Meritage and Hell's Kitchen drop Open Table: The exodus begins?

Categories: News

Open Table illustration for Dish.jpg
Lars Leetaru
Local restaurateurs switch to an Open Table alternative.
A recent Dish column looked into online reservations' impact on Twin Cities restaurants. While many restaurants, especially those that are new, off the beaten path, or have many seats to fill, are benefiting from using the dominant online reservation system, Open Table, some were feeling beholden to a service didn't really meet their needs and took a huge bite out of their budgets.

Desta and Russell Klein, the owners of Meritage in St. Paul felt that Open Table wasn't aiding their restaurant enough to be worth its exorbitant cost, roughly $15,000 to $18,000 a year. They wanted to be able to offer their customers the ability to make online reservations, but they didn't really need Open Table's marketing services.

So a couple of weeks ago, Meritage dropped Open Table and switched to another reservation system...and a lot of other local restaurants may soon be following suit. Here's why:

Desta Klein says that after the Dish article came out, she talked to Cynthia Gerdes, co-owner of Hell's Kitchen, who had just received her monthly $3,000 Open Table bill and was fearing she would have to raise menu prices to cover the costs. The two looked into an online reservation service called Eveve, which is Open Table's primary competitor in Europe. "We were both kind of scared to leave Open Table," Klein says. "They have such a dominant market share. That's not a good position to be in."

Eveve still offers diners same-time reservations and confirmations, Klein says, but with the ability to customize the process in a way that better suited her restaurant's needs. (The system can be set to designate which seats should be filled first and factor in the restaurant's ability to push tables together for large groups, for example.)

Also, with Open Table, diners' contact information feeds into Open Table's database, which means customers on one restaurant's email list receive marketing information from Open Table, essentially encouraging them to visit competing restaurants. "Open Table forced to pay for marketing I didn't really want," Desta Klein says. "Some of it was directly working against me."

Best of all, Klein says, Eveve charges only a $200 per month flat fee. By contrast, Open Table charges a one-time installation fee of several hundred dollars (to cover setup and training for the Open Table computer terminal and software), plus, at minimum, a basic monthly fee of $199 and a per-cover charge of $1 for each person in the dining party on reservations booked through Open Table's website. Eveve requires no contract, no special equipment, and can be accessed through as many computers as the restaurant desires, so staff can even manage reservations from home.

Klein says that so far, the new system is working better, and has cut Meritage's online reservations expenses about 85 percent. Hell's Kitchen made the switch a week ago and says it has seen its numbers of online reservations hold steady. Open Table was very useful to the large, downtown Minneapolis, tourist-friendly spot--Hell's Kitchen was the system's second most top booked in the Twin Cities, and among the top 10 in the nation, Gerdes says. But while the restaurant may miss out on some of the exposure Open Table offered, Gerdes thinks the annual savings--they paid a whopping $32,000 last year--will be more beneficial to the business overall.

Interestingly, Klein says she's already received calls from several large local restaurant groups who are also interested in finding an alternative to Open Table. "We might be starting a mini revolution here," she says.

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43 comments
deannah6
deannah6

How much is your Table Touch App?  Cheers to you for being so proactive but not all can create their own software or iTune App -- wow!  Interested in finding out how your App works and what the cost is.  Is it cheaper than Eveve?  What features does it have?  Please advise...

Kj Winters
Kj Winters

Table Touch vs. OpenTableAs owner of restaurant (Obento-ya) I also thought OpenTable was expensive. So what does a person do, of course, build their own system. It worked so well, it's now a App. Table Touch is available on iTunes. Competition is always good. Nice to know small places can still have big ideas. Cheers to giving restaurants a cost effective voice.

Lovehellskitchen
Lovehellskitchen

Wow, I had no idea opentable charged the restaurants so much.  I feel pretty bad now, as I've used open table pretty obsessively, even when there was no need.  Personally I've only used it to decide where to eat once, and that's because I very rarely eat Asian food so I had no idea where to go.

I've booked about 3 Hells Kitchen reservations per month so it's obviously a favorite of mine.

I just uninstalled the open table app off my phone, from now on I'm just going to call the restaurant if I need a reservation, and realize that the vast majority of the time I don't even need one at all.

Tim Ryan, Eveve
Tim Ryan, Eveve

Hi this is Tim Ryan, Sales Director at Eveve.  We would just like to thank Meritage and Hell's Kitchen who have joined a growing number of restaurants in North America in choosing Eveve.  If anyone would like to find out more please go to www.eveve.com.  For clarification purposes, all Eveve commentary is labelled as such.

guest
guest

I like using Open Table because all my reservations are on one site. 

