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Is OpenTable Worth it?

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Re: Is OpenTable Worth it?

#31

Post by draebek »

aaronbrethorst wrote: post #26
neilc wrote: post #25

Earlier quoted context omitted.

[If] you're not on Urbanspoon's Rez system or on OpenTable, you may as well not even exist. Perhaps to you, but I think that attitude is rare. I think most people find a place where they'd like to eat, and then they choose the easiest way to make a reservation -- the difference in convenience between Opentable and the telephone is pretty small. If I'm going to spend $$ on a nice meal, finding a good place is my prior…

Yes, that is my opinion. I don't doubt that I'm in the minority. Still, for me, OpenTable or Rez support is critical. My girlfriend and I will routinely pick a place to eat on a Friday or Saturday 30 minutes before we intend to eat. I don't like having to call a half-dozen places in order to get a table, and I wouldn't have much choice without these systems. If the restaurant is unable or unwilling to report their tr…

> My girlfriend and I will routinely pick a place to eat on a Friday or Saturday 30 minutes before we intend to eat. I don't like having to call a half-dozen places in order to get a table, and I wouldn't have much choice without these systems.

It never even occurred to me to try and make reservations _30 minutes_ before I want to go eat. Interesting concept. I usually just aim to only go places where I know I'll be seated very quickly, or else get take out.

Re: Is OpenTable Worth it?

#32

Post by js3309 »

netaustin wrote: post #14

You know, Yelp should cut off its relationship with Opentable and just jump into this business itself and charge either no fee or a nominal fee to restaurants (basic vs. pro). This would solve a big problem for Yelp; if Yelp could save restaurants from the crushing cost of reservations, restaurants would be more inclined to forgive Yelp for allowing us "bored, jobless layabouts" to trash them in a public forum ( http…

The reason they have a special relationship is because Benchmark Capital is a investor in both.

It is a overvalued company when it IPOed and especially now since some of the metrics are ridiculous.

Its P/E ratio is 127.5. Time to short Open.

Re: Is OpenTable Worth it?

#33

Post by jakarta »

d2viant wrote: post #19

This is an interesting opportunity to profit from. This company has massive expectations baked into it's stock price (NASDAQ: OPEN), trading at over a hundred times earnings. It's being massively shorted by the hedge funds. Combine the fact that there's relatively no barrier to entry with the rumors that their customer base isn't very satisfied makes for a huge opportunity to profit in the short/medium term.

That's basically the essence of capital cycle theory isn't it?

Wherever you see high valuations and high returns on capital, competition is bound to come in, which gradually reduces returns and valuations.

Re: Is OpenTable Worth it?

#34

Post by krosaen »

d2viant wrote: post #19

This is an interesting opportunity to profit from. This company has massive expectations baked into it's stock price (NASDAQ: OPEN), trading at over a hundred times earnings. It's being massively shorted by the hedge funds. Combine the fact that there's relatively no barrier to entry with the rumors that their customer base isn't very satisfied makes for a huge opportunity to profit in the short/medium term.

No barrier to entry? Don't they outfit each customer with a complete table management system including the hardware?

Re: Is OpenTable Worth it?

#35

Post by philtoronto »

tptacek wrote: post #7
philtoronto wrote: post #5

I want to call shenanigans on the profit margin in the restaurant business being 5%... OK, shenanigans.

Based on the 2004 Restaurant Industry Operations Report published by Deloitte & Touche LLP, average pre-tax profit margins range from 4-7% (4% for Full... Literally in the article summary right there on the first result of the SERP [restaurant profit margin].

I was ignorantly assuming they meant gross. You're right.

Re: Is OpenTable Worth it?

#36

Post by d2viant »

krosaen wrote: post #34
d2viant wrote: post #19

This is an interesting opportunity to profit from. This company has massive expectations baked into it's stock price (NASDAQ: OPEN), trading at over a hundred times earnings. It's being massively shorted by the hedge funds. Combine the fact that there's relatively no barrier to entry with the rumors that their customer base isn't very satisfied makes for a huge opportunity to profit in the short/medium term.

No barrier to entry? Don't they outfit each customer with a complete table management system including the hardware?

That's not a huge barrier though. The restaurant didn't have some outlay of capital for that hardware that is going to motivate their decision to switch. When they cancel their OpenTable contract, they'll just send the hardware back.

This seems like an opportune space for a startup to compete in. You could easily sell the online reservation service for a fraction of what OT is charging and just skip the hardware nonsense. The hardware and table management system could be a separate product or service.

Re: Is OpenTable Worth it?

#37

Post by mdon »

"That’s ultimately the most perplexing thing about OpenTable: unlike so many other Web services, this one has actually driven up operating costs, not reduced them."

How much do restaurants pay to accept phone reservations? It seems the cost comes from running two reservation systems - hiring a person to accept traditional phone calls, and paying OpenTable for the online reservation system.

Re: Is OpenTable Worth it?

#38

Post by gphil »

d2viant wrote: post #19

This is an interesting opportunity to profit from. This company has massive expectations baked into it's stock price (NASDAQ: OPEN), trading at over a hundred times earnings. It's being massively shorted by the hedge funds. Combine the fact that there's relatively no barrier to entry with the rumors that their customer base isn't very satisfied makes for a huge opportunity to profit in the short/medium term.

> It's being massively shorted by the hedge funds.

Just out of curiosity, who are "the hedge funds" and how do you know this? Is there some way of researching who is shorting what?

Re: Is OpenTable Worth it?

#39

Post by jasonjei »

I think there definitely is an opportunity to remove OpenTable from the equation. Look at restaurants like Momofuku Ko's annoying reservation system, where their in-house .NET reservation system books out within 3 seconds after 10am ET for 12 seats (24 covers a night), and seat inventories are only released 6 days in advance. Momofuku almost never starts a restaurant project without it now (e.g their buttermilk American free range fried chicken and Korean fried chicken).

It created lot of hype by becoming the anti-OpenTable. Read about the complaints of this reservation system on NYT, Departures, etc. Major food editors still have been unable to review the restaurant simply because their inventory allows for no special favors.

Of course, anyone with Mechanize and scripting language of choice can do high-frequency reservation bookings.

However, OpenTable does have a huge following, and its followers like to redeem OT points for cash. Which is why restaurants are hesitant to remove it for customers that will only eat at OT restaurants.

Re: Is OpenTable Worth it?

#40

Post by gphil »

One thing I've noticed about OpenTable is that usually when I can't make a reservation through their service (e.g. when it says there are no available times left) I can still call the restaurant and be accommodated. After doing this a few times now, it's made me wonder about the value-added for the restaurant-goer as well as for the restaurant. It seems like in these situations, OpenTable is just getting in the way of the restaurant-customer relationship to the detriment of both.
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