Online Reservations for Restaurants Offer Benefits and Drawbacks | Food Newsfeed
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Technology Turns Tables

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Restaurants share accolades and reservations about online-booking services.
By Amanda Baltazar March 2013 Technology

Seating a restaurant has changed from being an art to being a science.

Restaurant reservation sites like OpenTable—and smaller competitors like RezBook (from UrbanSpoon), CityEats, and MySeat.us—allow operators to seat a dining room according to computer analytics, which optimize seating arrangements, correctly populate tables of all sizes, and calculate table turns.

Restaurants across the U.S. tend to react passionately, either loving or hating the move to these systems.

“OpenTable is a godsend,” says Paola Bottero, owner and executive chef of Paola’s in New York City.

Her restaurant is jammed each night between 7 and 7:30, when around 90 people arrive, she says. OpenTable allows the manager to make notes—that a guest is waiting at the bar, or a table of people has partially arrived, for example.

“It makes everything easier to remember,” Bottero explains. “And that saves a lot of time.”

However, despite the positives, there are restaurant operators who prefer not to use OpenTable.

“People want to spend their money where they have an emotional connection to the business,” says Ina Pinkney, owner of Ina’s in Chicago. “Hearing a welcoming human voice on the phone, who can happily take a reservation, ask pertinent questions, and book the reservation makes perfect sense to us.”

Trading Personal Touches for Efficiency

And in fact, the loss of human touch is what some operators dislike about restaurant reservation systems.

“A reservation is personal,” says Luigi Diotaiuti, owner and chef of Al Tiramisu in Washington. “You talk on the phone to people, you chat to them, sometimes they tell you a little story about why they are celebrating. Any small detail I can get is important.”

But Ron Paul, president and CEO of Technomic, Chicago, pooh-poohs this idea.

“Consumers calling restaurants often get put on hold so it’s not always a good thing to have phone reservations,” he says. “Having people taking reservations at busy times doesn’t work well. The phone is a poor instrument.”

Keith Wallace, professor of the restaurant program at Drexel University in Philadelphia, also thinks phone reservations can be troublesome.

“Making a reservation by phone can be quite fraught for the consumer, especially if the restaurant doesn’t have the table or the time they want. So removing that human element at the beginning can create a better experience for the customer,” he explains. “Then the consumer’s first interaction with the restaurant is as a guest, which means they’re treated better than when cold-calling because they’re a paying customer.”

Increasingly, customers rely on reservation systems, affirming the providers of these services are certainly doing some things right and suggesting restaurants that don’t use them may find their business suffering

“Given mobile technology, more consumers are going to be making reservations online,” Paul says. “And I expect it to be driven by mobile. There’s no question consumers are getting more used to their mobile device.”

The numbers bear him out: According to OpenTable, 30 percent of customers make reservations using their mobile device, and Plates restaurant in Larchmont, New York, reports that mobile bookings constitute two-thirds of its bookings.

Offering Stellar Service

As reservation sites proliferate, there continues to be one clear leader. OpenTable is the giant in this industry, now boasting 19,000 restaurant customers across North America since it launched in 1999.

The number of consumers using the site continues to grow exponentially. In the third quarter of 2012, OpenTable served 29.7 million diners worldwide; almost triple the 10.3 million it served in the third quarter of 2009.

The reason may be that these customers feel better cared for, since OpenTable enables restaurants to gather information on their guests that can ensure they offer stellar customer service.

“You can treat certain customers—like regulars or those celebrating—with a little extra care,” says Wendy Weinstein Karp, owner of Plates restaurant.

“One time a customer let us know of a birthday and that they like the candle in the appetizer,” she says. “So we could meet that unusual need, and then surprise them with a candle at dessert too. Also table requests and dietary preferences are often in the system, so you can serve the guests appropriately without a lot of talk.”

New York City-based The Palm Restaurant Group routinely runs pre-arrival reports before each dinner shift. “That helps us identify how many of our guests for that shift are celebrating a special occasion, are first-time visitors, or are members of our loyalty program,” says Bruce Bozzi Jr., executive vice president of the 28-restaurant chain.

