Opinion

Felix Salmon

It’s time for OpenTable to think about diners

By Felix Salmon
February 28, 2012

I’m a big user of OpenTable — I’ve used it to reserve three lunches just this week, and I’d use it to book dinner on Wednesday, too, if it wasn’t for the fact that the restaurant I want to go to doesn’t take any reservations at all. I like its reliability: I’ve been using it for over a decade now (my first reservation, according to the site, was in June 2001), and so far I’ve never had a reservation be lost. OpenTable’s particularly good for business lunches with someone you’ve never met before: you just give the name on the reservation at the front desk, you’re shown to your table, and there’s none of that weird shuffling around trying to work out who it is you’re supposed to be meeting.

All the same, for a hot San Francisco technology company, OpenTable does seem to be changing diners’ habits at a veritable snail’s pace. Even at restaurants with the OpenTable system installed, a large majority of diners still prefer to make their reservation by phone. And at reservation-accepting restaurants in general, just 12% of reservations are made online.

Using the telephone really doesn’t make much sense, most of the time, if you have the choice; Bret Easton Ellis once crafted an entire comic set-piece in American Psycho using nothing but restaurant reservations and call waiting. Maybe it’s just my natural misanthropy coming through, but I don’t like calling restaurants on the phone, and it seems to me that the only people who could credibly claim to prefer it are the elite who can drop the right names and make empty tables magically appear when they do.

So what’s preventing online reservation services from being more popular? Why do they still have such low market share? I think that OpenTable CEO Matt Roberts is more right than he thinks when he says that it’s a function of his service having to be sold, essentially, door-to-door, one restaurant at a time.

There’s a slogan online that “if you are not paying for it, you’re not the customer; you’re the product being sold” — and this, to me, is probably the main issue facing OpenTable. The company sees itself as selling reservations systems to restaurants, much more than it sees itself as selling convenience to diners. And as a result, OpenTable is having difficulty gaining traction in a world where social media is doing most of the heavy lifting when it comes to connecting our online and offline worlds.

For instance, it still insists that you use your unique OpenTable username and password to log in. It should, of course, be asking you to log in using Facebook, instead. Indeed, OpenTable should more or less live on Facebook, much as Farmville does, most of the time. And even when you go to a restaurant’s website, or to opentable.com, it should take just a couple of clicks to invite any of your Facebook friends to lunch or dinner. When they accept, that reservation should then turn up in their OpenTable account, as well as yours. Similarly, when you’re searching for a place to eat, and looking at the reviews from OpenTable diners, the site should show you where your friends eat and what they’ve said about the restaurants you’re looking at. Foursquare is miles ahead of OpenTable on this front, which is crazy; if OpenTable wants to encourage people to leave reviews, then a really good way of doing so is for those people to know that their reviews will be seen by, and useful to, their own Facebook friends.

For most of 2010 and the beginning of 2011, OpenTable’s stock went on an absolute tear, rising from $25 to over $115. A lot of that was misplaced excitement about OpenTable entering the deals space, I think, but the company absolutely should have used the currency of its highly-valued equity to make a big investment in consumer-facing communication generally, and social in particular. If OpenTable could make restaurant reservations fun and easy enough that people actually started eating out more, then the pushback from restaurants in terms of OpenTable’s cost would surely dissipate overnight.

Instead, OpenTable decided to double down on its restaurateur-facing strategy, wheeling out new software which makes it easier for the computer to combine tables on the fly, to create say a 4-top from two 2-tops, and also a new iPad app for owners giving them detailed analytics on their restaurants.

All that new flashy software is great, I’m sure. But as far as a consumer like me is concerned, I still get asked, the tenth time I’m making a reservation at one of my regular lunch spots — and after I’m logged in to the site — whether or not I’ve ever eaten at this restaurant before.

I’m not asking, here, for sophisticated Netflix-style algorithms which look at where I eat, and where my friends eat, and how I rate restaurants, and which then make personalized recommendations for me and which will give me hints as to where I might like to take a certain person for dinner. (That might be a bit creepy, actually.) I’m just asking for a level of polish and customer service from OpenTable which matches the service I get from OpenTable’s participating restaurants. Because it seems to me that if OpenTable wants more people to make use of its product, then it should probably work on getting more people to like that product. Right now, it’s a clunky utility, albeit one which is much better than the telephone alternative. It can, and should, do a lot better.

