OpenTable Seats 3M diners per month, generates serious revenue

http://venturebeat.com/2008/06/29/opentable-seats-3m-diners-a-month-releases-mobile-version/

by phil_KartMe • 18 years ago

47 48 18 years ago

apathy2• 18 years ago

Let's see how they fare in the coming cool-down eh?

I have an OpenTable account and they are nice even if you don't regularly reserve tables through the service -- you can get a very good idea of how ridiculously inaccessible a 'hot' restaurant in Los Angeles is, for example. (1 month out? 1 week out? 1 day out?)

edu2• 18 years ago

And how do you feel about they service? Do you think it can be improved?

I've been tinkering with the idea of building something similar for the European market, with some improvements (if the reservation fails recommend available time-frames, or other restaurants in the neighborhood or similar restaurants...), recommendation or new restaurants (think of netflix for restaurants), CRM features for the restaurants and made the system "open" so anyone can integrate the service in whatever channel they use (web, SMS, phone, the-next-big-thing...) sharing the commission.

By the way, I'm open to talk... My mail address is on my profile :)

DenisM3• 18 years ago

I've been using it for several years. It does one thing and it does it very well - reservations. I don't have to call anyone over the phone anymore. I can check several restaurants and find one available at a glance, not by calling several places in turn. I love it.

There are adjacent features that could be added. Since they know for a fact who I am and that I was there, my review could be very valuable to others. Better yet, others review could be very valuable to me, especially when I'm out of town. An automatic system that matches people with my taste and shows "good" (for me) restaurants when I'm away from home would be great for me and for good restaurants around the world.

apathy2• 18 years ago

And how do you feel about they service? Do you think it can be improved?

Maybe. I think that they do an extremely good job of the one thing they set out to do, and it would be very hard to challenge them right now, given the strong relationships they have built with their partners.

Personally, I suspect that finding a niche where the main player is far less competent than OpenTable would make for a more compelling business opportunity, unless you honestly believe that the fall-through recommendation strategy

1) hasn't occurred to them, 2) isn't already being developed internally to OpenTable, 3) isn't applicable to other services with more churn.

The final point is the one I would choose to concentrate upon -- find an industry where the players are less loyal and more open to increasing their marginal profits. Restaurants are exceptionally vulnerable to the whims of the public, yet the business is exceptionally prone to supplier and brand loyalty. I wouldn't touch it with a ten foot pole, but that's just me.

OpenTable executes well, and I would be very leery of trying to take them on. It could be done, I just think it would be a lot more challenging than it first appears.

shafqat• 18 years ago

I've been thinking about taking on the European market as well. I'm based out of Geneva... Would be interesting to see how European restaurants respond to this concept - I find them generally behind the curve. I still haven't done enough research into European competitors, so will do that first, find out what we can do better, then get in touch ;-)

Erwin2• 18 years ago

I've used toptable.co.uk for that which is pretty good (most of their restaurants are in London but I've booked places in Rome succesfully too). Key points are good description of the restaurant, accurate sample menus, pictures and reviews from other patrons.

I think just the website won't sell unless you get the selection volume of toptable; but a turnkey reservation system + web front end would be helpful because a restaurant can link to you and let you take over the reservation instead of having someone have to answer the phones. Make it subscription based to minimize up-front cost; heck even offer restaurants to host an easily-created mini-site they can use as their official web page; there are loads of places that don't have a website but maybe if all they have to upload is a few pictures etc. you could go even further here allowing easy online menu creation, export to pdf, cost calculation, whatnot.

toptable is good but not great because they usually don't integrate with the restaurants' systems, so they have people sitting and calling the restaurants to reserve, so there's lag between reservation and confirmation (and 50% of the time in London my first/last name end up swapped or mutilated)

A local service here in DK is dinnerbooking.com which gives you the actual dates & times something is available. I am far likely to book a table at such a place than one where I have to phone them and hope to get through. Alas they're a pretty slow Web 1.5 site.

brent• 18 years ago

> "If it books 80 percent through its restaurant partner sites, that means it charges 25 cents on about 2.4 million seated, and then charges $1 on the remaining 20 percent, or 600,000 seated, through its own site. So OpenTable is making $2.4 million a month...."

