Tag Archives: OpenTable

OpenTable Launches Group Buying Deals (Updated)

Restaurants are among the top categories for group buying deals. Now OpenTable, the restaurant reservations service, is getting in on the game. On its blog today, OpenTable announced that it is launching a weekly “Spotlight” offer that provides diners with $50 of dining for $25 at a featured restaurant, which must be an OpenTable customer.

The revenue is being split with restaurants, and represents OpenTable’s first transaction product with consumers.OpenTable says it will feature a wide range of restaurants, both casual and formal.

Most dining parties will probably end up spending more than the offers, since typical OpenTable customers spend $50 a head and bring 2-3 people to dinner. Yelp has also been experimenting with group buying under the “Yelp Eats” and “Yelp Drinks” monikers.

Spotlight launches first in New York and Boston, with the weekly offers available beginning on Thursdays at 5pm. Other U.S. cities will follow in short order. In its first day, 1100 New York offers have been sold, and 700 Boston offers. The infrastructure for the offers is being provided by IMShopping’s Nimble Commerce.

OpenTable intends to juice demand for the coupons by dropping “get a clue” hints as to the restaurant’s ID prior to the coupon going online – something that might spark additional page views.

Here are this week’s clues:

Boston Secret Spotlight Clue #1: The chef at this hotspot in Boston’s South End learned her culinary techniques from both Bobby Flay and Malaysian street food vendors. Share your best guess here!

New York Secret Spotlight Clue #2: Dine under Midtown’s starry sky, where they’ve mastered the art of infusing classical French technique with American cuisine. Share your best guess here!

Yelp, OpenTable Team Up; ‘Reservations Without Registering’

OpenTable has affiliate relationships with hundreds of sites, which receive a percentage of OpenTable’s reservation fees in exchange for the link. Diners are treated as regular OpenTable customers. They register and are entered into a Guest Directory, where they are eligible for dining credits etc.

Now, OpenTable has opened its network a bit, allowing registered Yelp users to directly make reservations from Yelp – whether they have registered with OpenTable or not. Users that have registered with both services will automatically get the benefits that OpenTable provides (i.e. dining credits). But they don’t have to.

The immediacy of linking Yelp’s reviews with reservations should prime the pump for Open Table, and get more customers to ultimately register. Among OpenTable’s 11,000 restaurant customers in North America, there probably isn’t a single one without a Yelp review. OpenTable says it also won’t be watering down the comprehensive customer info that OpenTable has on every registered diner (i.e. missed meals, preferences, etc.). They’ll just keep files from the Yelp IDs.

OpenTable, in general, is aggressively moving to bring more diners and restaurants into its system. Another move the company recently made was the launch of Open Table Connect, a Web-based reservation system that restaurants can use in lieu of the core OpenTable system. OpenTable Connect, which is aimed at mid-priced restaurants, such as bistros and sushi houses, costs $49 a month, and $2.50 per diner. More than 82 restaurants are currently signed on.

OpenTable’s moves come as it deals with more competition. CityGrid Media’s Urbanspoon, for instance, has launched two complementary reservation products that undermine OpenTable’s fees – and open new fronts in the battles of Yelp versus Citysearch; and now, OpenTable versus Urbanspoon/CityGrid Media.

The first of Urbanspoon’s new products is Urbanspoon Rez, an online reservations system that is now in 170 restaurants in Los Angeles and Seattle and ready for national rollout. The second is Urbanspoon Rezbook, an iPad based system that directly mirrors OpenTable’s proprietary Electronic Reservations Book computer. Rezbook is now in pilot mode in five restaurants. A new report on Urbanspoon’s strategy is being released today for clients of BIA/Kelsey’s Marketplaces program.

BookFresh: Appointments Are Building Blocks, Not Marketplaces

One way to get into SMB accounts is to take over their appointment calenders. This is an approach that has been embraced by a growing horde of start-ups….at least ten by some counts.

