Open Table: Threat or Menace?

By
Image

Nothing? Really? People answer restaurant phones for free? Sure, it’s just one more part of the job for staff at some smaller places, but larger restaurants often have dedicated staff answering phones, or at least people for whom it’s a major part of their duties, so it certainly costs something.

When you book a table through the Open Table website, the restaurant is charged $1 per seated guest — so if you show up as a foursome, that’s $4 off the restaurant’s bottom line… And if you call the restaurant and make the reservation human voice-to-human voice, that costs the restaurant nothing.

Nothing? Really? People answer restaurant phones for free? Sure, it’s just one more part of the job for staff at some smaller places, but larger restaurants often have dedicated staff answering phones, or at least people for whom it’s a major part of their duties, so it certainly costs something.

Image

The premise of the article seems to be that restaurants feel compelled to use Open Table because other restaurants do, but wish they didn’t have to and it’s all a big drain on their business:

Restaurants would love it if you’d call them for reservations, even as an ever-increasing number of them pay Open Table for each online reservation plus equipment installation and a monthly “subscription” fee to help them manage their reservations and fill seats. After all, restaurants operate on tight margins, so those expenses will be reflected in the prices.

Okay, but is that because a higher proportion of a static customer base number is using Open Table— or because Open Table is growing her customer base? One’s costing you money, the other’s making you money, so it kind of matters which it is. These questions aren’t really addressed in more than generalities, but we have a hard time believing that they’re not part of Open Table’s standard sales pitch, and thus would provide some context for whether or not the sums being paid are producing value for the restaurants who are their customers. Compared to Groupon’s sometimes ruinously large piece of the action, Open Table’s flat rate service seems like a very straightforward model that could well be worth what it costs. But we don’t really get that argument, pro or con.

But anyway, why do they do this expensive and self-destructive thing? Because there’s another side of Open Table which the article doesn’t really address: it’s not just a reservation service. It’s also a form of marketing, extremely effective at targeting potential customers at the precise moment that they want a reservation and needs to see what’s available. The point of Open Table is not just that it takes reservations, it’s that it moves reservations a restaurant wouldn’t have gotten otherwise. How many? Does it pay off? For some types of restaurants but not others? The answers are frustratingly elusive in the piece:

[Sarah] Stegner’s restaurant has an older demographic than many in the city, so she estimates that 20-25 percent of Prairie Grass’s reservations are being made via Open Table, but she’s still paying more for the service each year because that percentage (and thus the number of reservations charges) keeps rising.

Okay, but is that because a higher proportion of a static customer base number is using Open Table— or because Open Table is growing her customer base? One’s costing you money, the other’s making you money, so it kind of matters which it is. These questions aren’t really addressed in more than generalities, but we have a hard time believing that they’re not part of Open Table’s standard sales pitch, and thus would provide some context for whether or not the sums being paid are producing value for the restaurants who are their customers. Compared to Groupon’s sometimes ruinously large piece of the action, Open Table’s flat rate service seems like a very straightforward model that could well be worth what it costs. But we don’t really get that argument, pro or con.

But anyway, why do they do this expensive and self-destructive thing? Because there’s another side of Open Table which the article doesn’t really address: it’s not just a reservation service. It’s also a form of marketing, extremely effective at targeting potential customers at the precise moment that they want a reservation and needs to see what’s available. The point of Open Table is not just that it takes reservations, it’s that it moves reservations a restaurant wouldn’t have gotten otherwise. How many? Does it pay off? For some types of restaurants but not others? The answers are frustratingly elusive in the piece: