. Can anyone who works in the restaurant business confirm this? No one in their right mind would go into a business with such a ridiculous profit margin.

2010 Restaurant Industry Operations Report (PDF), which gives the 4% number.

Most people who go into the restaurant business are not doing it to make money. They just want to own a restaurant. So "right mind" doesn't really come into it.
posted by smackfu at 12:52 PM on November 15, 2010 [2 favorites]

Do you guys living in the cities have jetpacks now, too?

Actually, kind of. Deep underground, we have pod-machines that whisk us to our destinations without the need for us to steer them, and without having to contend with traffic and stoplights like our backwards aboveground brethren. We can use these to travel anywhere within our future-city, and many points beyond it.

To access this personal transport service, it costs only $89 per month, and you may use it as much as you like.
posted by Threeway Handshake at 12:53 PM on November 15, 2010 [5 favorites]

I could see using Open Table a lot if I still lived in New York. Here in Los Angeles, blissfully, the best restaurants are exactly the kind that don't appear on Opentable. I've used it once or twice, but it's certainly not dominant here.
posted by Bookhouse at 12:54 PM on November 15, 2010

Restaurant owners are (by necessity) aggressively and ruthlessly frugal. Perhaps moreso than any other industry. I find it very difficult to believe that they're collecting $10 per reservation.

(Although, if that's really the case, they should go ahead and merge with TicketMaster, as they both make an absolute mint in what is otherwise a difficult and unprofitable industry by providing a service that has virtually no overhead costs associated with it, and are almost universally hated and despised by all parties involved)
posted by schmod at 12:55 PM on November 15, 2010

I go to OpenTable first, but I'll call if a restaurant I want to go to isn't on there. no biggie.

complaining we in the florist business do about wire services

Well...I just called a local florist directly because I didn't want them to have to pay the service, and I wanted to support a small business, and so on and such. And my parents' anniversary flowers (after getting mis-delivered) showed up with a card that said "Happy Birthday Mom and Dad!"

I'm thinking online is safer for that sort of thing in the future.
posted by JoanArkham at 12:57 PM on November 15, 2010 [1 favorite]

In my experience, Open Table works best in the kind of restaurants that need it least.

(Full disclosure: several years ago I was approached by an Open Table regional sales rep and offered a position selling their service to restaurants. I declined, and I kinda wish I hadn't. I never thought it would catch on the way it has.)

This article is spot-on, IMO. I imagine in large cities with a multitude of high-end dining options, Open Table is a competitive necessity.

But I agree with the article that Open Table is of dubious additional value from a restaurant's perspective. If you're full ever night, you don't need it. If you're empty, you can't afford it.

Can Open Table show that their system drives guests into your eatery? I'd love to see that data. Because I just don't believe it does.

Open Table is a middleman that provides some convenience and utility from the guest's perspective, but I'm not sure it actually helps a restaurant's bottom line.
posted by BitterOldPunk at 12:59 PM on November 15, 2010 [1 favorite]

This reminded me of a restauranteur's rant about why he didn't take American Express because the interchange fees were higher than MC/Visa. Yeah, fees suck.
posted by birdherder at 1:03 PM on November 15, 2010 [1 favorite]

As somebody nearing middle-age, I would never, these days, actually *call* a place to make a res. That just sounds crazy to me.

My first instinct (I'm not even 30!) is to call, rather than book online, and I'm kind of annoyed when I have to go through opentable, actually.
posted by kenko at 1:06 PM on November 15, 2010 [2 favorites]

I've used OpenTable. It's nice, as other people have noted, because it lets you avoid restaurants' web sites, which are second only to professional photographers' in terms of general bloat and horribleness.

But avoiding the phone call to make a reservation has its own benefits. At busy restaurants, you risk being put on hold when you call, or having someone not answer quickly -- so OpenTable might well be faster even if you have them on speed dial.

Also ... at some places it lets you dodge what might otherwise be a non-trivial language barrier. There are restaurants in my area where English is not the staff's primary language (and in their defense, nor is it most of the customers, so it may not be a major concern) and trying to make a reservation with them over the phone turns into a long exercise involving a lot of "I'm sorry... can you repeat that?" and attempts to devise a mutually-agreeable phonetic alphabet. I can only assume this is as trying for the person on the other end as it is for me, and so something like OpenTable would seem like a win-win. I get to make a reservation, they don't have to deal with monolingual English speakers on the telephone.

OpenTable isn't so ubiquitous that I'd use it to find new restaurants, though. I generally decide where I want to go, and only go into OpenTable if I know it's a place that's generally crowded enough to justify needing a reservation. I don't think I've ever not gone to a place because it wasn't on OT ... although there are places that probably got return business from me more easily, because I used OT and got a reservation easily.

This article also seems to miss the fact that restaurants get the option to remove inventory from OpenTable so if they really think they can fill the tables without it then there is no reason they couldn't just block off x number of tables.

This is interesting; I've always suspected that this was the case but didn't know it for sure. There are restaurants which routinely fill up weeks in advance when viewed via OpenTable, but always have room if you call on the afternoon of the night you want to eat. I couldn't figure out why they would want to do this (yes, it gives them more flexibility to accept same-day reservations, but at the cost of possibly having a table open -- why wouldn't they want to be booked solid?), but if OpenTable is charging them $10 a table, it makes sense to only offer through OT the smallest number of tables you think it will take to satisfy those people who will only come if they can book that way. Everyone else you would want to encourage to make their reservation some other way.
posted by Kadin2048 at 1:06 PM on November 15, 2010 [1 favorite]

I had a miserable experience using OpenTable the one time I used it to make a reservation. They didn't have any tables for us. None. They asked us to eat at the bar. Lame.

It's just another example of the toll-booth economy.
posted by wuwei at 1:10 PM on November 15, 2010

"This means that a table of 4 spending $200 on dinner would generate a $10 profit."

dobbs: "I find this absolutely absurd. Can anyone who works in the restaurant business confirm this? No one in their right mind would go into a business with such a ridiculous profit margin."

Generally, people in their right minds don't go into this business.
posted by Blasdelb at 1:11 PM on November 15, 2010 [2 favorites]

Why ARE restaurant websites almost universally bad? I can't think of any other industry where 9 out of 10 businesses have absolutely awful websites.

Anyway, I didn't know that OpenTable existed until right now, but I'd definitely use it vs. calling. I can't hear someone in a noisy environment and I'm terrible with accents. Generally they can't understand me either, even when I spell things slowly, so the conversation takes much longer than it should.
posted by desjardins at 1:12 PM on November 15, 2010 [3 favorites]

Thanks for posting this, halseyaa.
posted by mediareport at 1:13 PM on November 15, 2010

Open Table provides value to customers, as can be seen from the people on this thread who think it's convenient. It's only right that the company gets to extract some of that value.

Restaurateurs, wake up to how innovation works. You have to make a choice: ignore the Internet (good luck), do something better yourselves (the barrier to entry is extremely low on the web), or put up with Open Table.
posted by Triplanetary at 1:15 PM on November 15, 2010

I'd never heard about OpenTable until this thread appeared on MeFi.

Maybe I'm doing it wrong?
posted by hippybear at 1:18 PM on November 15, 2010 [1 favorite]

This reminded me of a restauranteur's rant about why he didn't take American Express because the interchange fees were higher than MC/Visa. Yeah, fees suck.

True, but have you ever seen Amex's fee schedule? It's fucking crazy. Highway robbery crazy. Load up the armored car crazy. I'm amazed that any retail establishment working on a thin profit margin accepts Amex.
posted by BitterOldPunk at 1:18 PM on November 15, 2010 [1 favorite]

Why ARE restaurant websites almost universally bad? I can't think of any other industry where 9 out of 10 businesses have absolutely awful websites.

Yeah, this is really true. Awful flash openings, lame euro-electro audio tracks. All I want is a menu and a way to make reservations. That's all.
posted by Bookhouse at 1:19 PM on November 15, 2010 [3 favorites]

I'm amazed that any retail establishment working on a thin profit margin accepts Amex.

For restaurants, corporate cards are the main reason. Are you willing to turn away business travelers who eat full meals on weekday nights, but need to use their Amex card?
posted by smackfu at 1:21 PM on November 15, 2010

True, but have you ever seen Amex's fee schedule? It's fucking crazy.

I wish I had taken a picture of it, but I saw a sign in a sandwich place today that said something to the effect of:

Please consider paying cash for small purchases. Every credit card transaction requires us to pay a fee and a percentage of the purchase price, to the point where we actually lose money on small transactions.

posted by electroboy at 1:23 PM on November 15, 2010

I'm a heavy user of opentable, having lived in NY and DC for its use. Here are some reasons:

I often am in parts of town during dinner time that I am unfamiliar with. Sometimes its just myself, sometimes I'm with a group of 8. Opentable gives me 40 options within a mile that fit exactly my party size and tell me what times are available so I can plan my timing and the rest of my day. It also allows me to sort by cuisine and price point so that I can adjust based on my group (is it a business client? some friends who are unemployed?). It saves my reservation history so I can quickly bring up places I've tried before without having to do deep recall on my own. And it can do all this in less than 3 minutes as long as AT&T is not cutting me off with its horrible connection.

