The story of OpenTable versus the restaurants

A recent post to Incanto’s website answers the question often asked of the San Francisco eatery “Why are you not on” For those of you that don’t know OpenTable is a restaurant reservation service. The case against Incanto accepting OpenTable is, in summary, that OpenTable takes too much away from the bottom line and also shifts customer loyalty away from the individual restaurant, replacing it with customer loyalty to OpenTable.

Put another way, the real cost of OpenTable goes beyond just the monthly fee and the per-reservation fee. The cost is also the ownership of  the customer relationship, which no longer belongs to the individual restaurant. At first glance one thinks “the restaurants are nuts to pay for the alienation of customer loyalty” and this is distressingly close to the truth.

I don’t disagree with the general principle of being able to book a restaurant reservation via the Web. However, I agree with Incanto and others that OpenTable’s lofty goals have been overrun by greed, especially now that it is a public company. If OpenTable were to place more emphasis on helping individual restaurants succeed, and encouraging loyalty to specific restaurants instead of merely its own reservation service, my opinion might be different. But for now, my advice is for restaurants to close the book on OpenTable and do what Incanto has done: offer reservations via its own website.

4 thoughts on “The story of OpenTable versus the restaurants”

  1. The thing is that with the OpenTables Electronic Reservation Book, restaurants have more information on their customers then they have ever had and OT gives them plenty of tools to enable the restaurants to reach their customers directly, taking advantage of that information. Smart restaurants use this capability to their advantage. No restaurant is going to succeed of fail specifically because of OpenTable, they will do so because of their service, food, marketing and ambiance. I think its a cop out to say OT is only out for itself. Some responsibility has to be put onto the restaurant to make sure it provides a good product and takes advantage of all of the tools that OpenTable provides to them.

    Don't misunderstand me though, OpenTable is a for profit company thinking about its long term prospects. So its like not going to try to shoot itself in the foot. My $0.02 anyway.

    1. I'd defer to the actual experience of restaurants such as Incanto on this, but I don't see a whole lot OT can do that the restaurant itself could not do with a loyalty/frequent diner program tied into its website instead of OT's. I doubt the gain the restaurant may see from OT outweighs the surrender of the customer loyalty and relationship to OT, on top of the fees paid by the restaurant. Now, maybe in some cities there's more potential for profit than what the author of Incanto's blog/website post says is the average (5%).

      Don't get me wrong. Lousy restaurants will fail one way or another, just like any other type of lousy business. I'm not saying any restaurant's failure is OT's fault. But I have to wonder how many restaurants would gladly dump OT if they weren't locked in by fear they'd lose their regular customers. Remember, when using OT, they own the customer relationship, not the restaurant.

      1. How does OT own the customer relationship? That to me is like saying 20 years ago that the yellow pages owned the customer relationship. I get more emails from restaurants that I have been to then I do from OT. All OT is is a tool for me to book something, but when a restaurant has a seasonal dish or some other change to their menu, many send emails to their guests directly. Plus, when I walk into a restaurant, they know what table I like, who my favorite server is and if I like red wine. OT doesn't know that and can't act on that. A good experience doesn't make me go back to OT, a good experience makes me want to go back to that restaurant.

        And you are right. Any restaurant that wants to develop its own site and technology and support it, back it up, make it easy for consumers to book online, should do it. Some have. But almost every restaurant I go into and ask them how their OT system is treating them, always says positive things. I rarely ever even get neutral comments. There are probably some restaurants that have had a bad experience, but that is not what I hear as a main theme when I talk to them.

        1. It's funny that Mark Pastore (who wrote the post on Incanto's site) appears to have had almost the opposite experience that you had. Only one of the owners he spoke to (out of "a dozen or so") was happy with OT; the rest were "less than happy." He asked in San Francisco and New York; in what cities did you make your inquiries?

          With regard to OT owning the relationship, OT offers its own loyalty programs and does not specifically (as far as I know) reward loyalty to any one restaurant or even group of restaurants under the same ownership. My impression is that restaurants lose access to customer info available via OT, if and when they quit paying OT. If this impression is wrong I can accept that.

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