OpenTable is an American online restaurant reservation system founded by Chuck Templeton. During the late 90s, it provided one of the first automated, real-time reservation systems. The company was acquired by Booking Holding back in 2014, for $2.6 billion. Today OpenTable makes money via subscription plans, referral fees, and in-dining with its first restaurant, as an experiment in Miami, Florida.
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Table of Contents
Origin Story
OpenTable is an American online reservation service for restaurants. The company was founded in 1998 by Chuck Templeton, with initial operations focused exclusively on restaurants in San Francisco.
Using the original system, restaurants who signed up for the service used OpenTable software to manage dinner reservations.
In the late 1990s, the ability for restaurants to take reservations using a real-time system was somewhat revolutionary.
The service quickly expanded to approximately 30,000 restaurants across the United States and limited international cities.
The platform now seats over 1 billion diners per year in countries such as Mexico, the UK, Australia, Canada, France, Japan, and Germany. It serves restaurants and eating establishments found in bars, wineries, hotels, casinos, and grocery stores.
Booking Holdings is the company the controls six main brands that comprise Booking.com, priceline.com, KAYAK, agoda.com, Rentalcars.com, and OpenTable. Over 76% of the company revenues in 2017 came primarily via travel reservations commisions and travel insurance fees. Almost 17% came from merchant fees, and the remaining revenues came from advertising earned via KAYAK. As distributionstrategy, the company spent over $4.5 billion in performance-based and brand advertising.
Basic ($29/month) – allowing restaurant owners to reach diners and build a reputation. OpenTable charges Basic plan users 25 cents per reservation plus a flat $49 fee. There is also a charge of $1.50 per network cover. In restaurant parlance, a cover refers to a single meal or customer for whom the meal is served.
Core ($249/month) – for restaurant owners who want a more efficient front-of-house or to maximize patronage. Website reservations are free and there is a $1 charge per network cover.
Pro ($449/month) – the Pro plan allows loyal customers to be recognized and rewarded through relationshipmanagement. Pricing for reservations and network covers is the same as the Core plan.
Regardless of the plan chosen, OpenTable also charges a 2% service fee for restaurant experiences and takeout.
Referral fees
OpenTable users can also order from restaurants that offer delivery. Depending on geographic location, supporting delivery partners include Olo, Toast Delivery, Uber Eats, Postmates, Deliveroo, and ChowNow.
OpenTable makes an undisclosed amount by partnering with these services, most likely in the form of an agreed-upon referral fee.
In-dining
OpenTable recently opened its first restaurant in Miami, Florida.
Serving eastern Mediterranean fare, the restaurant is an innovative pilot project for the company. While the quality of food is important, OpenTable hopes to use technology to develop a highly personalized hospitality service. The wait staff at the restaurant use historical customer food and drink preferences to give diners what they want without them having to ask for it.
If the concept proves profitable, there is scope to suggest that OpenTable will open similar restaurants elsewhere.
Key takeaways:
OpenTable is an American online restaurant reservation system founded by Chuck Templeton. During the late 90s, it provided one of the first automated, real-time reservation systems.
OpenTable makes money by giving restaurant owners access to its platform across three, paid plans. The Core and Pro plans incorporate free reservations and charge $1 per network cover.
OpenTable also earns referral fees from the many delivery services it partners with. It has recently opened its first branded restaurant in Miami using customer insights to offer a highly personalized restaurant experience.
Key Highlights
Founding and Early Innovation: OpenTable is an American online restaurant reservation system that was founded in 1998 by Chuck Templeton. It introduced one of the first automated, real-time reservation systems during the late 90s.
Initial Operations: OpenTable began its operations with a focus on restaurants in San Francisco. It provided restaurants with software to manage dinner reservations in real-time, which was revolutionary at the time.
Expansion and Acquisition: The service expanded rapidly and encompassed around 30,000 restaurants across the United States and select international cities. In 2014, OpenTable was acquired by Booking Holdings (formerly Priceline Group) for $2.6 billion.
Global Presence: OpenTable’s platform has grown to seat over 1 billion diners annually in various countries, including Mexico, the UK, Australia, Canada, France, Japan, and Germany. It caters to a range of dining establishments, from restaurants and bars to hotels and casinos.
Booking Holdings: OpenTable became part of Booking Holdings, which owns several brands including Booking.com, priceline.com, KAYAK, agoda.com, Rentalcars.com, and OpenTable. Booking Holdings generates revenue primarily through travel reservation commissions and fees, as well as merchant fees and advertising.
Revenue Generation: OpenTable generates revenue through multiple channels:
Subscription Plans: It offers three subscription plans – Basic, Core, and Pro – to restaurant owners. Each plan offers different features and charges a combination of flat fees, reservation fees, and network cover charges.
Referral Fees: OpenTable partners with various delivery services (Olo, Toast Delivery, Uber Eats, etc.) for restaurant delivery. OpenTable likely earns referral fees through these partnerships.
In-Dining Experiment: OpenTable opened its own restaurant in Miami, Florida, offering eastern Mediterranean cuisine. It uses historical customer preferences to offer personalized dining experiences and aims to blend technology with hospitality.
Technology-Driven Hospitality: OpenTable’s Miami restaurant experiment showcases its focus on utilizing technology to create a highly personalized dining experience. The use of customer insights to anticipate and meet diners’ preferences is a central aspect of this endeavor.
Subscription Plans: OpenTable’s subscription plans – Basic, Core, and Pro – cater to different restaurant needs. They charge varying fees for reservations and network covers, along with a 2% service fee for restaurant experiences and takeout.
Delivery Partnerships: OpenTable collaborates with various delivery partners for food delivery services, likely earning referral fees in return.
In-Dining Innovation: OpenTable’s Miami restaurant is a pilot project that aims to enhance the dining experience through personalized service based on customer history and preferences.
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Gennaro is the creator of FourWeekMBA, which reached about four million business people, comprising C-level executives, investors, analysts, product managers, and aspiring digital entrepreneurs in 2022 alone | He is also Director of Sales for a high-tech scaleup in the AI Industry | In 2012, Gennaro earned an International MBA with emphasis on Corporate Finance and Business Strategy.