Now, I could use Google on my phone and try, for example, "sushi." And it will give me maybe 10 options, with no ratings by other users, no price description, no consolidation of reviews for every restaurant that comes up, and I'd have to adjust the google maps range until it fits my walkable / drivable limitations. And then I'd have to check out their menu on their fussy website to see if the price range I'm looking for. Then I call each of those restaurants to see if they have availability that night, if they have it for my table size, and if its within a reasonable time. That's assuming they even pick up in the first place or remember to take me off hold after 5 minutes.
posted by shen1138 at 1:24 PM on November 15, 2010 [2 favorites]

One independent study estimates that OpenTable’s fees (comprised of startup fees, fixed monthly fees, and per-person reservation fees) translate to a cost of roughly $10.40 for each “incremental” 4-top booked through OpenTable.com.

Let's dig into this number. $4 for the reservation (it would only be $1 if they booked it from your restaurant's site though). So that leaves $6.40 for the other fees. Spread the $1300 startup fee over two years, because restaurants don't last long. That's $55 / month. The user fee is $200 / month. So $255 total / month. That works out to only 40 tables for the entire month (5 tables every Fri and Sat) booked through OpenTable, to have the fee be $6.40 each.

Is that really surprising that it's not worth it at that small scale?
posted by smackfu at 1:31 PM on November 15, 2010

what exactly is the problem with just calling a restaurant to make reservations

Well, you have to call a bunch of restaurants, not just one. The main point of Open Table to me is that I can ask it _which_ restaurants have a table open at a particular time. If you're trying to get last-minute reservations at a nice restaurant in San Francisco, most will be full, so rather than calling 10-20 restaurants I can do a simple search.

And once I've done all that, it seems silly to pick up the phone when I can just do one more click and be done.
posted by wildcrdj at 1:41 PM on November 15, 2010

I tried using it recently (Los Angels, CA, Westside-Hlwd area), and it was kind of a bust. I ended up calling the restaurant and getting a reservation no problem. How can it be that it's showing no openings online, but when I call, it's no problem? Completely OT: we are supposed to be in an economic crisis, especially here in CA and especially in LA, and if a Martian were to use restaurants as an indicator of distress, he'd come away with an entirely wrong impression. I had a visitor from Europe come here on short notice and I wanted to find high-quality cuisine that was rare/unavailable in his country. Good luck with that - granted it was a Sunday evening, but still, price no object. Everyone was booked, or had openings at absurd hours, or what particularly infuriates me, expected us to hang around for 1-2 hours(!) waiting for a table. I mean, people are spending gobs of dough at high priced joints like there is no tomorrow. It didn't make sense - and here I thought that restaurants were a high risk business, but from what I can see LA can use some more restaurants, cause what's here is packed to the gills and bursting at the seams.
posted by VikingSword at 2:02 PM on November 15, 2010 [1 favorite]

This essay is a good first step in raising awareness about the problem, but I would have liked to have seen more energy put toward some proposals to solve it. The only option offered is a weak suggestion to pick up the phone. For someone who has used Open Table to easily triangulate schedules between diners and restaurants, this is like asking a teenager to use the phone book.

I would be more impressed if some enterprising restaurateurs would form a consortium to build a real open alternative. I guess I don't understand the helpless tone about this article.
posted by dgran at 2:03 PM on November 15, 2010 [1 favorite]

It is simply not credible to argue, on an industry-wide basis, that a solution that materially increases the operating costs of every restaurant (and therefore the cost of dining out) will also stimulate customers to eat out more frequently, on the whole.

This is a pretty good article, but this person does not understand externalities. As the author himself points out, the customer gets value from OT and the restaurant typically does not pass the cost on (otherwise there would not be so much complaining about OT eating into profit margins), so in fact the chances are that OT is increasing the number of tops reserved, at least at the margins. Whether that is a good thing for the restaurants or not is a separate question. The restaurant business sucks, and the primary complaint here seems to be that OT is not making it suck less -- at least for restaurant owners. That's a shame, but it's not going to stop me from using OT.
posted by The Bellman at 2:05 PM on November 15, 2010

to the point where we actually lose money on small transactions.

