Is OpenTable Worth It? Founding Farmers says ‘Yes’!November 11th, 2010
As VSAG Principal and the Concept Developer and Managing Partner of one of the most popular restaurants in the country, I thought I would offer some insight and true-life case study experience to a question that has been bantered about the food industry community recently – Is OpenTable Worth It? Read below to get our perspective – and then let us know if we can help you and your restaurant see the same kind of OpenTable success! – Dan Simons
How many times have you purchased a product, only to find that you are not getting the value or functionality for which you paid? You become annoyed with how much money you’ve spent and then curse the product or company, maybe even throwing said product away. All the while, you never bothered to open up the user manual or build true fluency. This is a classic case of the user not understanding the product and blaming its creator.
Take the iPhone. How many of us have spent $499 for version 4.0, yet have never used the Face Time function? We may be frustrated that we haven’t received our money’s worth, but are only using our iPhone for the basics: calls/texting, checking in on Facebook and playing Angry Birds. Could we say the same about OpenTable, the restaurant industry’s leader in online reservations?
San Francisco’s beloved “Incanto” owner Mark Pastore recently penned a well-written article titled “Is OpenTable worth it?” where he expresses his frustration at OpenTable being the “nearly exclusive gatekeeper to this country’s restaurant seats” and questions its true value to the restaurateur, whom he says spends more money on OpenTable than it is “actually worth.”
He performed an informal survey of a dozen or so restaurant managers and owners throughout the country, most of whom were not happy with OpenTable. Many referenced feeling held hostage by “a hugely successful multinational corporation (that) has skillfully out-executed and out-maneuvered its competitors to create a valuable business.” What those that participated in Mr. Pastore’s survey don’t mention (and the one member of the dozen that felt OpenTable increased the value of his restaurant probably knows) is what we have found to be the most important ingredient to OpenTable’s recipe: the software.
The OpenTable software is the Face Time of the iPhone. It is a catalyst to optimize your FOH operations: the analytics, the metrics, data and health of the business. Do you know that the table turn time report allows you to better optimize seating? That tracking server performance may allow you to further delve into a server’s lack of dessert/coffee sales? Also included is seat utilization statistics (is your host staff seating two tops on four tops all night?) and the ability to capture guest likes and dislikes, VIP’s – naming just a few – but only if you use it.
To be fair, the price of OpenTable assumes you will use the robust software, software that can be overwhelming in a world of user-friendliness. OpenTable is growing faster than the company can keep up with, thus unable to provide customer service that provides assistance in receiving 100% utilization of their product. While there is phone customer support and a video-filled learning website (www.otlearningcenter.com), these only review the entry-level functions most users already know – and what we know at Founding Farmers – the meat of the burger is in the analytics; functions we were intimidated by at first.
We recently decided to create a case study by using an OpenTable specialist to dive into these analytics and help us either find value in OT or find a way to escape its clutches. As one of the most booked restaurants in the greater mid-Atlantic region, Founding Farmers is an OpenTable customer with an astronomical monthly bill: roughly $6,000. What we weren’t doing was implementing the actual function of the software, causing a bitter taste in my mouth, similar to those in Mr. Pastore’s article. I sort of felt that we were hooked on it like an addict could be hooked on drugs; it generates a lot of reservations that I think we may get anyway—but I’m scared to stop using it—its just a magic box sitting in the corner. I have no idea what else I could be doing with it. So, we ended up with very expensive reservations! There were two choices: remove OpenTable or see if it was possible to get the money out of it that we were putting into it.
The next 45 days were spent using Founding Farmers as a test site to definitively answer the question “Is there Return on Investment using OpenTable?”
We began monitoring table turn times by reports, only to find the reservations sheets were set to have tables turn at least 45 minutes later than they were actually turning (turn time/seat optimization). By following the slot utilization function, we found out that the host staff had been reserving tables for two people in reservations slots created for four, losing 50% of the business designed for that reservation slot.
We monitored server table turn time averages, which allowed us to begin monitoring the ‘why’ of shorter turn times and what wasn’t happening at the table – desserts/coffee being sold, diners being rushed through service by staff, and the like.
We used the actual reservation sheets and floor plan to manage the current shift, in and of itself creating an efficient system in which we kept accurate track of covers, where diners were during their meal, and more accurate wait times via the waitlist.
We started running VIP reports filtered to guests who had dined more than 25 times, marking their profiles as VIP regulars thereafter. This has given the relationship with the guest back to the restaurant to maintain, where we can now acknowledge guest loyalty with appreciation. Not only valuable, but actually priceless.
While there are many more details to share about the functionality of the software and the total value, the easiest conclusion we can convey is that at Founding Farmers, sales are up 15%, yet the monthly cost with OT is still the same. Realize that this is a 15% sales increase in a restaurant that was already extremely busy. The optimization utilization of the software was the catalyst for the sales increase; we could not have been as busy through this analytical lens without the OT software.
Founding Farmers sees the software as having amazing potential and functionality that delivers value. It is so much more than an expensive reservation system. There are many end users compelled to use it, but without knowing how to get the value out of it. To see results from the software, you need to master it—which means either taking classes, making a commitment to self-teaching, or paying a third-party consultant. While it would be nice if the software provider could ensure the end-user is fluent, the vast majority of software providers don’t always ensure that happens.
With OpenTable, we see them as not being able to ramp up their user development programs fast enough to take OpenTable users to the next level. The end user is responsible for their purchase and getting the end value, but if a company wants a long-term relationship, they have to help people get that value. OpenTable needs to find a way (either in-house or through a certified third party network) to get the end-users fluent, or the sentiment reflected in Mr. Pastore’s article will continue to foment.
We could blame OpenTable, but in the end, we had to blame ourselves for installing, then failing, to do the hard work of getting fluent with the system. In the day and age of the quick fix, the magic pill, and business that moves at the speed of light, we realized that as the end-user, we MUST be in control of the value proposition. Founding Farmers could still feel held hostage by our addiction to OpenTable from which we couldn’t escape, or we could finally put in the hard work to get the value out of it. We chose the latter. In doing so, we’ve changed our loathing of the ‘drug’ into loving the hero. OpenTable’s software is clearly a winner with regard to overall return on investment – but only if you use it.
Update: There’s been a ton of conversation regarding the great OpenTable Debate. From Twitter (@samsifton, @amandahesser) to media giant blogs including Inc.com, TechCrunch.com, Seeking Alpha and Reuters, the restaurant – and business – world has very strong opinions on the value of this omnipresent company. OpenTable is even jumping into the conversation with their perspective, visible on the OpenTable blog.