As for "picking up the phone"--I prefer having something in writing that I have a reservation.

Stinkfist
Stinkfist

what ever happened to picking up the phone. This world is going to shit. Put down your damn i phones open your eyes and free your minds. Maybe the restaurants should  feed you too cause quite frankly thats getting a little behind the times too.

Gen
Gen

What really interests me is where Opentable's fees aregoing.  In the 4 quarters to 2010 Q3, Opentable’s revenue was about $84million.  Profit was $14.74 million (17%). What is even more outrageous is that Opentable's top 5 staff made $8million last year in "Basic" pay.  On revenues of $80 million,about 10% of a restaurant’s bill is going into the back pocket of a few greedyfat cats, with a further 17% going to a few VC investors and those same shareholdingexecutives.

Andreas
Andreas

Eveve is very good for us, it is not good at all to have only one company who provide bookings system in USA. Yes the exodus is beging!!!

I will contact with Eveve!!!!

Mark
Mark

What always got me about Opentable was this. I'd google a restaurant and try to book. But the restaurant then packs me off to open table, and I have to give that bunch all my details. So I wonder, who's providing the service to whom? I find Open - even though I don't want to - through the restaurant. Not the other way around. What a scam!

Jason Dorweiler
Jason Dorweiler

Never even knew about open table. I don't understand why a restaurant would pay 18 g's a year for this service. If your food is good, prices right, word of mouth and the phone work better.

Ann
Ann

Glad to see folks are finally waking up to the Open Table rip-off. Open Table is not "free" even for consumers...restaurants have to pass that OPEN charge off to consumers somewhere, most likely in the menu prices. In addition to their ridiculous rates, the entire company is on morally shaky ground.  Just take a quick peruse at their SEC filings to find out the high volume of shares being dumped by company officials (compared to company earnings, something seems askew).  Not saying illegal, but it does wreak a little "pump-and-dump-ish".   If you're a restaurant owner, we need to stand behind the National Restaurant Association and let them know we support their rumored roll-out of a FREE reservation system that will take OPEN to the mat.

Matt Hill
Matt Hill

...One of the top 10 booked in the nation.... How come when Open Table got the news that Hells Kitchen was dropping them, someone wasn't on the next flight to MSP begging them on their hands and knees keep them as a client?

Schnig
Schnig

I don't know what customers "like" open table but I think it's a total rip-off.  Their "hook" for restaurant customers is their point system.  I have been using them regularly for 2 years and have never received a reward...because at LEAST 80% of the time I book, I get a little message that says "you will not receive any points for this reservation".  So now, I use the restaurant website or call.

Stacy
Stacy

Hurrah!   Finally.

Gen
Gen

Well done Meritage, sounds like a case of "The Emperor's New Clothes" to me.  I am in the travel business and it sounds like restaurants are breaking free of the monopoly suppliers in a similar way to our sector.  Regarding the booking app: I have an iphone, and the only "app" I ever use is Google.  Why use an app like Opentable which has thousands of restaurants, when Google lists them all, with syndicated reviews from all the comparison sites.  If I use Google to find the restaurant, it makes no difference which company provides the restaurant's booking system.

Shark K.
Shark K.

I think the ease of Open Table's smartphone app makes it a better choice for consumers.  Just because a couple of established hipster places can get away with it, does not mean it is horrible for everyone.  Yes the industry is tight on the bottom line, but the two examples should maybe look at their poor customer service practices to increase revenue before cutting the lifeline of a solid reservations system that customers like.  I personally will not jump from poor website to poor website (hint, hint) to see where I can make a reservation when I can do it all in one stop on my phone app.

Onedove
Onedove

I am thrilled about this

Kaleeburich
Kaleeburich

Wow! I had no idea Open Table charged that much... I would have dropped them too. It would be cheaper for restaurants to hire a developer to custom design an app for their restaurant website. I use Open Table for convenience... not the marketing factor of finding unknown or new restaurants.

Michael Stearn
Michael Stearn

I had a look at the Eveve website and it looks like they are taking a number of restaurants from Opentable in Europe.

Im not surprised if a restaurant can get a product of essentially the same functionality, but can save 85% from their mothly bill!

scott
scott

Wow.  No idea Open Table costs that much. I'll work directly with the restaurants now for reservations.

Eva
Eva

Eveve is the best alternative against Open Table, mainly for two reasons:

1 The software is better and more dinamic, it was created to optimize restaurant tables2 This company can demostrated how the number of your reservation can increase because your restaurant has technology and innovation. 

After provide these tools, your restaurant is ready to the magical word, Marketing!!! 

But, this is not magic, and it is not so easy as pay another company who are not interesting into know what your restaurant need.