0.25 * 2.4 million + 1 * 0.6 million = $1.2 million /mo.

Still serious money, but off by a multiple of 2.

fallentimes2• 18 years ago

What other company's revenue can be off by a multiple of 2 and still be profitable?

Good catch. Ridiculous company.

dcurtis3• 18 years ago

I don't get it. The site looks like it belongs to a domain squatter.

They don't understand their market at all. My dad would be completely confused.

cdr• 18 years ago

The design is not great, but based on their success I would be much more inclined to believe you don't understand their market.

dcurtis3• 18 years ago

I think the majority of their current success is through integration into the restaurant websites. They understand how to get to their users, I just think they could be a lot better about giving them a good user experience.

And if they can get this much money with such a terrible customer experience, imagine how much money they could make if they made it easier to use, reputable-looking, and more visually appealing.

fallentimes2• 18 years ago

Only if he had never used craigslist before.

I agree with your first comment though.

alaskamiller2• 18 years ago

Have you considered that domain squatter sites look the way they do (alignment of all the data and links on the front page) because it works? Average folks jump on those pages and engage with it in some manner.

dcurtis3• 18 years ago

I don't think that's the right assumption. Squatter sites look the way they do because they need to be templates for a wide variety of data. They need to be able to plug in advertisements and have it physically work for every conceivable thing.

That's why they look generic; they are the most generic pages you can create while still giving the content structure.

mattmaroon• 18 years ago

I've long admired OpenTable. They've slipped into massive dominance of a large and growing industry, and done so almost entirely unnoticed.

Also once in place, there's huge inertia preventing a restaurant from switching to a competitor, even if a good enough one emerged. Truly impressive.

pg2• 18 years ago

BTW, if someone wants to start a competitor, we'd be interested in funding one.

coglethorpe• 18 years ago

Call for a YC entry? Hmmmm. I liked this idea because it's mobile and relies on something besides ad revenue eyeballs to generate revenue.

phil_KartMe• 18 years ago

coglethorpe,

don't miss that opentable is not just for consumers. to get restaurants on their system, opentable offers tools that help restaurant managers measure their staff and customers. i've heard the system captures and provides data (e.g., repeat visits by customers, tips by customer and waitress, table turn timing by waitress, etc.) that can help managers get real business benefits like growing revenue

i wonder what other appointment industries (e.g., hair salons, dentists) have a similar opportunity to help consumers and business managers

edu2• 18 years ago

http://news.ycombinator.com/item?id=232092

I've been thinking of it for sometime now, but I've not submitted to YC because I lack a cofounder... Anybody interested?

pistoriusp2• 18 years ago

I'm interested.

misterbwong• 18 years ago

I'm also interested...

omnipath• 18 years ago

I actually had something similiar planned for Android Competition, but instead of reservations, users could make takeout orders, based on current resturant sales, location to a particular store, and type of food the user wanted. Would make money by charging resturants to be included in the program, for updates/sales, and for analysis based on their customers habits. Works great for Asian and pizza places.

Only problem, Asian and pizza places are usually so cut-throat, I don't know if I'd have the salemanship needed to get them to buy into the idea.

Erwin2• 18 years ago

http://www.just-eat.co.uk/pages/frontpage.aspx -- this is a site that originally started in Denmark but they seem to have expanded to UK etc. pretty well.

You order and pay online (which is nice for deliveries); they either phone in your order or use some kind of Internet or fax device to send it in (I'm not sure about the details of the restaruant communication). This is perfect for a local pizza/grill place (of which there are a huge amount of in Denmark); when you sell a pizza for 50kr there's not much margin for complex IT or even a simple web page. The pizza place takes care of the delivery.

