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Understanding OpenTable's game plan and how to cut your bill without losing customers

As a restaurant owner, you may be getting tired of how much you pay OpenTable every single month and you have probably noticed that the bill is getting disproportionately higher while the number of reservations is stagnating. In this post, we will explain what is OpenTable's game plan to drive restaurants' OpenTable bills up.

OpenTable pricing model consists of three components: an average of $1K setup\hardware onetime fee, about 200$ monthly subscription fee and from $0.25 to $7.50 per diner per booking reservation fee. Reservation fees vary according to the following rules: $0.25 per diner for reservations that originated from the restaurant's website, $1 per diner for reservations that originated from OpenTable website or mobile app and finally $7.50 per diner for reservations made through OpenTable 1000 point table program. The whole idea of the 1000 point table program is as follow: diner gets 1000 OpenTable reward points for making reservation at certain times of the day and the restaurants have to pay an extra fee for this service. Granted, OpenTable may be helping you to fill tables in slow time but at what cost! To put it another way - restaurants subsidize OpenTable's loyalty program, instead of spending this money to build thier loyal customer's base!

Recently, OpenTable revenues went up compared to same time last year while the number of participating restaurants did not increase proportionally. And the explanation for such dramatic growth is partnerships with companies like Google, Yelp, TripAdvisor and Bing. Here is how OpenTable increases its reservation's revenue at restaurant's expense.1 – Support Your Community

Visit your local schools and contact the PTA, the different athletic associations or the local bands. Chances are they are struggling to raise money. Most restaurants typically offer to host a spirit night and give 20% to 30% back from the guests these groups brought. Be bold, make an offer they can’t refuse, and give 30% back on all checks that night. If your restaurant is seen as a pillar of the community, they will support your business in return.

OpenTable fees diagram

In occasional instances, diners would go to OpenTable website or mobile app to search for a restaurant and make a reservation. In most cases, however, patrons use Google, Bing, Yelp or TripAdvisor to search for a place and read reviews before making their reservation. When using a third party tool other than OpenTable, patrons land on a search result page more or less like this one:

OpenTable Google Screenshot of reservation page

If a restaurant's website is optimized for search engines, the result page will have two reservation links: one to the restaurant's website reservation page and another to the Open Table website reservation page. One will cost restaurant $0.25 and another $1.0 per dinner. As a diner, you don't really care which one to use as long as you will get to the place where you can make a reservation. But Google, Bing, Yelp, TripAdvisors make it more intuitive for visitors to click on the more costly direct OpenTable link. Because they partnered with OpenTable, they will get a share of the hefty fee paid by the restaurant for each reservation made through their website.

If a restaurant decides not participate in OpenTable program and optimizes their site with Search Engine Optimization, patrons will only see one link to make a reservation and this reservation will be at no cost for the restaurants. Hostme can provide restaurants with a reservation system that can replace OpenTable reservation widget on restaurant's website and start saving thousands of dollars!

Hostme Restaurant Reservation widget

Renowned restaurateurs Mark Pastore shares his views about OpenTable in this article. He took an internal survey of other restaurant owners and wrote. "Only one of the dozen or so I spoke with said he felt that OpenTable increased the value of his restaurant and that he wouldn't imagine opening a new project without it. The rest were less than happy... feeling of being trapped in the service, it was too expensive to keep, but letting it go could be harmful." The reason why restaurants' owners are feeling trapped is because of the great marketing job that OpenTable has done positioning themselves as the main source of reservations, when in a reality they are just a middleman that can be replaced unnoticeably.

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