OpenTable is a predatory online reservation service that once required restaurants to "rent" their equipment and use their proprietary software. It might have seemed all warm and fuzzy until the bill came at the end of the month and the restaurant would find, g-gulp, that those hundreds in membership dues and reservation fees (about $10 for a four-top) added up to a hefty chunk of change.
And it wasn't just unsophisticated mom & pop restaurants that griped about OpenTable (but feared that dropping the service would cost them business); top-tier dinner houses were also resentful because OpenTable's business model depends on taking the restaurant itself (any restaurant) out of the customer relationship, a process known as "disintermediation."
Almost every restaurant uses its own computers these days, running easily downloaded point-of-sale software to enter orders and ring up checks, so there's no revenue stream anymore from leasing dedicated terminals. Instead, OpenTable charges monthly fees for its logo to be displayed on the participating restaurants home pages, linking to the OpenTable website. That's about two-thirds of OpenTable's revenue stream, in fact.
After that, it's OpenTable that's calling the shots, with loyalty points and newsletters and the lure of special deals for customers who use its service to make reservations. So OpenTable has to keep adding value for the consumers who use the site to make reservations. The consumer gets to see local restaurants by cuisine, by neighborhood, by price point, by popularity. And the restaurants? Well, they have to be there, don't they? On the same screen as their rivals. So it just makes sense, doesn't it?
If you own a restaurant, there's a lot to worry about. Before you or your cooks draw that first streak of gastrique onto the plate for your artisanal, hand-grown, chanterelle-crusted poussin); before those cooks were recruited and taught how to prepare your carefully-guarded recipes; before you train your bussers and wait-staff; before you extend your contract with New System Laundry, Auto-Chlor, Sysco, Charlie's Produce, Corfini Gourmet, DinerWare and your social media consultant, your customer still has to walk into the door.
Because butts in seats is still the name of the game.
Running a restaurant is intense, akin to driving a high-performance race car: nothing to worry about (it seems) when all is running smoothly, but white-knuckle terrifying when you're doing over 100 mph half a lap from the pits and you hear a funny noise. With so much to go wrong, and it's understandable that many owners want to reduce the risk disaster.
So they outsource the online reservations, grumbling but grateful that there's one more thing they don't have to worry about. But resentful, nonetheless, about the cost.
Well, hallelujah, there's a new game in town. She's called Eveve, she's from Edinburgh in Scotland, and she showed up in Seattle a couple of weeks ago. Got her American start in the Twin Cities in 2011, then dipped her toe in Houston's waters. Her first signups locally were in Belltown, at La Vita è Bella and Txori. She's planning a serious foray into San Francisco shortly. But first, Seattle. She doesn't do every single trick that OpenTable does, but she's a lot less expensive.
For many clients, OpenTable was a crutch, part of that disintermediation process that takes responsibility for hospitality away from the restaurant and gives it to a Big Data outfit. In return for a hefty fee or commission, OpenTable then sells the diner's butt back to the restaurant where he or she wanted to go in the first place, but now the restaurant has just forfeited its $20 margin. This is a more sophisticated scam than Groupon (because neither party is aware of its cost), but a scam nonetheless.
It's just another dance move in the decline of person-to-person hospitality. Going out for dinner has become a digital commodity, and more of a drain on restaurant resources (with steep commissions and fees that come right off the bottom line) than increasing the minimum wage.
Every major restaurant nonetheless feels compelled to use OpenTable, from tiny neighborhood spots to prestigious houses like Canlis and the Space Needle. Almost 500 in Seattle alone. But now they won't have to. Cornichon wonders, though, whether we're going to see the savings turn up on the plate. That poussin doesn't come cheap.
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