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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 i

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.

natrius 16y ago
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.
- RockyMcNuts 16y ago
  is the time the restaurant owner spends taking and canceling reservations worth something? is the time the user spends calling to check for availability worth something? we've become that skeptical about technology around here? we really don't think that the convenience of checking availability on your mobile device is good for diners and helps people go out more and find better places to go? whether it helps or hurts restaurants really boils down to whether you view it as a tax on the business, or a source of efficiency and a better product. If you view it as a tax, which seems a little pessimistic, who pays the tax is a question of whether demand is elastic or inelastic. If the demand is inelastic, the restaurants can raise prices to cover the tax. If demand is elastic, they can't. What that suggests is OpenTable helps the restaurants that are oversubscribed with reservations all the time, since they can pass along costs, and it helps them manage things more efficiently, keep tables filled, send email reminders so people remember to cancel. Also if you're Internet savvy there are good marketing opportunities. It probably doesn't help the others much. So they feel they are being dragged kicking and screaming into the 21st century and saddled with a cost and something they have a hard time using and complain about it. This seems awfully like a startup seeing a need and filling it. It's hard to see evidence of a nefarious monopoly and market failure, unlike Ticketmaster which locks everyone in with anticompetitive agreements. If this kind of startup is a slippery slope to disaster, a lot of smart people are wasting a lot of time with this fancy technology.
  - natrius 16y ago
    The problem is the OpenTable, the reservation management system, is intertwined with OpenTable, the consumer-oriented reservation portal. Restaurants that are oversubscribed can easily switch from OpenTable without losing business, because they only care about reservation management. In fact, I'd guess that the more popular the restaurant, the more likely OpenTable is to give you a discount so they can beenfit from the network effects. Everyone else is losing out because they're paying to gain access to customers who are using the reservation portal, but would've been customers anyway if it didn't exist. A third-party, back-end agnostic reservation portal would be better for everyone. The best portal would win, and the best reservation management system with the lowest prices would win. It is a market failure, though it will probably resolve itself eventually.
- hugh3 16y ago
  So what we're saying is that there's a huge business opportunity for anyone who can gain traction while undercutting OpenTable significantly (say, from $1 per reservation to 20 cents per reservation)?
  - natrius 16y ago
    Yes, but I think the only way to get people to use it is if they don't have to create yet another account just to reserve a table. Let people put in their phone numbers and text to confirm. You'd also probably want to partner with Yelp if they're not already working on something similar. I'm guessing that OpenTable is so popular with restaurants because customers use it to find open tables at a particular time, so the network effects matter. Yelp gives you a leg up there.

natrius 16y ago

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.

RockyMcNuts 16y ago
is the time the restaurant owner spends taking and canceling reservations worth something? is the time the user spends calling to check for availability worth something? we've become that skeptical about technology around here? we really don't think that the convenience of checking availability on your mobile device is good for diners and helps people go out more and find better places to go? whether it helps or hurts restaurants really boils down to whether you view it as a tax on the business, or a source of efficiency and a better product. If you view it as a tax, which seems a little pessimistic, who pays the tax is a question of whether demand is elastic or inelastic. If the demand is inelastic, the restaurants can raise prices to cover the tax. If demand is elastic, they can't. What that suggests is OpenTable helps the restaurants that are oversubscribed with reservations all the time, since they can pass along costs, and it helps them manage things more efficiently, keep tables filled, send email reminders so people remember to cancel. Also if you're Internet savvy there are good marketing opportunities. It probably doesn't help the others much. So they feel they are being dragged kicking and screaming into the 21st century and saddled with a cost and something they have a hard time using and complain about it. This seems awfully like a startup seeing a need and filling it. It's hard to see evidence of a nefarious monopoly and market failure, unlike Ticketmaster which locks everyone in with anticompetitive agreements. If this kind of startup is a slippery slope to disaster, a lot of smart people are wasting a lot of time with this fancy technology.
- natrius 16y ago
  The problem is the OpenTable, the reservation management system, is intertwined with OpenTable, the consumer-oriented reservation portal. Restaurants that are oversubscribed can easily switch from OpenTable without losing business, because they only care about reservation management. In fact, I'd guess that the more popular the restaurant, the more likely OpenTable is to give you a discount so they can beenfit from the network effects. Everyone else is losing out because they're paying to gain access to customers who are using the reservation portal, but would've been customers anyway if it didn't exist. A third-party, back-end agnostic reservation portal would be better for everyone. The best portal would win, and the best reservation management system with the lowest prices would win. It is a market failure, though it will probably resolve itself eventually.
hugh3 16y ago
So what we're saying is that there's a huge business opportunity for anyone who can gain traction while undercutting OpenTable significantly (say, from $1 per reservation to 20 cents per reservation)?
- natrius 16y ago
  Yes, but I think the only way to get people to use it is if they don't have to create yet another account just to reserve a table. Let people put in their phone numbers and text to confirm. You'd also probably want to partner with Yelp if they're not already working on something similar. I'm guessing that OpenTable is so popular with restaurants because customers use it to find open tables at a particular time, so the network effects matter. Yelp gives you a leg up there.