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OpenTable has no effective competitors (for now?) - they'll be making this many bookings for the foreseeable future. That's $14 per booking... divided by how ma

OpenTable has no effective competitors (for now?) - they'll be making this many bookings for the foreseeable future. That's $14 per booking... divided by how many years you think OpenTable will continue to hold the reservation throne. Considering that they don't really have a real competitor right now, even if the OpenTable killer is being worked on right now, it'll be a while yet before they actually threaten OpenTable's numbers.

joezydeco 12y ago
Nick Kokonas of Alinea/Aviary summed up the threat to OpenTable in his recent post about his restaurant ticketing system[1]: "At one time it was definitely the case that if I were looking for an Italian restaurant in a certain neighborhood I would consult OpenTable, read the reviews, and book directly. Now I just use Google or Google Maps. Google of course knows this and that’s why they bought Zagat. I’d bet Google will soon begin the reservations game as part of Zagat ratings." Could Google deliver a reservation system to restaurants without renting them hardware and nixing the $14 customer charge? Sure. Could they even pay for the hardware out of their own pockets to get traction and dump a pile of Nexus tablets in every store? Absolutely. Perhaps OpenTable management realizes this and figures this is a good time to exit. [1] http://website.alinearestaurant.com/site/2014/06/tickets-for-restaurants/ http://website.alinearestaurant.com/site/2014/06/tickets-for...
- potatolicious 12y ago
  OpenTable isn't just a reservation system, it's a full-on restaurant management system. They've seen this possibility coming and they're reasonably well positioned to deal with it. OpenTable only does reservations when facing the diner, but when facing the restaurant they do reservations, CRM, payments, table tracking, and analytics. Whoever wants to replace OpenTable needs to replace all of this at once. Not only that, they need to convince a restaurant to ditch practically their entire IT stack, retrain all of their employees in the new system, and do so without service or quality interruption. OpenTable has positioned themselves to be about as sticky as you can imagine a software business to be. They've locked in their vendors hard. Evil? Probably. Very effective? Hell yeah. It's not as if no one's challenged OpenTable before - there are in fact a number of restaurant management startups out there, but none can even dent OpenTable's dominance due to the lock-in. Google couldn't take out OpenTable even if they tried, not without burning a pile of cash taller than this current purchase price.
  - deleted 12y ago
    [deleted]
  - frogpelt 12y ago
    You sound pretty convinced. But it is almost never the case that a product or service is insulated from competition. And I completely disagree that for competitors to emerge they MUST do everything that OpenTable does. They only have to offer a couple of features that OpenTable doesn't. Or do one thing better or cheaper.
    - potatolicious 12y ago
      All of OpenTable's features are core competencies of a restaurant. A restaurant must do CRM, it must maintain analytics about its own performance, it must be able to manage tables and keep track of payments, and unless you're a no-reservations place, it must have a system in place to handle reservations. If you don't cover all of the above bases as a competitor, you're leaving your customers to cobble these pieces together themselves. Maximum freedom? Sure, but how many takers do you think you'll have? "Hey Mr. Restaurant Owner, I understand you have a substandard but perfectly functional system that runs every major concern of your restaurant. Your employees kind of hate it, but they're extremely proficient at using it since it's the industry standard. Boy do I have a great idea for you! You should throw this system away so you can assemble multiple pieces of software from multiple vendors together to do the same thing, in a field where interoperability isn't even in the vocabulary! How your payments system talks to your CRM system? Fuck knows. But you should do this!" OpenTable isn't completely immune from competition, but they're pretty much as close as any software company can get. There's a reason why every potential competitor to OpenTable has taken the "full restaurant management system" angle. OpenTable is vulnerable if someone can execute on the kitchen-sink restaurant management system better and more cheaply. I don't think it's vulnerable to piecemeal replacement.
