How Does OpenTable Make Money? The OpenTable Business Model In A Nutshell

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.

Business Model Element	Analysis	Implications	Examples
Value Proposition	OpenTable’s value proposition revolves around making restaurant reservations convenient and hassle-free for diners while offering restaurants a streamlined reservation management system. For diners, OpenTable provides an easy-to-use platform and mobile app to discover, browse, and book tables at restaurants. Diners can access real-time availability, read reviews, and earn loyalty points. For restaurants, OpenTable offers a reservation management system that helps optimize table utilization, reduce no-shows, and increase revenue. OpenTable also provides data analytics and marketing services to help restaurants attract more diners and improve their operations. Overall, OpenTable aims to enhance the dining experience for both diners and restaurants.	Simplifies restaurant reservations for diners with an easy-to-use platform and mobile app. Provides diners with real-time availability, reviews, and loyalty points. Offers restaurants a reservation management system to optimize table utilization and increase revenue. Assists restaurants in reducing no-shows and improving operations. Enhances the dining experience for both diners and restaurants. Appeals to diners seeking convenience and access to restaurant information. Attracts restaurants looking to streamline their reservation process and attract more diners.	– OpenTable’s value proposition aligns with the increasing demand for convenient dining experiences. – Its loyalty program incentivizes diners to use the platform repeatedly. – The reservation management system helps restaurants efficiently manage bookings and improve their overall performance.
Customer Segments	OpenTable serves two primary customer segments: diners and restaurants. Diners include individuals and groups looking to make restaurant reservations for various occasions, from casual dining to special celebrations. Restaurants comprise a wide range of dining establishments, including fine dining, casual dining, cafes, and more. OpenTable caters to both small, independent restaurants and larger restaurant chains. While individual diners can use the platform for free, restaurants pay fees for using OpenTable’s reservation management system and related services.	Serves two main customer segments: 1. Diners: Individuals and groups making restaurant reservations for various occasions. 2. Restaurants: A wide range of dining establishments, including independent restaurants and restaurant chains. Offers free access to diners for booking reservations. Generates revenue from restaurants through fees for using the reservation management system and related services. Caters to the needs of diners seeking convenient dining options and restaurants looking to optimize their operations.	– Addressing both diners and restaurants ensures a balanced marketplace for reservation bookings. – Offering free access to diners encourages user adoption and repeat usage. – Revenue from restaurants sustains the platform’s operations and growth.
Distribution Strategy	OpenTable’s distribution strategy is digital and mobile-centric. Diners can access OpenTable’s platform and services through its website and mobile app, available on iOS and Android devices. The platform provides real-time restaurant availability and booking functionality. Restaurants use OpenTable’s reservation management system, which can be accessed through a web-based portal. Additionally, OpenTable has partnerships with third-party platforms and websites, further expanding its distribution network and allowing diners to discover and book restaurants through various channels.	Relies on a digital and mobile-centric distribution strategy. Diners access services through the website and mobile app (iOS and Android). Offers real-time restaurant availability and booking functionality. Restaurants use the reservation management system through a web-based portal. Forms partnerships with third-party platforms and websites to expand the distribution network. Ensures accessibility and convenience for diners and restaurants through digital channels.	– Digital distribution simplifies access to OpenTable’s platform and eliminates the need for physical distribution channels. – Real-time availability and booking functionality enhance the user experience for diners. – Partnerships with third-party platforms increase the platform’s reach and visibility.
Revenue Streams	OpenTable generates revenue primarily through reservation fees paid by restaurants and premium subscription services. Restaurants pay a fee for each reservation made through OpenTable, which may vary based on factors like location and reservation time. Additionally, OpenTable offers premium subscription services, such as OpenTable Plus, which provide restaurants with enhanced features and visibility on the platform for a recurring subscription fee. The platform may also earn revenue through advertising and marketing services offered to restaurants to promote their offerings to diners.	Relies on revenue streams from: 1. Reservation fees paid by restaurants for each booking made through the platform. 2. Premium subscription services (e.g., OpenTable Plus) offering enhanced features and visibility for restaurants. 3. Advertising and marketing services provided to restaurants to promote their offerings. Ensures consistent income through reservation fees and subscription services. Enhances value for restaurants through premium subscription offerings. Provides additional revenue sources through advertising and marketing services.	– Reservation fees incentivize restaurants to use the platform for managing bookings. – Premium subscription services offer added value to restaurants looking to enhance their online presence. – Advertising and marketing services contribute supplementary revenue while promoting restaurants to diners.
