OpenTable is often referred to as the Uber of the restaurant industry. Customers can use OpenTable to find new restaurants, compare ratings, and make reservations all from their own personal account. OpenTable removes the need to call the restaurant and provide a name and phone number, and also enables the user to collect rewards points toward future meals. Without OpenTable, customers would have to look up the phone numbers of restaurants in their area, call and provide a great deal of information – all with the risk of the restaurant not having any availability. Now, OpenTable does much of the discovery and filtering for the user, saving them time and providing a relatively friction-free experience. OpenTable, which emerged in the Web 1.0 environment of the late 1990’s, has been among the few websites from that era to remain relevant and follow digital trends into mobile and location-based consumerism. The company now claims to seat 18 million restaurant patrons per month at 36,000 restaurants worldwide. (1)
Of course, this model requires two elements of scale – restaurants and customers. While customers have been brought in by the clear value proposition of an online reservation platform, OpenTable has also used digital technologies to improve its operations and increase the efficiency of its restaurant sales force. OpenTable uses Chatter, a workplace social network, to replace traditional e-mail for items such as progress reports – this enables greater sharing of information and best practices among employees. (2) It has also partnered with CRM companies such as SalesForce and Fishbowl (an e-mail marketing provider) to create a value-add for restaurants in terms of customer targeting and loyalty. (3)
Recently, OpenTable has made steps to enter uncharted territory in the restaurant industry: mobile payments. We are all used to the ritual of asking for the check at the end of the meal, paying with either cash or credit card, and leaving tip. OpenTable is attempting to remove this pain point of paying at the end of the meal. As CEO Christa Quarles said, “the whole point of OpenTable Payments is take out the moment at the end of meal, where you are asking, ‘What’s the damage? What’s the bill?'” (1) This is not happening overnight and OpenTable views it as a long term play.
One area in which OpenTable needs to continue to innovate is in the restaurant discovery arena. Despite its location-based and theme-based search, its restaurant recommendations remain overwhelming in terms of the sheer number of restaurant options, the onus on the user to decide what they want for dinner when they want to go out (a perennial challenge), and the lack of internal cohesion among the options (i.e., there are options in many parts of the city, and some options are highly irrelevant while others are relevant).
OpenTable needs to aim to use big data more effectively in helping crystallize more high quality choices for customers. That is to say, OpenTable needs to crack the question of how to understand a person’s taste through their data. This is a complex problem because it also incorporates the social element of eating, the different considerations that might be important to a user for any given meal such as location and convenience, and then the highly variable and nebulous nature of personal food tastes.
In addition, OpenTable needs to look for new areas in the restaurant consumption process to disrupt. For instance, they could look at the food ordering process as one that could be at least partially transferred to the cloud. Restaurants often have lengthy wine lists which can cause confusion for the customer and a lack of confidence that they are ordering the right wine. OpenTable could come in and create a similar solution using data to match the customer’s tastes with the current wine list offered by the restaurant. Since wine is such a cash cow for restaurants, this could be a way for restaurants to upsell customers who may be reticent to purchase a highly priced wine without being sure they will enjoy it. Another place they could begin to aggregate is in predicting trends in eating before they become in vogue. For instance, if a new type of preparation is becoming popular in New York or another trendy destination, OpenTable can use its data to catch that trend in advance and sell it down to other regions which may be second adopters.
Overall, OpenTable is sitting on a great deal of data that can be of use in maximizing value for restaurants. In the future, it should look at the entire value chain of restaurants and capitalize on this information to reduce pain points along the whole chain and create value for all parties.
(1) Leena Rao, “OpenTable’s New CEO Talks Mobile Payments, Premium Reservations, and More”, Fortune.com, April 1,2016. Accessed at http://fortune.com/2016/04/01/opentable-christa-quarles/, November 2016.
(2) David Carr, “Why Messaging Has the Momentum in Business Collaboration”, Forbes.com, August 18, 2015. http://www.forbes.com/sites/davidcarr/2015/08/18/why-messaging-has-the-momentum-in-business-collaboration/2/#77e0f8ac7096
(3) See, for instance: https://www.fishbowl.com/independent-restaurants/opentable/