This is only vaguely related. Today I got my Discover Card bill and found that the $1.05 transaction I'd mistakenly charged to it [buying something from the Itunes store when I thought I was using PayPal] was actually refunded instead of being put on my bill. I called just to see what was going on and they said that for teeny charges, they'll sometimes do this. I mentioned it on Twitter and it's apparently a thing. I had never really heard of OpenTable before this thread and clicking on their Vermont listings takes me to the best restaurants in Boston (thought I can refine the search and see maybe ten places in the state), so I think it's one of those jetpack things for me too. I'll wait and see if it gets here.
posted by jessamyn at 2:10 PM on November 15, 2010

Well...I just called a local florist directly because I didn't want them to have to pay the service, and I wanted to support a small business, and so on and such. And my parents' anniversary flowers (after getting mis-delivered) showed up with a card that said "Happy Birthday Mom and Dad!"

I'm thinking online is safer for that sort of thing in the future.

HAHAHAHAHAHAHAHAH......*hiccup*

You do realize that all the online services do is smile, take your money and send a portion of it to that same florist? With an extra layer of people to screw things up?

(I certainly hope that florist redelivered your order free or refunded your money AND sent another bouquet. You did ask, right?)

In other words, unless you get your online bouquet sent to you in a box, it's going to come from your local florist, period. By calling directly YOU get to choose who winds up with the order. Teleflora, FTD, 1800flowers, JustFlowers and FromYou flowers-ALL these entities depend on the local florist.
posted by St. Alia of the Bunnies at 2:18 PM on November 15, 2010 [1 favorite]

I should have asked for a refund, but didn't. The whole thing was so traumatic (multiple phone calls, arguing, close to tears) I just wanted to be done with it.

all the online services do is smile, take your money and send a portion of it to that same florist

Yep, that's why I called directly. But doing things online would have provided me with both a receipt and a record of exactly what I asked for. (There was also a bit of a language barrier.)
posted by JoanArkham at 2:25 PM on November 15, 2010

Once the market is saturated (meaning once a sufficent pool of customers begin using OT in a given area) and OT becomes the portal for reservations from those customers, OT no longer sufficently increases the number of covers for a given restaurant. These covers become pooled between a top 3-5 restaurants in your bracket and then distributed based on table availability as people settle on food in order to placate their schedules. The customer cheapens the fine dining experience in the sense that rather than look for something truly special - they begin looking for something special enough.

It also destabilizes the restaurants relationship with regulars should the regular begin using OT as thsoe regulars are effectively rewarded for patroning elsewhere and provided ample opportunity and suggestions to do so.

Now, the same amount of money may be spent overall, but the money is effectively redistributed not only among the restaurants (once again based on timing - not on quality). In addition, a portion of each sale now goes to this broker.

For a customer, this seems like a win win, except that the restaurants in question have a few options to ensure covering this overhead:
1. cut cost
2. increase prices
3. decrease service levels (slightly) to optimize timing
4. increase physical table count

Those are all the halmarks of how one becomes the Wal-Marts of fine dining.
posted by Nanukthedog at 2:25 PM on November 15, 2010 [1 favorite]

How can it be that it's showing no openings online, but when I call, it's no problem?

Not every table in every restaurant in OpenTable is available via OpenTable. The French Laundry, for example, has a single table available for reservation via OpenTable; they obviously have more tables than that.
posted by asterix at 2:32 PM on November 15, 2010

The Bellman: As the author himself points out, the customer gets value from OT and the restaurant typically does not pass the cost on (otherwise there would not be so much complaining about OT eating into profit margins), so in fact the chances are that OT is increasing the number of tops reserved, at least at the margins.

I don't think I'm following your logic here. Do you really think that OpenTable increases the gross number of restaurant meals eaten on a given night in an area where many/most restaurants participate? I think that's probably not the case; it's more likely that participating restaurants are pulling some number of reservations away from non-participating restaurants. The higher the percentage of restaurants that participate in OT, the worse this problem probably gets, which is a nice little example of network externality (for the econ nerds among us).

The key question is how many reservations OT-participating-restaurants "steal" from those not participating. There's some proportion of diners that want to eat at Restaurant X, and would just call to make a reservation or walk in if OpenTable wasn't available. There's some other proportion that will only book through OT. I fall into the first group for the vast majority of my meals out in D.C., but about 4 or 5 times a year I have to book business lunches downtown and I'm definitely in the second group--I'm not going to call 20 restaurants and ask whether they have a table for four available for that afternoon at 1pm. I have no idea what the overall proportions of diners in each group are, though, and I bet restaurants have no clue either--which is why they are terrified of being left behind if they are the only ones that don't join.

