Online Reservation Platforms Help Boost Restaurants' Revenues
More than 16,000 restaurants in the U.S. use online reservation site OpenTable to allow their guests to book for a meal.
But OpenTable does more than help customers secure a place to eat. It also provides marketing for the restaurants that use it,provides reviews, and helps restaurants boost business and manage flow. It also offers rewards to diners as an added incentive to use the restaurants that are signed up.
OpenTable’s not alone, but it was the first to market of these sites (it was set up in 1998), and it is the largest. Other online reservation sites include Rezbook (from Urban Spoon), RestaurantReservations.com, MySeat.us, Harbortouch Reservations, and Freebookings.com.
“Many restaurants through the recession have struggled with keeping tables filled and have reached out to OpenTable and others like it to list their tables to keep them filled,” says Darren Tristano, executive vice president of research firm Technomic in Chicago.
“The downside is there’s a fee to it, but I think many restaurants are willing to pay the fee because they feel there’s an incremental opportunity to build some sales.”
Consumers use OpenTable to search for a specific restaurant or a restaurant in a certain area, then book a table.
Restaurants on the site make available as many tables as they wish to reserve at that time (many keep some tables for phone reservations or walk-ins). For each person that books through OpenTable the restaurant pays a fee—$1 per person if it’s directly through OpenTable’s website, and less (usually 25 cents) if it’s through the OpenTable software on their own website. So a table of four booking through OpenTable costs the restaurant $4.
Fifth Group, which has seven restaurants, was the pioneer in Atlanta and started using OpenTable in 2000.
The biggest advantage, says Fifth Group’s director of operations, Stuart Fierman, is that because the site allows you to control your reservations—and thus your flow—it makes dining room management very easy and efficient.
“We have color-coded ‘statuses’ for the tables—for example, green for open, yellow for dessert, pink for paid. “
Plus, he adds, OpenTable lets operators know when each table was seated and books tables based on the earlier reservations. “So if a table books at 7:30 p.m., OpenTable knows to try and book that same table at 5:30 and 9:30 to maximize the covers, while flowing the dining room,” Fierman explains. “The easiest way to manage a dining room is to book it effectively in the first place.”
OpenTable also allows you to view your restaurant through analytic reports.
“I can see how long the average table takes to turn—how long the people sit on average, and I can see if I am maximizing my seating,” says Kendal Lund, food and beverage manager at Copperleaf Restaurant & Bar at Cedarbrook Lodge in Seattle.
“We have a smaller dining room and tend to book quickly, and OpenTable ensures that we are able to optimize the reservations without overbooking,” he adds. “I can control the flow of online reservations based upon our needs, and I can run reports to see that we are optimizing our seating capacity.”
Treating guests well
OpenTable also allows you to keep tabs on who’s dining with you, Fierman says, which means the company can recognize who its most frequent guests are.
“This allows us to pay special attention to our regular guests and remember their preferences—like certain tables or a favorite wine,” he adds. Fifth Group makes use of the ‘notes’ section on OpenTable to record the likes and dislikes of specific customers.
“That allows us to leverage what we do best, and that’s make people feel special,” Fierman says.
Lund agrees. “A major benefit of OpenTable is the ability to keep records of regular diners and keep accurate notes about their preferences,” he says.
“It offers servers the opportunity to enhance and customize the dining experience specifically to each guest. We can keep track of birthdays, anniversaries, dietary restrictions, etc. It is an effortless way to ensure that we are able to keep track of details important to our guests.”
Tim Fannin, general manager at Abe & Louie’s in Boston, believes that the biggest driver for consumers using restaurant reservation sites is convenience, and that simply helps his business.
“People can make reservations at 3 a.m. or not wait through a busy signal or go through the litany of questions,” he points out.
The convenience doesn’t just come down to when customers can book, Lund says, but also that they can do so much on one website.
“They can get all the information they need about where they can get a reservation, and they can read the reviews. It’s a one-stop shop for people. The convenience drives it.”
Abe & Louie’s started using OpenTable in March. “The biggest reason we put it in was to be more accessible to our guests,” Fannin says. “I think in the days and times we’re in, people are leaning on that technology to check for table availability.”
Boosting quiet times
How it’s really helped the restaurant is to boost business in the shoulder times (typically before 5 p.m. and after 9:30 p.m.), Fannin explains. “We open up a slot so people don’t get stumped if they’re a big party.” Big parties who can’t book a table for the time they prefer can see off-peak times that can be an alternative. “So that’s found money, found people,” he says.
It’s almost essential to be on OpenTable, he adds. “There’s been an influx of competition here of restaurants using OpenTable. If we don’t pop up as one on there, they’ll skip us and go elsewhere.”
Abe & Louie’s also marketed the fact that it was available on OpenTable shortly after it had signed up, with information on the bottom of diners’ checks and added it to its website.
For Jason Fletcher, OpenTable is a marketing tool as much as anything else.
“OpenTable does a good job of promoting, in search engines, the restaurants that participate with it. It takes [consumers] to reviews and also the [restaurant] location. So if there are five restaurants on a street corner and three use it, they’ll see those. Many people use OpenTable as a dining guide—both tourists and locals.”