      - vidarh 12y ago
        The vast majority of restaurants don't have a unified system to do this today. Where the company I work for has gone in, it's usually been the first step towards a unified restaurant CRM solution they've taken. It's rare for us to start talking to a client that tells us they already have a CRM solution in place. It is somewhat more common for us to come across restaurants that use services like OpenTable and competitors only as a source of bookings. > Your employees kind of hate it, but they're extremely proficient at using it since it's the industry standard. The thing is, it's not the industry standard. It may be by far the largest, but it serves a tiny portion of the industry. According to the press release, they serve 31,000 restaurants worldwide. There are more than 400,000 restaurants in the US, of which more than 200,000 are "full service" restaurants. Most of these are still "unexplored territory" where there's either little to no IT investment (the small operators) or a patchwork of custom/partial solutions, often bolted onto the till-system with no central CRM solution (the larger operators)
- RollAHardSix 12y ago
  > Perhaps OpenTable management realizes this and figures this is a good time to exit. It's also 2 billion dollars. That's simply a good time to exit. You could foresee-ably work the rest of your life and never build your company to that level on your own. No doubt OpenTable worked extremely hard to get to this point so I wish them all the best in the future and nice, long lives to enjoy that wealth.
- smackfu 12y ago
  Most of the restaurants around here just link to OpenTable on their reservations page, if you get there via Google. I think they actually pay a smaller percentage for those kind of bookings, rather than ones that were generated within the OpenTable app. That thing he mentions about restaurants not putting up their prime time reservations is a bigger threat to OpenTable, since they know they will be sold and don't want to pay the fees, but I don't know how widespread that is outside of chic city restaurants. I know that I would just book elsewhere if I saw that a place "seemed" book solid in OpenTable.
  - prostoalex 12y ago
    The fee is 25c per booking when done through an embed on restaurant's site, $1 when generated through OpenTable or a partner site they pay. http://blogs.houstonpress.com/eating/2014/05/as_fees_become_problematic_res.php http://blogs.houstonpress.com/eating/2014/05/as_fees_become_...
- erichurkman 12y ago
  Google does not even have to enter the space to potentially upset the restaurant booking space. If they added "book a table" to the search result page & map listing or restaurants, and solicited those as paid ads, competitors could encroach on OpenTable's success. Even small local marketers could get in on that game: buy a software license for a table booking platform and start selling to local restaurants. Collect $X per booking, pay Google $Y, profit $X - $Y. No OpenTable required. Of course, OpenTable could get in on it, too.
  - prostoalex 12y ago
    Has this no-name table booking platform for a small marketer received enough mindshare in the consumer land to generate tons of leads? If a diner makes a reservation off the restaurant's Web site by clicking the embedded OpenTable form, their fee is 25c. The big bucks is in generating new customers through OpenTable app/site itself and various partners (Yelp, etc.) and rewards where OpenTable brings in customers during slow hours by awarding them 1,000 points.
- dirtyaura 12y ago
  It's not $14 customer charge, that's what Priceline paid per annual lead. Cost per lead is likely to be less than a $1 dollar, annual revenues were $190M, divided by 12*15M leads is around $1.05. They likely have other income streams than lead generation, if they are providing full CRM to restaurants.
Numberwang 12y ago
Bookatable is about the same size.
what_ever 12y ago
TripAdvisor recently bought lafourchette (~$140 million according to TC) who are pretty active in Europe where OT has very less presence. lafourchette apparently has 12,000 restaurant partners according to this article http://techcrunch.com/2014/05/07/lafourchette-gobbled-up-by-tripadvisor/ http://techcrunch.com/2014/05/07/lafourchette-gobbled-up-by-... Disclaimer: I work at TripAdvisor.
calinet6 12y ago
Ripe for disruption. OpenTable could exist in 1997, the only reason a competitor doesn't eat their lunch is that it's a boring space—that is unfortunately fully booked by OpenTable. They could be toast within a year, if a Slack-quality competitor decided to take them on.

