The true cost of OpenTable (thinking outside the box)

OpenTable has been around for a long time and while I understand that change is hard, I do recommend restaurant owners to re-evaluate their vendors on a regular basis. While many restaurants are using OpenTable, it is important to understand how market dynamic and increased costs are affecting your business. Let’s try to demystify OpenTable and evaluate the true cost of using their system.

No-shows

‍Granted, OpenTable does reduce the amount of no-shows through their app, guests can only have a total of 4 no-shows before being kicked out of the system. They can, however, turn around, create another login and password and do it all over again. But what I think is more problematic is that for no-show, in order to not pay the OpenTable booking fee, you need to signal in the system that the guests never showed. So, in other words, you have to rely that your host, often the least experienced member of your staff, will dutifully report in the system, the no-shows. It can add up to a decent amount at the end of the month and it’s awfully difficult to track and correct.

It is only $1 per reservation made through OpenTable, right?

This one is a bit more difficult to grasp. Technically, yes, it is but there is more to it than meets the eye. Sure, acquiring a new customer through OpenTable seems to only cost $1. However, you also have to take into account all the regulars who will also book through OpenTable because it’s convenient, they can get points, etc. So, that $1 to acquire a new customer actually goes up exponentially when you take into account all returning customers just going through OpenTable for the convenience of it.

Opportunity cost

At the end of the day, you may just look at your OpenTable invoice like just another cost to do business in this industry. You need a reservation system and OpenTable has been a leader for a while. However, if, instead of spending hundreds of dollars in OpenTable, you found a more affordable reservation and table management system and then applied that budget to social media marketing. For instance, with Facebook, you can target your high value customers. For instance, you are a local high end restaurant and would love to focus on foodies and high income customers. Social media will allow you to reach out to them, OpenTable just reaches for the masses and fills your table, not always with the more profitable customers. Rethink the opportunity cost of doing business with OpenTable and find out if the new media can be a more profitable option for your restaurant.

Guest’s loyalty is towards OpenTable, not your business!

OpenTable works hard at increasing the loyalty of their users. But don’t be fooled, the loyalty is toward their services, not your restaurant. So for every reservation customers make through OpenTable, they get points they can use wherever they want, including your strongest competitor across the street. And guess who is paying for this? Not OpenTable, that’s for sure. So you are indirectly paying for your competitors' marketing, actually, you are all paying for each other and the only winner here is OpenTable.

My Recommendations:

Pick a more affordable reservation and table management system such as Hostme (starting at $39/month). Use the difference to buy ads on Facebook and Instagram, pay a professional photographer to take pictures of your restaurant and your dishes, run contests where you offer free food/drinks. There are lots of social media professionals ready to help you and stop financing OpenTable’s antiquated marketing schemes.