They get most of their money from restaurants but seem to offer some monthly subscription with a few extra features and small discount at certain "VIP" restaurants.

eyudkowsky• 18 years ago

Why, what's wrong with OpenTable?

jbenz• 18 years ago

What's wrong is they don't have much competition. There's always some market share available if you put in the legwork and sign up the restaurants OpenTable misses. There's always room for improvement, too.

pg2• 18 years ago

I just get the feeling there's room for improvement.

kashif2• 18 years ago

We are doing one called TableRush.com in India - but we are not the founders. We should launch in a few months and then follow up with a Symbian mobile application.

prakash2• 18 years ago

Where are you guys based?

enki• 18 years ago

we're a team of 5 (3 tech, 1 marketing, 1 advertising) with some funding, operating in this space for some months now.

looking for a kick-ass graphics designer to join us: paul AT boehm.org

sachiinc3• 18 years ago

Hi My name is Sachin Chopra, founder of tablerush.com, which is on the same lines as opentable, but offers more value and services than that and we are looking for funding. you can contact me with your profile at sachin@tablerush.com and we discuss this further.

sdurkin• 18 years ago

Auction pricing for exclusive places would generate a ton of revenue.

wallflower• 18 years ago

Auction-rate pricing for reservations http://nyc.tablexchange.com/

PrimeTime Tables is an expensive, members-only reservation service. http://www.primetime-tables.com/

wensing• 18 years ago

Part of the beauty, for me at least, is that 'restaurant reservations' is a likely-to-be-overlooked problem in the Web 2.0 era. I mean, where's the social networking component?! Can you friend other reservers?! Oh wait, you're going to eat dinner with people? Oh.

How many more problems like this are out there? Reminds me of DHH's "Fortune 1,000,000".

pistoriusp2• 18 years ago

Facebook Feed/ Twitter:

"John made a reservation at 'The Sausage Saloon.'"

This may, or may-not, be a good idea. I suppose it depends on how an individual feels about it.

softbuilder• 18 years ago

I interviewed with OpenTable in 99/2000. I got into an argument with their tech lead during the interview and sadly was not offered a job! hahaha

I will always remember OpenTable because apparently they had built a great system on Java and Oracle (all very cutting edge at the time) and it worked great. However they were switching to Microsoft's DNA platform because they had a VC who was in bed with M$. Nice!

I liked their CEO and I'm betting that their success is almost entirely due to leadership, not technology or lack of competition. Also, while I'm sure there's room for competition, their kind of business is heavily tied to relationships which they have no doubt cultivated for many years. An excellent and well-earned high barrier to entry.

sabat• 18 years ago

I like this company pretty well, in that its service is really convenient. And it works.

(Disclaimer: I know some people who work there, including some at the exec level. But I'm mainly biased because I've used it for years.)

There may be room for competition, especially since they are slow to roll out obvious features like mobile access (DUH, guys) and social/recommendation features. Other opportunities abound, and they're not taking advantage of them.

Problem with competition: if you take OpenTable's approach, you're talking about physical hardware in someone's restaurant.

OTOH -- who said you needed anything other than a PC hooked up to the net and a webapp? Hmmmmmmmmmm.

DenisM3• 18 years ago

These are touch-screens, and need to be durable for restaurant environment.

Mystalic• 18 years ago

I've had the opportunity to discuss OpenTable with the founder on several occasions - The specific plan he put in place and the lessons the company have learned are helping it spread internationally. It's got such a market grip. It'll take serious grit to beat it in the market.

sachiinc3• 18 years ago

hi Guys...I am the founder of tablerush.com. Looking for investors or funders. Anyone interested? Contact me at sachin@tablerush.com. We can surely look at it.

sachiinc3• 18 years ago

Ours surely offers more services than open table too..

OpenTable Seats 3M diners per month, generates serious revenue

Related Stories