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OpenTable: The Online Reservations That Restaurants Love to Hate

nytimes.com

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Re: OpenTable: The Online Reservations That Restaurants Love to Hate

#4

Post by RockyMcNuts »

If it didn't help their business, they wouldn't be on the system.

It's an ultracompetitive business. I'm sure any restaurant owner thinks he'd be doing great if it wasn't for credit card fees and rapacious landlords and city codes and taxes and whatnot. But if those went away the business environment would still get as tough as it needs to get to keep out the non-hackers.

Re: OpenTable: The Online Reservations That Restaurants Love to Hate

#7

Post by natrius »

RockyMcNuts wrote: post #4

If it didn't help their business, they wouldn't be on the system. It's an ultracompetitive business. I'm sure any restaurant owner thinks he'd be doing great if it wasn't for credit card fees and rapacious landlords and city codes and taxes and whatnot. But if those went away the business environment would still get as tough as it needs to get to keep out the non-hackers.

That's what I thought until someone pointed out the prisoner's dilemma aspect of the situation. Using OpenTable makes a restaurant more profitable in isolation, but when everyone's using OpenTable, they're all worse off than they would be if no one was using it. This assumes that OpenTable doesn't significantly increase the number of restaurant-goers overall, which I think is accurate.

Re: OpenTable: The Online Reservations That Restaurants Love to Hate

#8

Post by joe_the_user »

waterlesscloud wrote: post #3
joe_the_user wrote: post #2

Call me cheap... $1 per reservation does sound like quite a hit for a low-margin business.

It's $1 per seat reserved, so 4 people is $4.

Woah,

That's about half the tip at the cheap restaurants I go to, so I assume it would be a quarter of the tip at the "good" places.

Now, as I recall the help gets, on average, half their income from their tips.

So, yeah, that's a nice income indeed and you might see why a few folks aren't happy...

Re: OpenTable: The Online Reservations That Restaurants Love to Hate

#9

Post by anonymous246 »

joe_the_user wrote: post #2

Call me cheap... $1 per reservation does sound like quite a hit for a low-margin business.

That's exactly what I thought; however the blog article linked from the nytimes pieces has some interesting info:

``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 approximately $10.40 for each “incremental” 4-top booked through OpenTable.com. To put that in perspective, consider that the average profit margin, before taxes, for a U.S. restaurant is roughly 5%. This means that a table of 4 spending $200 on dinner would generate a $10 profit. In this example, all of that profit would then go to OpenTable fees for having delivered the reservation, leaving the restaurant with nothing other than the hope that that customer would come back (and hopefully book by telephone the next time).''

http://incanto.biz/2010/10/22/is-opentable-worth-it/

Re: OpenTable: The Online Reservations That Restaurants Love to Hate

#10

Post by joe_the_user »

anonymous246 wrote: post #9
joe_the_user wrote: post #2

Call me cheap... $1 per reservation does sound like quite a hit for a low-margin business.

That's exactly what I thought; however the blog article linked from the nytimes pieces has some interesting info: ``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 approximately $10.40 for each “incremental” 4-top booked through OpenTable.com. To put that in perspective, consider that the average profit margi…

Not sure where the `however` comes in ... the OpenTable hit just looks bigger...
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