joezydeco 12y ago

Nick Kokonas of Alinea/Aviary summed up the threat to OpenTable in his recent post about his restaurant ticketing system[1]: "At one time it was definitely the case that if I were looking for an Italian restaurant in a certain neighborhood I would consult OpenTable, read the reviews, and book directly. Now I just use Google or Google Maps. Google of course knows this and that’s why they bought Zagat. I’d bet Google will soon begin the reservations game as part of Zagat ratings." Could Google deliver a reservation system to restaurants without renting them hardware and nixing the $14 customer charge? Sure. Could they even pay for the hardware out of their own pockets to get traction and dump a pile of Nexus tablets in every store? Absolutely. Perhaps OpenTable management realizes this and figures this is a good time to exit. [1] http://website.alinearestaurant.com/site/2014/06/tickets-for-restaurants/ http://website.alinearestaurant.com/site/2014/06/tickets-for...

potatolicious 12y ago
OpenTable isn't just a reservation system, it's a full-on restaurant management system. They've seen this possibility coming and they're reasonably well positioned to deal with it. OpenTable only does reservations when facing the diner, but when facing the restaurant they do reservations, CRM, payments, table tracking, and analytics. Whoever wants to replace OpenTable needs to replace all of this at once. Not only that, they need to convince a restaurant to ditch practically their entire IT stack, retrain all of their employees in the new system, and do so without service or quality interruption. OpenTable has positioned themselves to be about as sticky as you can imagine a software business to be. They've locked in their vendors hard. Evil? Probably. Very effective? Hell yeah. It's not as if no one's challenged OpenTable before - there are in fact a number of restaurant management startups out there, but none can even dent OpenTable's dominance due to the lock-in. Google couldn't take out OpenTable even if they tried, not without burning a pile of cash taller than this current purchase price.
- deleted 12y ago
  [deleted]
- frogpelt 12y ago
  You sound pretty convinced. But it is almost never the case that a product or service is insulated from competition. And I completely disagree that for competitors to emerge they MUST do everything that OpenTable does. They only have to offer a couple of features that OpenTable doesn't. Or do one thing better or cheaper.
  - potatolicious 12y ago
    All of OpenTable's features are core competencies of a restaurant. A restaurant must do CRM, it must maintain analytics about its own performance, it must be able to manage tables and keep track of payments, and unless you're a no-reservations place, it must have a system in place to handle reservations. If you don't cover all of the above bases as a competitor, you're leaving your customers to cobble these pieces together themselves. Maximum freedom? Sure, but how many takers do you think you'll have? "Hey Mr. Restaurant Owner, I understand you have a substandard but perfectly functional system that runs every major concern of your restaurant. Your employees kind of hate it, but they're extremely proficient at using it since it's the industry standard. Boy do I have a great idea for you! You should throw this system away so you can assemble multiple pieces of software from multiple vendors together to do the same thing, in a field where interoperability isn't even in the vocabulary! How your payments system talks to your CRM system? Fuck knows. But you should do this!" OpenTable isn't completely immune from competition, but they're pretty much as close as any software company can get. There's a reason why every potential competitor to OpenTable has taken the "full restaurant management system" angle. OpenTable is vulnerable if someone can execute on the kitchen-sink restaurant management system better and more cheaply. I don't think it's vulnerable to piecemeal replacement.
    - vidarh 12y ago
      The vast majority of restaurants don't have a unified system to do this today. Where the company I work for has gone in, it's usually been the first step towards a unified restaurant CRM solution they've taken. It's rare for us to start talking to a client that tells us they already have a CRM solution in place. It is somewhat more common for us to come across restaurants that use services like OpenTable and competitors only as a source of bookings. > Your employees kind of hate it, but they're extremely proficient at using it since it's the industry standard. The thing is, it's not the industry standard. It may be by far the largest, but it serves a tiny portion of the industry. According to the press release, they serve 31,000 restaurants worldwide. There are more than 400,000 restaurants in the US, of which more than 200,000 are "full service" restaurants. Most of these are still "unexplored territory" where there's either little to no IT investment (the small operators) or a patchwork of custom/partial solutions, often bolted onto the till-system with no central CRM solution (the larger operators)
RollAHardSix 12y ago
> Perhaps OpenTable management realizes this and figures this is a good time to exit. It's also 2 billion dollars. That's simply a good time to exit. You could foresee-ably work the rest of your life and never build your company to that level on your own. No doubt OpenTable worked extremely hard to get to this point so I wish them all the best in the future and nice, long lives to enjoy that wealth.
smackfu 12y ago
Most of the restaurants around here just link to OpenTable on their reservations page, if you get there via Google. I think they actually pay a smaller percentage for those kind of bookings, rather than ones that were generated within the OpenTable app. That thing he mentions about restaurants not putting up their prime time reservations is a bigger threat to OpenTable, since they know they will be sold and don't want to pay the fees, but I don't know how widespread that is outside of chic city restaurants. I know that I would just book elsewhere if I saw that a place "seemed" book solid in OpenTable.
- prostoalex 12y ago
  The fee is 25c per booking when done through an embed on restaurant's site, $1 when generated through OpenTable or a partner site they pay. http://blogs.houstonpress.com/eating/2014/05/as_fees_become_problematic_res.php http://blogs.houstonpress.com/eating/2014/05/as_fees_become_...
erichurkman 12y ago
Google does not even have to enter the space to potentially upset the restaurant booking space. If they added "book a table" to the search result page & map listing or restaurants, and solicited those as paid ads, competitors could encroach on OpenTable's success. Even small local marketers could get in on that game: buy a software license for a table booking platform and start selling to local restaurants. Collect $X per booking, pay Google $Y, profit $X - $Y. No OpenTable required. Of course, OpenTable could get in on it, too.
- prostoalex 12y ago
  Has this no-name table booking platform for a small marketer received enough mindshare in the consumer land to generate tons of leads? If a diner makes a reservation off the restaurant's Web site by clicking the embedded OpenTable form, their fee is 25c. The big bucks is in generating new customers through OpenTable app/site itself and various partners (Yelp, etc.) and rewards where OpenTable brings in customers during slow hours by awarding them 1,000 points.
dirtyaura 12y ago
It's not $14 customer charge, that's what Priceline paid per annual lead. Cost per lead is likely to be less than a $1 dollar, annual revenues were $190M, divided by 12*15M leads is around $1.05. They likely have other income streams than lead generation, if they are providing full CRM to restaurants.

Numberwang 12y ago

Bookatable is about the same size.

what_ever 12y ago

TripAdvisor recently bought lafourchette (~$140 million according to TC) who are pretty active in Europe where OT has very less presence. lafourchette apparently has 12,000 restaurant partners according to this article http://techcrunch.com/2014/05/07/lafourchette-gobbled-up-by-tripadvisor/ http://techcrunch.com/2014/05/07/lafourchette-gobbled-up-by-... Disclaimer: I work at TripAdvisor.

calinet6 12y ago

Ripe for disruption. OpenTable could exist in 1997, the only reason a competitor doesn't eat their lunch is that it's a boring space—that is unfortunately fully booked by OpenTable. They could be toast within a year, if a Slack-quality competitor decided to take them on.