Silicon-Valley-based BookFresh, formerly known as HourTown, has raised $1.5 million from NBC Universal, Baseline Ventures , Hatch Ventures, Ron Conway and others. The 10 person team calls itself “The OpenTable for Everything Else” (besides dining) and is trying to stick out from the crowd with a platform that can easily be added as a widget to SMB sites, and marketed via partnerships with publishers.

Like others, the site offers free basic listings to SMBs, and has developed three tiers of paid services: Business, at $19.95, Pro, at $29.95; and Enterprise, which has variable pricing. Among the myriad features are transaction processing, search optimization and support for multiple staff. The ultimate goal is to launch a directory of high quality merchants.

During the past two weeks, BookFresh has announced partnerships with TypePad, the blog platform providers, and with HomeThinking, a site that offers tips to home buyers while helping Realtors showcase their listings across the Web, offering free syndication to sites like Craigslist, Trulia, Zillow and others.

An example of HomeThinking’s implementation is here. Using the site, home shoppers can browse through various Realtors, review their performance history, and then book an appointment online at their convenience instead of having to line up a time via email communications.

“We’ve seen tremendous uptake of the feature in our beta testing and agents are finding great value in allowing live appointment scheduling,” says Homethinking Founder Niki Scevak.

BookFresh CEO Ryan Donahue, a PayPal vet –an alumni group that includes Jeff Jordan at OpenTable and Jeremy Stoppleman at Yelp –acknowledges the current glut in appointment services. But he thinks he has an edge over rivals. “We’re not a consumer destination,” which try to be marketplaces onto themselves, he says. “We are exclusively focused on the SMB owner. We’re hammering away on the merchant acquisition problem.”

The key to really understanding the business is seeing appointments are the flip side of leads (something I also heard from an SEO coach at the recent TargusInfo Leads Quality conference).. Appointments share many qualities with the leads market, but also have some real advantages.

“It is a highly qualified flavor of lead, with a natural connection to both buyers and sellers” says Donahue. “The critical differentiator is that leads are typically non-exclusive where as appointments almost always are. They also have a high degree of commitment because the buyer and seller are promising to be somewhere. “It is an interesting social contract,” he adds.

AT&T iPhone Ad for The New Yorker: Apps in the City

In a take off of “Sex in the city,” AT&T has taken out the back page of The New Yorker with an iPhone ad entitled “Apps in the city.” The ad, part of a series of iPhone ads using different themes and highlighting apps under those themes, features Urban Daddy, OpenTable, Wine Ph.D, Fandango and Rocket Taxi.

It is nice for AT&T and Apple to support the local apps with the ads. But otherwise, keeping tabs on local apps can be tough work. As my mobile-centric colleague Mike Boland notes, “there is no ‘local’ category in the app store, and local apps are spread throughout ‘lifestyle’ and ‘Utilities’ with no rhyme or reason. App developers self-select their category so they end up all over the map.”


Observations on Open Table’s IPO

OpenTable, the elite restaurant reservations service linked to hundreds of local media and organizational websites such as Citysearch and Superpages.com, defied naysayers last Thursday with a successful IPO that ended its first day at $28.71; 44 percent above its $20 opening price.

In two days of subsequent trading, the price has come down to $26.72. But the price has been relatively stable, and appeared to reflect enthusiasm for a truly useful service by affluent stock investors/diners; and enthusiasm for an impressive first-mover company with multiple revenue streams (i.e. monthly fees tied to Customer Premise Equipment and services; installation fees; and per diner fees).

Kelsey’s Marketplaces program had made a number of observations about the 292 person company in a full scale report issued in March. Most importantly, we note that the North American operations have become quite profitable. This doesn’t seem to be widely understood. Only the company’s aggressive expansion into key European and Asian markets have kept OpenTable at “break even.”

But there are plenty of danger signs around. The worldwide recession has had an immediate impact on high-end dining, which is OpenTable’s bread and butter (it primarily serves restaurants with average bills above $80). The company says it seats 2.8 million diners a month, but estimates that reservations are down 10-12 percent from last year. This potentially crimps an important revenue stream for the company, which receives an estimated $1 per diner.