Comments
22 comments so far | RSS Comments RSS

Felix, why do you, like many others, assume that the entire world loves Facebook? I, along with many others, refuse to use Facebook due to their abysmal privacy policies, and would STOP using OpenTable should it migrate to Facebook. A much better partnership would be with restaurant review sites such as Yelp or Zagat.

Posted by mfw13 | Report as abusive
 

I’m with mfw13, if they insisted on logging in with Facebook, I would stop using OpenTable, which I try to use for every restaurant reservation.

And you should be careful what yo wish for. If you start logging into OpenTable with a FB account, your restaurant reservations may end up on your FB page.

While I like using OT, my wife would never do that. She would much rather call up – and I think lots of people still find it easier and faster to just call, rather than go to the computer (not everyone likes to use their small screen phones for internet activity) and log in. Becoming a part of Facebook will not make the process any easier.

Posted by KenG_CA | Report as abusive
 

I agree with the previous commenter: Facebook’s sign-on is evil evil evil. When you are logged into Facebook, or Google for that matter, these companies record effectively ALL of your websurfing because of how the “Like” and “+1″ buttons are designed.

Additionally, unlike a comment site, OpenTable needs significantly more information about their customers, including phone # and sometimes credit card #, that aren’t provided by Facebook/Google/Etc single-sign-ons, so they effectively need the user to create a local account anyway.

ADDING optional single-sign-on (like Reuters does for comment accounts) to their account structure is fine, but your “integration with facebook” provides very little benefit for OpenTable’s users OR customers.

Probably the bigger problem with OpenTable is its value-add for the restaurants is not nearly so great as it could be, because they charge so much!

You always go on about how “Cash clears at par”, well, phone reservations clear at par: You have the staff there anyway, so the net marginal cost of answering the phone and writing it in the book is low: the dish gets polished 30 seconds later and the infrastructure cost is three bucks a month from the local stationary store.

In contrast, a reservation through OpenTable costs $200 a month PLUS $1 a customer (for all booked through OpenTable) or $.25 for those booked on a link from the resteraunt’s page. (http://blog.opentable.com/2010/how-open table-works-for-restaurants/)

If you’re a $50/person meal with a 35% operating margin, this isn’t a problem, but is crippling if you are $15/person, especially if a lot of the reservations you get would be happening ANYWAY, but just booked through the web rather than a phonecall.

Posted by NicholasWeaver | Report as abusive
 

And another no-thanks on the Facebook idea…

My way of dealing with FB is to limit the amount of info I share there.

Broadcasting the details of my social and business life is not something I wish to do, so I would not use a service that required me to do so.

Posted by EdCone | Report as abusive
 

I agree with the sentiment of the post but your I think you’ve over simplified. For instance “OpenTable’s particularly good for business lunches” I agree but Felix we aren’t all journalists who swan about on facebook and twitter all day. Do you know how many businesses block any sort of Facebook functionality? I just can’t see it being as simple as you propose.

Posted by tkev1 | Report as abusive
 

There seems to be pushback against the facebook idea. Perhaps allowing an either/or would satisfy some of that.

What percentage of Opentable’s potential customers (or products) have even heard of Opentable? I’ve only heard of it from your blog, and don’t usually even remember the name from one mention until the next; I vaguely remember “there’s a unified restaurant reservation platform that Felix Salmon uses.” Perhaps it doesn’t make sense to get their name out, though, until they wouldn’t alienate new users with their interface.

Posted by dWj | Report as abusive
 

Count me as another Facebook single sign-on naysayer. I absolutely refuse to use my Facebook user credentials on any website other than Facebook itself. It’s a shame too, because there are several websites that I’d actually like to utilize that force you to use a Facebook account, so I just don’t end up using those sites.

Posted by spectre855 | Report as abusive
 

I’m curious about the FB sign-on “naysayers” since I’m considering a social network sign-on mechanism for my site. Is it specifically FB that you don’t want to use due to privacy/tracking concerns?, and do you have the same negative views towards LinkedIn, Twitter, etc..? Would it be okay to offer FB as an option, while also allowing local site registration?

As a developer that has integrated various social API’s I’ve discovered that only the FB API provides a users’ email once they’ve logged in via FB, while others such as Twitter and LinkedIn do not. This might explain why many sites are only integrating FB login.