The reviews on OpenTable are invaluable, he says. Another advantage is that they’re all genuine—diners can only write a review once the restaurant has noted on the system that they actually ate there.
Copperleaf’s Lund also likes the reviews.
“The exposure that OpenTable’s site offers is very useful. Potential diners who are unfamiliar with the area can easily find out information about our restaurant, see reviews, and make reservations by doing an area search.”
Copperleaf also gathers customer emails through OpenTable, since guests can check a box to receive future promotional materials. “That’s really helpful as we know which guests are interested [in the emails],” Lund says.
Fletcher has been using OpenTable since early 2010 at The Green Room, and business has grown every month.
“I believe it’s played a part in [growing business] due to the sheer number of online reservations we get,” he says, adding that consumers like the site for its “ease of use, nationwide coverage, and reliable reviews.”
He also uses OpenTable to promote the restaurant’s happy hour and special events by adding them to his restaurant’s page.
Copperleaf also highlights upcoming events like winemaker dinners or live music on its OpenTable page. It also has its Facebook page integrated onto the overview site, so it consistently highlights new features and events through both websites.
And OpenTable also gives restaurants a boost with roundups—the best restaurants for brunch, for example, or restaurants with great outdoor spaces.
A few downsides
But online reservation systems do come with a few disadvantages.
The first is teaching an old dog new tricks.
‘We’re a 20-year-old restaurant implementing technology,” says Abe & Louie’s Fannin, though he acknowledges that the technology was easy to grasp.
Another negative is allowing it to be a roadblock. If you don’t manage OpenTable properly, it can look like you’re sold out when you actually have tables available, Fannin says. This is because you haven’t opened up enough tables to be available on the reservation site.
There are also the per-person costs, but that’s a price worth paying, Fierman says. “We wouldn't use it in all of our restaurants if we didn't think it was worth it. Additionally, because so many out-of-town diners use OpenTable in their searches for restaurants, we see quite a bit of business come through this way.”
Fannin agrees. “It's organized and effective in collecting and managing reservations. It also helps us with reaching out to guests who have been with us in the past. It also allows us to get feedback directly from the guest about their experience.”
Having customers book using technology takes away the human interaction in reserving a table. But Fannin says that Abe & Louie’s keeps that as intact as possible by calling all parties of more than two people the day before their reservation to confirm.
“When we call to confirm we can also ask if there’s anything special. I think it requires more engagement on our part. You have to reach out to them a little more.”
But there seems to be no disadvantage to consumers to booking through a website.
Rewarding frequent users
OpenTable effectively works as a loyalty program, Technomic’s Tristano says. Members earn points for any reservations they make and honor. These points are redeemable for OpenTable Dining Cheques that can be used at any OpenTable restaurant.
A standard reservation earns 100 points for the person making the reservation, but bonus points can be added at certain restaurants at certain times (typically slow times). The minimum check that can be redeemed is for $20 with 2,000 points.
The rewards system doesn’t just help out consumers. Restaurants benefit from customers’ finding it easier to book a table at their restaurant, and extra points for tables at slow times can boost sales.
The additional points do cost the restaurants money, though. Fierman, for example, doesn’t think the cost is worth it.
“OpenTable does a few different programs where they market to their database these off-peak times/tables. However, the cost to the restaurant is substantial—I know one of the programs is $7.50 per cover. A table for four could cost you $30, and they might not even spend that much.”
But the points can be a driving force for making reservations for consumers.
“I think some people get a kick out of the $25 check that they get after so many reservations through OpenTable,” Fannin says.
“Consumers become addicts for their points,” Fierman adds. “There are guests who really take advantage of the point system so they’ll get a dining rewards certificate. “It’s reservation crack.”
OpenTable is not just a static website. It also has a mobile site and an app, says Brandon Bidlack, senior director of restaurant marketing.
“We’ve seen large growth through people booking through mobile phones so we’re able to deliver a comprehensive solution to really help restaurants to take advantage of that moment of decision,” he explains.
The OpenTable app is available on Android, Blackberry, iPhone, Kindle Fire, webOS, Windows Phone, and the iPad.
OpenTable has seated more than 25 million diners through its mobile applications since 2008, representing about $800 million in revenue for the restaurant partners of the site.
Mobile is essential to diners today, Bidlack says. “People want to book in the here and now.”
Consumers do everything through their phones, and that’s why Harbortouch’s new reservation system—which is free to all restaurant customers who use Harbortouch’s POS system— will send text message alerts to customers when their table is ready.
“We can send them a text or we can call them,” says spokesman Brian Jones. “This means they can wander down the street or go to the [restaurant’s] bar. Sometimes they don’t like it when people start yelling out names, so there’s a little more discretion.”
Guests can choose to receive a text, a call, or nothing when they book, he explains.
The next thing we’re likely to see, Tristano says, is restaurants participating in several restaurant reservation sites as others compete more directly with OpenTable.
“There will be competitors in the marketplace that will offer bigger rewards [than OpenTable],” he says. “And operators will struggle with who to use, so they may use multiple sites.”