Economy aside, the company’s long-term prospects are geared around making it churn-proof with value-added features. Extra value is provided by OpenTable to restaurants by diner feedback, leads and customer “dining cheques,” which are the equivalent of frequent flyer awards. But a surprising number of these cheques have not been cashed in, making us wonder whether the suite of these features is really important, and/or a differentiator.

OpenTable also seeks to boost its customer base. This may also prove challenging. The company’s expensive proprietary system requires a dedicated sales force, and is anchored by unique customer premise equipment. It remains to be seen whether the CPE-based approach will continue to dominate in an IT environment that’s generally going “open platform.”

Given all this, can Open Table be a long-term success? It definitely can. Our assumption is that OpenTable, with cash in hand, could readily expanding into mid-priced markets (i.e. $40 per check). It can do this by developing Net-based software, or by acquiring a reservations-based system aimed at this market. We also believe the company could do well by expanding into targeted advertising.

OpenTable Files for $40 Million Public Offering

OpenTable, the online restaurant reservation service, has filed an S1 with the SEC to raise $40 million. The company, founded in 1998 by former Citysearch President Thomas Layton, was launched as easyseats.com. It currently has contracts with 10,000 restaurants in all 50 states, or approximately 1/3 of U.S. reservation restaurants. It seats roughly 2.8 million diners per month.

Among Open Table’s features are computerized reservation management, table management, guest recognition and email marketing for restaurants. In return, it charges installation fees, subscription fees and incremental fees per booked diner. It made $41.3 million for the nine months ending at the end of Sept, earning a small profit. This includes $22.16 million from subscriptions; $17.34 million from reservations and $1,81 million from installations and related services.

The 292 person company currently handles reservations in the U.S., Canada and Mexico , and also has launched operations in Germany, Japan and the U.K.. Its international operations outside of North America account for 900 restaurants.

While the company shows rapid growth in most segments, it has experienced setbacks last year in France and Spain, where it closed offices. Moreover, the depressed worldwide economy may have played a large role in a falloff in reservations, which declined in 4Q 2008 anywhere from 10 percent to 15 percent.

Vertical SlowDown? Teresa Lawlor on Vertical Challenges

The development of verticals is an obvious growth strategy for newspapers, Yellow Pages, search engines and as standalones. The Kelsey Group projects that verticals and classifieds will make up 25 percent of interactive local revenue by 2012.

But nothing happens overnight. And at this point, still early in the game, there have been some initial disappointments with vertical results.

Teresa Lawlor, a consultant who specializes in vertical development and a former VP of Marketing for Media News Group (and before that, with DexMedia), has lived through a number of vertical startup efforts. She has learned that it is going to require a lot of patience, determination and luck.

“I definitely think there is a slow transition toward the verticals being the next big wave,” says Lawlor. “The opportunity is there. It has the potential to build audience, engagement, loyalty, partnerships and new revenue streams. But it requires a commitment to spending some time working out what verticals will be most easily and profitably leveraged, building community around them and hiring staff…. a little more open-minded about change and risk.”

Newspapers, in particular, are “scared to take the plunge because they don’t have the mindset, nor the personnel that know anything about this stuff. But I truly believe that this is the first step toward direct marketing for the newspapers ,” she says.

Yellow Pages are in a similar boat. “When I was at DexMedia (now RH Donnelley) about six years ago we were just bringing on verticals (health, auto, b2b, wedding, legal, dining, travel). It was a great idea – partnering with Edmunds.com, OpenTable, etc. to try to get a piece of the transaction and revenue share and introducing new products.”

But Lawlor notes that it was doomed to failure. “It failed because of changed leadership, but also largely because we didn’t integrate – the content wasn’t integrated with the listings and the self-serve piece. So users never saw them and we had so many legacy data issues and conflicts with the sales force around self-serve advertising and the low price point of online products vs. print. Sound familiar?” she asks.

Lawlor still believes the rise of verticals is going to be a critical part of the future. But getting them started in a time of crisis is going to be all the harder since there is less patience in tweaking things, looking at the analytics and getting them right . “Being a change agent in an industry that is treading water is a very challenging thing and takes time,” she says.