The company tries to go a step beyond for guests celebrating a special occasion, from the initial greeting at the host stand to writing note cards that are placed on the table prior to the guests’ arrival.

The Ralph Brennan Restaurant Group in New Orleans has a regular guest who is hard of hearing. “A quiet-table request can be carried forward with the guest record, so we’re able to properly plan for her seating in advance of the shift and she never has to ask,” explains vice president Charlee Williamson.

But Ina Pinkney argues that a human can provide exceptional service much better than a customer.

An example is that when one of her regulars arrives and they see his car, the server puts a pot of coffee on the table, clears the second place setting, and places a pen on the table for the crossword the guest invariably completes in the newspaper. The guest prefers minimal conversation and the check presenter placed after his entree arrives. “Show me an algorithm that understands Bruce at table 10,” Pinkey says.

Calculating ROI

Some operators see reservation systems as a necessary cost—and that cost can appear substantial.

Karp says the cost of the system is around 1 percent of gross revenue, but for her it’s a price worth paying: “That 1 percent frees up my manager to do other things.”

Similarly, Luke Fryer, owner of Betel in New York City, says it costs him slightly less than 1 percent of his revenue and Mikel Rogers, owner of Pearl Bellevue in Seattle, says it costs around 0.4 percent of gross revenue.

But Williamson of the Ralph Brennan Restaurant Group doesn’t mind the costs because she’s found that OpenTable guests spend more in some restaurants. “In Red Fish Grill they spend $5 or $6 more; and on an average $40 check that’s 12.5 percent more,” she says.

Williamson believes this is because diners booking through OpenTable seem to view their meal as an experience and are more committed to it, whereas walk-ins at the restaurant—which is on the touristy Bourbon Street—may simply want something to eat.

The costs can also be viewed in a different way, according to Wallace of Drexel University. “The cost of acquisition of a new customer is $20–$30 when you’re dealing with advertising margins,” he says. “So the fact that you can acquire somebody for the $1 reservation cost (the cost to book through OpenTable) is remarkable.”

And using OpenTable does tend to reduce costs, he adds, “Because you don’t need to have someone answering the phone to take reservations or return calls received during busy times or when you’re closed. The man-hours needed to return those calls are substantial.”

OpenTable isn’t just about keeping customers happy when they’re in a restaurant; it’s about enticing them there, too. And that’s where the marketing aspect of the system comes in.

“The ability to make data-driven decisions gives us a competitive advantage in marketing,” Williamson says. “The [opportunity] to look at objective, quantifiable information and then make smart decisions is invaluable, especially to look at trends over time.”

Supporting Savvy Decisions

Operators can also use OpenTable to market special events.

Pearl Bellevue in Seattle uses the site to post information about a New Year’s Eve event, or a special Mother’s Day brunch, for example.

“The price for OpenTable is all-inclusive so the more savvy about the site you are, the more you can take advantage of it,” says Bradley Dickinson, owner and executive chef.

OpenTable also allows restaurants to look at trends and project forward. For instance, the site provides analytical reports after big days like Thanksgiving or Easter.

In fact, according to Brandon Bidlack, the company’s senior director of restaurant marketing, restaurants can get a breakdown of total cover counts on special days and compare them to past days. They can also look at factors such as turn times, wait times, how many repeat guests they had, or how many guests were associated with a particular guest code such as VIP or wine-lover.

The advantages of using a system like OpenTable are numerous, but even proponents like Williamson and Bottero say it’s not perfect.

“The connections we used to have between customers and managers at the door are pretty much not there any more,” Bottero says. “You lose a little interaction but it’s a worthwhile exchange.”

Williamson also dislikes the initial rapport it creates with customers, she explains: “The first thing that happens when someone comes in and says there’s a reservation is our employees bow their heads [to look at the computer]. I also wish the hardware were sleeker looking. An iPad is much sexier and you can’t run OpenTable off an iPad.”

But if operators leverage the information they have from the OpenTable data, the remainder of the meal can make the initial encounter fade into insignificance, for an overall experience worth remembering—and worth talking about.