Very, very good restaurants can probably get away with not using OpenTable but I can totally understand how a restaurant that faces a lot of competition of restaurants at a similar price-point, location, and reputation (like, say, metro-accessible restaurants that charge around $15-20 per entree for dinner) would be worried about taking a hit in volume if all their competitors join up but they don't. And from the pricing information above, it sounds like the sign-up fee and monthly costs are high enough that it probably doesn't make sense to dip your toes in the water and, say, only release a small number of tables on OT.
posted by iminurmefi at 2:38 PM on November 15, 2010

Why ARE restaurant websites almost universally bad? I can't think of any other industry where 9 out of 10 businesses have absolutely awful websites.

---

Yeah, this is really true. Awful flash openings, lame euro-electro audio tracks. All I want is a menu and a way to make reservations. That's all.

Running a restaurant is a difficult business to do profitably, and what are the odds that someone will be good at that and at running a web site? So the only restaurants (on average) that are likely to have good web sites are those that are owned and operated by large corporations, for whom restauranting may not be their only moneymaker, and who likely recognize the value of spending for a good web site. Meanwhile, restaurants owned by individuals and families and small businesses are either going to spend their money where they see more direct ROI, or they'll jump at the chance to get a free website when one of their employees volunteers to do it.

Also, restaurants are social businesses that thrive on face-to-face customer contact and repeat business. Web sites are good for drawing in initial business, but really do little to develop and maintain a relationship long-term. By comparison, when I call the local Thai place, they recognize my voice and know my default order, and when we stopped ordering for a bit to save money on eating out, the next time I ordered I got a huge hearty "welcome back, we were wondering if you folks moved away or something was wrong." That's what keeps a restaurant successful, when profit margins are low and business is local.
posted by davejay at 2:41 PM on November 15, 2010

Ironically, I don't go to Incanto precisely because my experience as a customer with reservations at Mr. Pastore's restaurant has been so bad. I live four blocks away and the price, decor, and menu are all a perfect match for me and my partner. But over two years I've called and gone for dinner four times there, and each time the service was rude. Impolite on the phone taking my reservation, rude at the maitre'd station when arriving, and bafflingly condescending service from waiters. It's too bad because the restaurant is doing fascinating things with salumi and offal. (They spun out Boccalone as a retail charcuterie provider.

This article is a great example of how a natural monopoly is bad for customers (in this case, restaurants). He's right about the monopoly power, too. At least in San Francisco, if a restaurant is not on OpenTable it is largely invisible to my usual "where should I go out with my friends" search. I use OpenTable a lot when travelling, too, and even in places where most restaurants aren't in OpenTable (Santa Barbara, St. Louis) I'll still prefer the OpenTable places for convenience.

My understanding from restaurants I've asked is that OpenTable charges a flat $1 / customer for reservations booked through their system. $10.40 / 4 top must include the cost of the reservation system. Which I understand adds real value over and above the online reservations part.
posted by Nelson at 2:47 PM on November 15, 2010 [2 favorites]

Running a restaurant is a difficult business to do profitably, and what are the odds that someone will be good at that and at running a web site?

Except other types of small businesses have good websites. Yes, smaller businesses are more apt than large ones to have particularly bad sites, but it's nothing like the nearly-universally-awful sites that restaurants have.

Also, other types of businesses tend to have "bad" sites that are, basically, clearly built by amateurs. Simple design, poor layout, basic HTML. Restaurants, however, have an infamous pattern of specific probems: Tons of flash, for example. It's not as simple as "restaurants are small businesses, which tend to have a similar level of quality in their sites."
posted by Tomorrowful at 3:07 PM on November 15, 2010

You know, this article bugs me just a little. There's no real data to back up the statement that "many restaurateurs quietly resent OpenTable", other than people he knows but won't identify.

How can it be that it's showing no openings online, but when I call, it's no problem?

It's up to the restaurant which tables they put on OT. I know many that only do reservations up to 4 people on OT, any higher and they want you to call. Unfortunately, if you're looking online OT itself will just show that no reservations are available.

My understanding from restaurants I've asked is that OpenTable charges a flat $1 / customer for reservations booked through their system.

Yeah, but if you access OT through the restaurant's website, it's only 25 cents per person, instead of one dollar per person.

I think the toughest thing about OT is that less expensive restaurants pay the same fees for everything, meaning OT eats a bigger hole in their profit margin. Here's an article in which a restaurant owner weighs the pros and cons of OT. (PS: he ended up going with OpenTable).
posted by oneirodynia at 3:10 PM on November 15, 2010

I see 5 restaurants listed in our little college town. I noticed that the prices are listed as $$, when they are, for this market, $$$$. Other restaurants that serve similar fare at similar prices are not listed.

I suspect this app is targeted at serving higher-end markets. There are more dollars per serving available for marketing, and conveniences to customers may be valuable to those customers.

