Today a friend shared a post, via Kottke, from Mark Pastore talking about why he doesn’t use OpenTable at his restaurant. Personally, I prefer to call and talk to a restaurant directly because, as Pastore points out, that’s part of the experience. That doesn’t mean I haven’t used OpenTable, I have, but it hasn’t won my loyalty. I’ve also always wondered where the profits were coming from – Pastore breaks that down for the reader:
What are the actual economics of listing your restaurant on OpenTable? First and most importantly, the restaurant pays all the fees. Diners not only don’t pay any fees directly, they earn rewards for showing loyalty to OpenTable. This is the crux – and brilliance – of OpenTable’s business model: OpenTable has convinced restaurants to pay it substantial fees while it takes the customer relationship out of the hands of the restaurant and places control into OpenTable’s hands.
He does acknowledge the convenience factor, but wonders about the long term impact of this type of business model on the future of dining out. Toward the end of the post (please read the whole thing – it’s an interesting read) he does hit on what I think is the real crux of the problem – OpenTable has a stranglehold on the market. Without a viable competitor, whether that’s another competing business or a simple/dynamic opensource option, the situation won’t improve for restaurants and in the end, we, the diners will suffer.