Marketing Strategy	OpenTable’s marketing strategy includes search engine optimization (SEO), partnerships, email marketing, content marketing, and user-generated content. The platform focuses on optimizing its online presence to appear prominently in search engine results when diners search for restaurants. OpenTable partners with various websites and apps to expand its reach and provide reservation services through third-party platforms. Email marketing keeps diners informed about restaurant options and promotions. Content marketing includes blog posts and dining guides to engage diners and highlight restaurants. User-generated content, including reviews and ratings, adds credibility and helps diners make informed choices.	Utilizes SEO to optimize online presence and appear prominently in search engine results. Forms partnerships with websites and apps to expand reach and offer reservation services through third-party platforms. Implements email marketing to inform diners about restaurant options and promotions. Engages diners through content marketing with blog posts and dining guides. Encourages user-generated content, including reviews and ratings, to add credibility and assist diners in making informed choices. Focuses on building awareness, providing valuable content, and fostering a sense of trust among diners.	– SEO efforts ensure that OpenTable is visible to diners searching for restaurant reservations online. – Partnerships with third-party platforms increase the platform’s reach and user base. – Email marketing keeps diners informed about dining options and encourages bookings. – Content marketing establishes OpenTable as a valuable resource for diners and provides engagement opportunities. – User-generated content builds trust and informs diners’ choices.
Organization Structure	OpenTable operates with teams dedicated to product development, marketing, sales, partnerships, customer support, and business operations. Product development teams focus on enhancing the platform’s features for both diners and restaurants. Marketing teams handle promotional efforts and user acquisition. Sales teams work with restaurants to onboard them onto the platform. Partnerships teams collaborate with external organizations to expand the platform’s reach. Customer support teams assist diners and restaurants with inquiries and issues. Business operations teams manage financial aspects and overall strategy.	Employs a structure with specialized teams for product development, marketing, sales, partnerships, customer support, and business operations. Ensures continuous enhancement of the platform’s features. Focuses on promotional efforts, user acquisition, and restaurant onboarding. Collaborates with external organizations to expand the platform’s reach through partnerships. Assists diners and restaurants with inquiries and issues through dedicated customer support teams. Manages financial aspects and strategic planning through business operations teams.	– Specialized teams contribute to the platform’s continuous improvement, user satisfaction, and operational efficiency. – Collaborative efforts with external organizations enhance the platform’s reach and offerings. – Customer support teams play a vital role in maintaining a positive user experience.
Competitive Advantage	OpenTable’s competitive advantage lies in its extensive network of restaurant partnerships, user-generated content, convenience, and data analytics capabilities. The platform’s vast network of restaurant partners provides diners with a wide selection of dining options. User-generated content, such as reviews and ratings, helps diners make informed choices and builds trust. OpenTable’s user-friendly platform and mobile app offer convenience in discovering, browsing, and booking tables. Data analytics capabilities provide restaurants with valuable insights to improve their operations and attract more diners. Overall, OpenTable’s combination of partnerships, user trust, convenience, and data-driven insights positions it as a leading player in the restaurant reservation industry.	Derives a competitive advantage from: – Extensive network of restaurant partnerships offering a wide selection of dining options. – User-generated content (reviews, ratings) aiding diners in making informed choices. – Convenience provided by the user-friendly platform and mobile app. – Data analytics capabilities offering valuable insights to restaurants for improvement. – Strong market presence and user trust as a leading player in the restaurant reservation industry. – A large user base providing network effects and reinforcing its position.	– The extensive network of restaurant partnerships contributes to a diverse selection of dining options for diners. – User-generated content adds credibility and assists diners in making dining decisions. – Convenience and user-friendly features encourage diners to use the platform repeatedly. – Data analytics empower restaurants to enhance their operations and attract more diners. – A strong market presence ensures user trust and adoption. – A large user base creates network effects, benefiting both diners and restaurants.

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.

In 2014, OpenTable was acquired by Booking Holdings (formerly Priceline Group) for $2.6 billion.

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-business-model — 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 distribution strategy, the company spent over $4.5 billion in performance-based and brand advertising.

OpenTable revenue generation

OpenTable makes money in a few different ways.

Subscription fees

The company offers its management platform across three different plans:

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 relationship management. 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.