If you are that type of customer, choosing to spend more per meal, or traveling with a liberal expense account, maybe business entertaining, then this seems like it could have it's uses.

The large reservation problem seems like it could be a particular issue where it would be easier to find a solution by choosing from a pool of listed available services, but preview seems to show that OT is usually removed from that trade by the restaurants themselves. Odd.
posted by dglynn at 3:19 PM on November 15, 2010

I'm amazed that any retail establishment working on a thin profit margin accepts Amex.

Because business travelers use (corporate) AMEX cards, and since they're spending Somebody Else's Money, they spend more while doing it.

The question is, what's worse: Losing 6% on that $100 sale, or having it go across the street where there's a sign that say "AMEX Welcome."

Note: If the result is that your profit margin drops too low, the correct answer is to lose the $100 sale....but if you're a hotel in a business area, if you lose AMEX, you lose.
posted by eriko at 3:40 PM on November 15, 2010 [1 favorite]

I recently went to a restaurant without a reservation and was turned away because they had no tables available. I stepped outside and checked opentable on my phone and saw they had a reservation available in 5 minutes! Booked it online and had a great meal with no wait. That restaurant was going to lose money either way, but it's a great story.
posted by jewzilla at 4:07 PM on November 15, 2010 [1 favorite]

Just checked out the website for the first time, a few things I noticed:

* Portland, OR isn't listed as a Featured Areas, they have no new style restaurants outside of Beast.
* At first I thought I mistakenly went to a parked domain website based on the design and color scheme.
posted by wcfields at 4:34 PM on November 15, 2010

Nelson: I couldn't agree with you more. More specifically to your point: The last time I made reservations at Incanto, they "lost" my reservation and we had to wait forever to get seated. OpenTable has never lost my reservation. OpenTable doesn't misspell my name. OpenTable has a field for special requests. As a consumer I love the service.
posted by analogue at 4:53 PM on November 15, 2010

Now, I could use Google on my phone and try, for example, "sushi." And it will give me maybe 10 options, with no ratings by other users, no price description, no consolidation of reviews for every restaurant that comes up, and I'd have to adjust the google maps range until it fits my walkable / drivable limitations.

Download the Yelp app if you have a smartphone. I haven't used OpenTable since I started using it. Your query is as simple as: "Nearby --> Restaurants --> Filter --> Distance + Open Now + $$$".

Calling to make a reservation is just touching the phone number. Way simpler than OpenTable or using the (inevitably terrible) restaurant website. Qype has an app that does similar stuff for London, as does TimeOut, I believe.
posted by benzenedream at 4:58 PM on November 15, 2010

I am a huge OpenTable lover. I live in NYC, there are a bizillion restaurants for me to consider going to here. Even if I am able to narrow it to "nice italian on the west side". I am never going to remember all the names, and I would never have the patience to look at all their menus. OpenTable will show me their names, let me click through to their website to see their menu, and saves me the hassle of calling 20 places to see who has a reservation. And it will draw me to new places because the barrier to find them, check out their dishes, and get a reservation is so low. If I didn't have OpenTable I would probably go to the same subset of restaurants all the time, occasionally adding a new super-hot one to the list, but only rarely.

And fwiw, almost all the restaurants I use OpenTable for (and I expect it to be available for) are fairly to very expensive. I'm not using opentable for cheap burgers, I'm using it for nice steaks.

I would be still be happy to use OT if it showed me availability but required a phone call. But these days, if I have to have a reservation, and I have to call you to get it, you'd better be really hot shit. Otherwise it just isn't worth my time.
posted by ch1x0r at 5:08 PM on November 15, 2010

Live in a major city. Never used OpenTable. Never had a problem eating in the restaurant I wanted. I've actually had worse luck with reservations than with just showing up, to the point that I've concluded that reservations are only for 6+ people on weekend nights. I wonder why my experience is so different from those who feel that OpenTable is indispensable.
posted by breath at 5:26 PM on November 15, 2010

This thread has really convinced me not to use Open Table, I really don't want it to get a foothold in my city.
posted by octothorpe at 5:32 PM on November 15, 2010

Data point: OpenTable is popular in L.A. but not indispensable, in my experience.

Can't restaurants restrict the number of tables made available through OT, thus benefitting from the listing but not screwing over their margins on every table? I know that sometimes I can't get a table on OT, but can by calling.

