Opentable Analysis

OpenTable: The 800-Pound Pumpkin in the Restaurant Industry

Making restaurant reservations over the last decade has changed significantly. People no longer have to deal with the hassle of calling a restaurant to reserve a table but can easily check for availabilities and make instant reservations online or on their mobile applications. According to the National Restaurant Association website, 40% of adults seek an easy and convenient dining experience and 93% of adults enjoy dining out. OpenTable, established in 1998 in San Francisco is the first out of the gate to build a model that redefines the dining experience for diners as well as the restaurant itself. The company’s real-time online reservation service and Electronic Reservation Book (ERB) play a key role in people’s decisions about where to dine and help restaurants streamline their operations. The service is available throughout the United States as well as internationally, with offices in Japan, Germany, United Kingdom and Mexico. Being the first to satisfy the needs of diners and restaurants, OpenTable has a competitive advantage in the market and will continue to hold a dominant market position because of its revenue generating potential.

OpenTable has two main products that fuel its growth; an online reservation service where diners can search the OpenTable website or mobile apps for restaurant reviews and book reservations for restaurants in their network and the ERB that provides restaurateurs a solution in a box product that helps automate reservation and guest management operations. While the online and mobile service is free to diners, the company charges restaurants startup, monthly and per reservation fees to use their system. Though the fees can add up for restaurants and cut into restaurants overall revenue, the fees are minimal compared to the potential loss of profit to run the restaurant without the package. According to the OpenTable’s website, the ERB system offers restaurants “a...