As a diner, when you think about OpenTable, you probably think about the convenience of booking restaurant reservations online (as we hope you do!). However, recent buzz has led some diners to wonder, “Is OpenTable as good for my favorite restaurants as it is for me?” Well, we certainly believe so, and here’s the how and the why.
OpenTable’s most popular product for restaurants is our Electronic Reservation Book, which replaces the traditional pen-and-paper reservation book. It’s the touch-screen system you see when you check in at the restaurant’s host stand. Long before most diners had discovered OpenTable.com, restaurants purchased our Electronic Reservation Book to help them manage reservations, assign tables, recognize repeat diners, and remember your preferences. Restaurants pay a $199 monthly subscription fee, which includes our software, unlimited upgrades, the touch-screen computer system, and customer support. In addition, there’s a one-time installation fee, which covers on-site installation and training and custom configuration of the system.
For online reservations, we charge a pay-for-performance fee of $1.00 per seated diner booked on OpenTable.com or $0.25 per seated diner booked via the restaurant’s website. And for the typical restaurant, it takes only three incremental reservations to break even on the complete monthly OpenTable cost.[i]
We also recently introduced a web-based product that caters to restaurants that don’t require all of the operational benefits of our Electronic Reservation Book. This product provides restaurants with access to the OpenTable network of diners as well as online reservation booking capabilities for their own websites.
So, is OpenTable a good value for restaurants? Do we help improve restaurants’ bottom lines? In a word, yes.
In addition to helping restaurants run their operations, OpenTable helps restaurants attract incremental guests. And, by helping our restaurant partners fill seats that might otherwise have gone empty, we help them make more money. This is because a large portion of a restaurant’s expenses are fixed — they don’t go up as a restaurant serves more guests. For example, whether the dining room is half full or there’s a line out the door, a restaurant pays the same amount in rent and must have minimum staffing in place for the floor and kitchen. By spreading the overhead costs over a larger number of paying customers, restaurants make more money.
Think about an airplane that takes off half full. That airplane still has the same equipment and personnel costs as a full plane. So every empty seat represents a lost revenue opportunity for that airline just as every empty chair represents a lost revenue opportunity for a restaurant. Filling more seats generates more profits. And OpenTable helps fill more seats.
We hope this helps you better understand how we help to connect diners with open tables at more than 15,000 restaurants around the world. If you’re hungry for additional information and a restaurant’s in-depth perspective on the revenue-generating value of OpenTable’s products and services, chew on this blog post: Is OpenTable Worth It? Founding Farmers says ‘Yes’! by Dan Simons of VSAG, owners and operators of two restaurants on the OpenTable network.
[i] The typical restaurant gets a positive return on its monthly OpenTable investment with only 3 incremental reservations each month. OpenTable Costs: $199 monthly fee + (3 Incremental reservations x 3 diners/reservation x $1 per diner fee) = $208; Restaurant Gross Margin: $42.50 per diner check x (1 -35% cost-of-goods) x 3 incremental reservations x 3 diners/reservation = $249