Also, if the industry hates the OT fee structure perhaps someone should set up a more cooperative venture (through a trade association?) that would aim at less profitability and offer participating restaurants options to offset the cost of the service by allowing the owner to mix booking fees (passed on to the diner) and profit sharing...a critical mass of restaurant operators might make the switch if there was a viable, less abusive alternative. Right now the alternative seems to be offering a booking system on one's own website, which obviously is a poor substitute for being part of a metropolitan search engine.
posted by snuffleupagus at 6:05 PM on November 15, 2010

I used OpenTable once a couple years ago to book reservations at a restaurant I go to semi-regularly (once or twice a year for the last few years) in my relatively major city (Seattle). It was ok. I didn't really notice any improvement in service or reservation quality over just calling the place -- actually, come to think of it, I remember being incredibly nervous that OpenTable was just pulling my leg and there wouldn't be a reservation waiting. I don't think I'd worry about that now.

Still, I think I prefer calling. I can tell from the phone call what kind of service is likely, and in the unlikely event that something goes wrong, I like that there is not an internet buffer between my annoyance and the cause of it. My internet experience in general tells me that online reviews are rarely from the moderate, meh side of the clientele, so I tend not to trust them anyway.

It's been a while since I looked at that site, though, so maybe I'll check it out again and give it another shot.
posted by Errant at 6:07 PM on November 15, 2010

I tried OpenTable once and still couldn't get a reservation at Dorsia.
posted by clearly at 6:33 PM on November 15, 2010 [2 favorites]

I don't want to call. I'm happy to make reservations online through a system that isn't OT. When I'm making reservations it's usually because I have several people coming with me, and I just want to see what my options are as to time and party size, and then let everyone decide. If I have to call, it's 'do you have reservations? okay, thanks, I'll call back". Or i make them and then cancel them. Which I feel bad about. It's like hotel reservations - I just want to know what my options are first. If OT is the easiest way for restaurants to be online, then $1/head doesn't seem bad to me. But what do I know.
posted by dpx.mfx at 9:17 PM on November 15, 2010

No, I have Prime and I order soap and toothpaste rather than go to CVS, but I've never had a problem calling a restaurant and having someone answer to take down my name. Is this perhaps something specific to larger cities?

No. It's specific to certain types of restaurants in larger cities, perhaps. For this article to lump together all restaurant operations regardless of size, complexity, and customer base is odd. Some restaurants have a dedicated staffer for reservations. Some have management handle it. Some rely more heavily on the host/hostess on duty. Some rely mostly on walk-ins but have Open Table anyway, presumably for the caché.

I've used Open Table, but don't feel like it's really much more convenient than calling and asking for a reservation.
posted by desuetude at 10:05 PM on November 15, 2010

Oh yeah, and if the food is worth it, diners will ignore the cruel denial of Open Table convenience.
posted by desuetude at 10:07 PM on November 15, 2010

I've used both OT and restaurants' own numbers/websites to make reservations at four star places; my best experiences have been at the places where I made them online. Two years ago, I called a place a month in advance for dinner on my birthday.

"I'd like to make a reservation for one for dinner at X pm on 5-22" "One for lunch?" "One for DINNER, please." The woman who answered the phone was a native speaker of English.
posted by brujita at 10:21 PM on November 15, 2010

Yeah, the benefit to me is that it has a database of all the restaurants. When I want to have a last-minute dinner with my sister who lives a half-hour away, I can use Open Table to find a restaurant exactly half-way between us that has seats, is serving the kind of food we want to eat, and has good reviews. It's super convenient, and I've ended up eating in restaurants because of it that I would never have discovered on my own.
posted by MythMaker at 3:45 AM on November 16, 2010

I've never heard of Open Table. But then again, the concept of reserving a table using the web sounds ridiculous to me. Just as a test, I tried to see what was available for my home town of Oxford. It came up with 7 restaurants, none of which I would want to eat at anyway. Maybe it's just me, but when I want to eat out, I just visit the restaurant I want to go to. If it's full I go to the next one. Never had a problem with that system before.
posted by salmacis at 6:07 AM on November 16, 2010

Maybe it's just me, but when I want to eat out, I just visit the restaurant I want to go to. If it's full I go to the next one. Never had a problem with that system before.

When you are taking a date to dinner, you want a little more plan than that.
posted by smackfu at 6:14 AM on November 16, 2010

Maybe it's just me, but when I want to eat out, I just visit the restaurant I want to go to...

it's not just you. I do that when outside of London.

Within London, that is also what I do when I want to grab some chow at a neighborhood place. Otherwise, much of this is done online.

To give you one example, go to the website of the Harwood Arms- which is a gastropub. It is in Fulham so I have no plans of walking by there. Click on 'Reservations' on the menu bar. Notice that there is no phone number and Opentable is provided as the only option.