As every proffesional of Marketing knows, the Marketing has to be focus in your target to be profitable. This is the only way in which the Marketing has a good result. 

Internet only suppose a share of your business,  less than the 30% of your revenue come from Internet bookings. Why do you need to spend more money in Internet promotios than in off-line promotion? Why can't you develope your own marketing campaigns with your own tools?

1 Take care of your clients, manage the reservations properly & don't give free your data base2 Focus in your target to promote your restaurant 3 Save your money4 Best technology and innovation

Mark Monika
Mark Monika

I had no idea restaurants had to pay so much; I'll go through restaurant websites from now on, especially the indie jewels such as these that i visit whenever i'm in town.

Honestly
Honestly

Won't change my reservation habits. The OpenTable app is pretty useful.

Cyn
Cyn

Hell's Kitchen owners here: Thank you, "Lovehellskitchen" for your delicious comments, but at the risk of anyone thinking we wrote this ourselves, we just want to be clear that we did not. So, "L.H.K." and (most) everyone else, thanks thanks thanks for your support on our huge decision to change. Yes, our new online reservations give instant email confirmation, and of course, you're always welcome to call for a res as well.  Cynthia Gerdes

Urbanirvana
Urbanirvana

Hmmm. Why do you care? From the consumers point of view, they offer a convenient and reliable service.  I've used them for years in California, Texas, Hawaii, Colorado and while traveling on quick trips. I've earned at least ten meals for free through the points.Was just waiting at an Amtrak station last month and used their app on my phone to book reservations at four restaurants I have never been to before. It took less than ten minutes to look up the menus and glance at photos and decide where to go.So easy.

Paulanapier77
Paulanapier77

Where does this information actually come from?  Can it be backed up at all?  I wish I could run a restaurant which could afford to pay me 10% of revenue, and a 17% dividend on top.

Paula
Paula

There is no such thing as a free lunch!  I do not know what it costs to build a reservation system, but I would imagine it costs a few bucks!  If the NRA have built a system, you can be sure the restaurants will pay one way or another.  On the other hand, if it is a cheap solution which doesnt work as well as Opentable, why would a restaurant use it?  While Opentable is expensive, at least it provides a decent reservation system, which delivers bookings.  I would not jeopardize all that to save a few bucks!  Finally, the diners seem used to Opentable.

Nlevis
Nlevis

Great discussion... I have been writing about Opentable.com for months on Seekingalpha.com under "hedgephone" --- I think they are smart businesspeople but that the service is, well, not that great for the restaurant... That's not my point thought, my point is that the stock is in a bubble and that it should make a good short here.... Check out my article on it at www.hedgephone.com

noodleman
noodleman

@Shark: Do you also believe a restaurant's wait staff makes $100k? Criminy, screw the third-party app. That would be the least of my concerns if I ran a restaurant. I'd rather spend some of those five-figures I was paying OpenTable to have someone develop my OWN app for my restaurant. OpenTable is nothing but a glorified database; not worth $32k.

Jess
Jess

Hiring a developer would cost even more that opentable! also when you have something that's convenient, you don't really go looking for anything else? it's good to be reminded that there are alternative options.

John
John

Looks pretty obvious that you work for Eveve. Why not disclose it in your comment?

Rachel Hutton
Rachel Hutton

Per Mark's comment, with restaurants that use Open Table, booking your reservation though the Open Table website incurs a $1/per person charge, while booking directly through the restaurant's website costs them just $.25. Calling incurs no Open Table fee. 

Cyn
Cyn

P.S. Nor do I, in fact, think those goofy "shill" comments were by Eveve...they're a class act and certainly don't speak in broken sentences.

Houyhnhms
Houyhnhms

Eva and Andreas are obviously working for OT. It's black propaganda. This is getting fun!

Jess
Jess

i agree getting a decent reservation system is more important. but if this new company is as good as open there's no case for not going for it.. i'd wait to see what it delivers

Eva
Eva

Because, it is obvoius as you say. Do you have any opinion about I have said?Actually, where do you work?, maybe I can help "your restaurant"Cheers,

Eva

brazil_83
brazil_83

Those are of course just the variable costs.  When you add the monthly fees, referral fees, hardware costs, it is much more.  Recent study showed that the cost of a four top broughtthrough OT is $10.40. With margins of between 5-7% (national average)for restaurants, the table would have to spend $208.00 to breakevenincluding the OT fee.

Di
Di

But if these people come back to the restaurant, without going through opentable again, then it's pure profit for the restaurant. I think the worst thing for restaurants using opentable is they can never get repeat customers, like it says above opentable advertises competing restaurants, so they spend all these money on opentable when they should be spending on getting repeat customers.

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