Posted by cskelly | Report as abusive
 

I’d like to see better statistics about restaurant reservations. Obviously, more expensive restaurants are more likely to take reservations, and high prices means an older client base, which will take longer to adopt online reservations. In San Francisco, many restaurants only make a fraction of their tables reservable, so you end up calling to see if there’s a reasonable chance of walk-in, and you may make a reservation for a different time.

You are right about the user experience, but wrong in your solutions. Why do I even need to log into anything at Open Table? Why can’t I just give a name and cell phone number or email address?

And they are horrible when your ideal time is unavailable. They show some nearby times, but not the whole day, so you end up clicking around a bunch, and they don’t tell you the restaurant accepts walk-ins when it does.

Posted by AngryInCali | Report as abusive
 

I think the service costs the restaurant $1.50 per reservation. Also I think there are some upfront software costs. This may be OK for a multi-million dollar grossing NYC or LA restaurant, but for a mom and pop or a restaurant in a smaller market it is an excessive cost that can be a cost that can be considered dispensable. Many restaurants that I regularly visit or where I know the restauranteur always tell me to call first and to avoid OpenTable.

Posted by SyrahZin | Report as abusive
 

I agree with most of the anti-Facebook commentary. I almost always avoid signing in to other sites with Facebook because I don’t want a bunch of comments on articles or notes on what I’ve read showing up on my Facebook wall. I find Facebook’s privacy settings ambiguous enough that I often find myself checking my wall to see if said random stuff is showing up on my wall.

I also must say that I personally don’t agree with Felix’s view that calling restaurants is a hassle that serves no purpose. I don’t mind doing it because I don’t see any big time savings in using an online system, and some significant percentage of the time I have a question or specific request (for example, a menu question, or a question if the restaurant is full bar or beer and wine only, or a request regarding booth vs. table seating, or a request for a special dessert for someone’s birthday). I say this as someone with my own share of natural misanthropy regarding most services – I prefer shopping online when possible and can’t think of the last time that I actually went to a teller at a bank.

Posted by realist50 | Report as abusive
 

How hard is it to call a restaurant? I mean, sure, maybe for the very tiny percentage of restaurants that are difficult to get tables at, it can be a bit of a hassle, but doing it online doesn’t make tables more available. The reason OpenTable hasn’t been able to get most diners to use them is because most diners simply don’t need them.

And yeah, hooking them up to Facebook is a completely stupid idea.

Posted by Moopheus | Report as abusive
 

I see the same problem with Netflix. It’s ridiculous I can’t go on Netflix and see lists of my friends favorite movies or recent watches. Or just simply a best of 2010 list a la Spotify.

Posted by Metsox | Report as abusive
 

Felix, as you are a prolific Open Table veteran of 10 years, there are a couple of areas of your usage and thinking that I am interested in understanding. While the ability to make a reservation on-line has no doubt been a bonus to both customers and the restaurants themselves, as already commented, this convenience comes at a financial cost to the restaurant. I feel sure that if you suggested to restaurateurs that you could bring them new incremental business for $ 1 per cover, they would consider that good value to attract and hopefully retain new customers, creating greater long term business opportunities for them. However it is after this first incremental opportunity that the financial burden for the restaurant grows.
I am interested to learn if you make your reservations at your favourite restaurants that you visit regularly always directly through Open Table or by going via the restaurants own website ? If you are one of their customers already and care about the restaurant, why would you make them pay four times the price for you to have the convenience of using the Open Table portal rather than their own website, which also has an operating cost to them ?
The next obvious question therefore is would you be willing as the customer to pay a convenience fee directly to Open Table in the same way as you pay a convenience fee to take cash out of an ATM? The ATM provides a service to you on behalf of your bank but one where you personally pay for that convenience. Why should a restaurant be expected to provide a convenience for its customer’s but also be expected to pay it ?
The other similar analogy to this is the ticketing industry. When you buy your tickets for your favourite concert from Ticketmaster, conveniently via their website, the booking fee is charged to you the customer, not the artist or the promoter of the event. Indeed in most instances they make a further charge for the credit card processing fees. So once again the consumer pays directly for the convenience of the on-line service.
So in summary, I think the real reason that we do not have every restaurant offering itself as available for on-line reservations whether on Open Table or many of the other solutions out there is that the business model in play seems unique to the restaurant industry. I believe that if the burden of cost was moved to the consumer like every other industry I can think of, then every restaurant would happily offer the on-line reservation convenience with the knowledge that it would not become a financial burden to their business.