Yes, that's London for you.
posted by vacapinta at 6:19 AM on November 16, 2010

Maybe it's just me, but when I want to eat out, I just visit the restaurant I want to go to. If it's full I go to the next one. Never had a problem with that system before.

This does not work in many major cities and even relatively smaller ones. When I lived in Boston, I passed too many Friday nights with my friends walking up and down Tremont St, and then Shawmut, and then Washington, until we found a restaurant that would seat us without a reservation. Usually the whole process took like 90 minutes and we swore up and down to never go out without a reservation again.

Is there any way to put a big red "THIS IS A CITY THING" flashing at the top of this page?
posted by telegraph at 7:39 AM on November 16, 2010

Here's an idea: Next time you're in an OpenTable restaurant, ask the manager if they would prefer you use OpenTable or call next time you need a reservation. That will tell you if their cost is overly burdensome.
posted by blue_beetle at 11:42 AM on November 16, 2010

Well, on the level of an individual booking where they already have OpenTable, it only costs the restaurant $1 if you book through their website. So I doubt the manager cares too much either way.
posted by smackfu at 12:34 PM on November 16, 2010

I really think opentable has been successful because making reservations is usually a pain. Tons of restaurants don't open until 5 and and if it's noon and you are trying organize a dinner with 5 of your friends for 6:30 everything has to be put on hold until you they open. And then you have to remember to call at 5, which you won't and it'll be 5:45 or you'll be on the road or on the subway, it's a mess. Then even after they open, half the time there is no one to pick up the phone. And then even if they do pick up the phone half the time the person on the other line isn't very friendly or it's so noisy you can barely hear them. Then they are usually booked anyway for the time and number of people you want.

Opentable is great because if you are trying to get a table for a decent amount of people on a busy night, you can search a couple dozen restaurants and find something that will work. This is especially true for big family dinners on things like holiday and graduation weekends. Getting a reservation is already a nightmare even with Opentable.

I am really glad to know that they charge per reservation though, I had no idea. That will make me seriously consider just calling the restaurant I want after I see that there is an open reservation online. Especially for the smaller restaurants.
posted by whoaali at 12:39 PM on November 16, 2010 [1 favorite]

It's worth noting that there has been considerable amount of short selling going on recently with the Open Table stock.

I would take any criticism and bitching about it right now with a grain of salt.

Honestly, I haven't used it since the '90s. It was cool when it launched, but I realized it's almost always quicker to call (San Francisco/Oakland). Same with online takeout ordering.

In my experience, Open Table works best in the kind of restaurants that need it least.

Exactly. If you don't care about the hyped/trendy restaurants, it's mostly unnecessary. There's always plenty of room at Souley Vegan. And if you don't like the music, you can eat next door at Beer Revolution.
posted by mrgrimm at 1:13 PM on November 16, 2010

Off topic question: Can someone tell me the name of the nice, slightly hand-drawn-looking smallcaps headline font on that Incanto site? I think it's being inserted by one of those Flash sIFR things I haven't used and I can't get a match on "What the Font". Highlighting the source with Firebug gets:

font-family:'IMFDPSC',Georgia,"Times New Roman",Times,serif;

"IMFDPSC" gets ZERO returns on Google. Any ideas
posted by planetkyoto at 5:09 PM on November 16, 2010

I think the article confuses 5% NET profit with the GROSS profit you could make by turning a table. No way you only make $10 gross profit on a $200 tab. So IF the service brings in a party where a table would have otherwise not turned, it's probably worth it.

If the restaurant is turning and burning all it can, it should consider dropping out of the service and see what it does to traffic.

The strategy of only having a few tables open to the service also sounds like a good one; eventually regulars might figure out that it's better to call direct once they've found the place.

Maybe the big takeaway is that if you're a first-class restaurant, maybe you need a first-class in-house reservation system on the web these days.
posted by randomkeystrike at 8:07 PM on November 16, 2010

Original article is factually incorrect. I don't think the writer understands what "incremental" means. The incremental cost is $1 per diner, or $4 in the 4-top example given.

I think he's adding a bit of the $199 monthly fee on to get to $10.40. I suspect he's trying to add a day's worth of service fee, as the math is close.
Daily service cost = (199 * 12) / 365 = 6.54

And adding the daily service cost to the $4 fee gives $10.54.
It would really only make sense to do the math like that if you were open every day of the year and had exactly one OpenTable booking a day.

So really instead of mis-stating the incremental cost, he should be saying that the OpenTable pricing system is designed for big restaurants that take a lot of bookings through their system, and isn't economical for small places. And they should definitely fix that.
posted by w0mbat at 10:44 AM on November 17, 2010