Posted by deepinthought | Report as abusive
 

@cskelly, I can only speak for myself but realist50′s comment above pretty much sums it up for me. I like the idea of a single internet sign-on but in the case of Facebook, there’s the very real possibility that my using this sign-on is going to end up sharing whatever I do on that site with my entire “friends” list.

I don’t want everyone on my list to know that I’m not going to be at my house from 8-10PM tonight for a dinner reservation. Just like a lot of people didn’t want everyone on their list to know that they were listening to the Backstreet Boys but Spotify’s Facebook integration helpfully made that happen for them.

Posted by spectre855 | Report as abusive
 

@Metsox, because a lot of people would find that invasive. I don’t want my work colleagues (some of whom are friends on Facebook) to know that I like to watch Japanese Anime and raunchy stand up comedy. The second that there was even a possibility that those things could be shared with people that I know personally, I’d cancel Netflix.

Posted by spectre855 | Report as abusive
 

Facebook is just the “in” thing for journalists because of the IPO. Felix will move on to another tech toy soon after that. Notice that he hasn’t used Foursquare in quite a while; he’s really just a trend junkie.

Posted by Curmudgeon | Report as abusive
 

I use OpenTable whenever possible, and have found restaurants in cities I was visiting, and even some restaurants in my own town (in neighborhoods I was going to some event in, and hadn’t previously spent much time in) through them.

I largely agree with the anti-Facebook sentiment. It’s one thing to offer a button to share a review on Facebook; you could even offer FB login. I would not be pleased if it were required.

Posted by Auros | Report as abusive
 

OpenTable is very convenient but in my experience not the best way to get a reservation, especially when trying to book last-minute or at popular restaurants. I’ve finagled reservations out of Maitre d’s on “fully booked” nights many times despite OpenTable’s insistence that there were no tables. Speaking with a live person offers a level of flexibility and information that you just can’t get from booking online: “We’re all booked for tonight, but let me see if I can squeeze you in at 9:30. I could also reserve seats for you at the bar if you’d like.”

Besides, the real-life American Psycho example aside, does it really take that long to pick up the phone and call?

Posted by TangleStraight | Report as abusive
 

This is another vote against integrating Facebook and OpenTable. FB is way too intrusive. Whenever I visit a FB or FB laden page I feel the same way I do when I’ve accidentally linked to some Russian porn site. I slam close the window before it can download too much malware or some onBlur handler does something nasty to me. FB is really creepy.

I have been using OpenTable for at least five years, and I like the convenience, especially when making tentative plans where I might have to cancel. A lot of my trips are like those little puzzles where you have to back out one tile from the solution. I agree that OT has a crummy interface. I can’t just check restaurant R in city C on date D. I have to go through a multi-level menu rigamarole to choose the city first.

The $2400 marginal cost is not that crazy. I rent a vacation cottage and pay about $1000 a year to various rental sites. I consider it a form of advertising. How much newspaper space or food blog space can I buy for that? Even better, if someone is at OT, they are already planning to buy a restaurant meal. Perhaps various restaurants consider OT to be a reasonably priced advertising expense.

There are also those restaurants who roll their own reservation system, and some of them are quite good. Tamarind Tree in Seattle even lets you specify a table. Some are awful. A number of other restaurants are using Urbanspoon, except that Urbanspoon only lets you book one meal a day, so if you also want lunch, you are out of luck.

Posted by spiffy76 | Report as abusive
 

Every single thing that this article says OpenTable should do, is done by RestaurantConnect. It’s the best thing that ever happened to restaurants. Most importantly, it’s competition for OpenTable (when you’re the only option you don’t have to be a good option), it’s much less expensive (it doesn’t charge restaurants online reservation fees), and it’s a more intuitive, better system (created by a man who has spent his life running restaurants).

Posted by Restaurateur | Report as abusive
 

I felt the same way about OpenTable, but then I saw this article and it really gave me a new perspective on how I can use OT in my restaurant. http://www.vsag.com/news/index.php/2010/ is-opentable-worth-it-founding-farmers-s ays-yes

Posted by skippymcgee | Report as abusive
 

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