Open Table and the cost of making reservations

How much does booking online cost restaurants? You'd be surprised.

There are as many ways to procure a table at a restaurant as there are to cook an egg. Sometimes you simply walk in off the street and ask to be seated, and you're instantly given a spot. At other times, that approach means you will wait for an hour or more, jammed into a crowded bar or in a queue that stretches into the street. A lot of restaurants let diners make advance reservations, and some go so far as to sell seats for each evening's prix fixe meal as individual tickets, as at a concert. Each approach has its pros and cons, both to the diner and to the restaurant—some of which benefit one group at the other's expense.

The simplest reservations system, of course, is not to have one. Some small restaurants, and larger ones with high-traffic locations or outsize popularity, have high enough demand to consistently reach their desired capacity just by waiting for diners to show up. This policy can increase the restaurant's profitability by cutting the expense of managing reservations and eliminating the inefficiencies of having tables sit empty between parties, or, worse, for an entire turn due to a no-show.

The new Tilia in Linden Hills seats diners on such a first-come, first-served basis, though chef and co-owner Steven Brown says the policy has less to do with logistics than emotions. "The main factor is that we're squarely a neighborhood place," he explains. "We want people to feel like they can come in any time they want." There's a democracy to a system, Brown says, that turns no one away. Anyone can get a table, as long as they're willing to wait. (The restaurant stays open till 1 a.m. and so far has been able to accommodate all those who wait out the dinner rush.) Taking reservations, Brown says, would send a different message. "It adds a certain formality," he says. "Also, with only 14 tables in our restaurant, we could get booked out in a matter of moments."

Lars Leetaru www.leetaru.com

Location Info

Map

Tilia

2726 W. 43rd St.
Minneapolis, MN 55410

Category: Restaurant > American

Region: Southwest Minneapolis

Brown hopes that diners can turn the time spent waiting for a table at Tilia into an opportunity to socialize or explore the neighborhood. (Though maybe not at Sebastian Joe's, where you'll be tempted to spoil your dinner with an ice cream cone.) "We want to be that community hub in our neighborhood," he says.

But diners on tighter schedules—say, those hosting clients, headed to a show, or paying for a babysitter—want to know that they won't have to wait and prefer to have a table confirmed. Most restaurant reservations, about 90 percent, are still made on the phone, though internet bookings are fast increasing. Michael Kutscheid, the maitre d' and co-owner of Sanctuary restaurant in downtown Minneapolis, has a long memory of the days before online reservations. "In '98 when Oceanaire opened, I had a person dedicated to answering the phone and taking reservations from 10 o'clock on," he recalls. "When I opened D'Amico Cucina, we had five incoming phone lines. These days, the amount of traffic on the phone has really calmed down."

That's largely due to OpenTable.com, which launched in San Francisco in 1998 and enjoys something of a monopoly in the online reservation business. The system didn't gain much traction in the Twin Cities until around the time the company went public a couple of years ago, but today nearly 250 Minneapolis and St. Paul restaurants use the service.

Online reservations can be extremely convenient. They can be made at any time, without having to wait on hold or receive a confirmation. Simply go to OpenTable.com and view the dozens of dining options displayed on a map, sortable by location, price range, and cuisine type. With just a few clicks, and at no cost, diners can book a table instantly.

But there's no such thing as a free lunch—or a free dinner reservation. The participating restaurant typically pays 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. The system's biggest source of contention is that it also charges the restaurant $1 for each person in the dining party on reservations booked through Open Table's website. If diners book by clicking through the restaurant's website, that fee is reduced to $.25 per person. Calling the restaurant directly incurs no Open Table expense.

Some frustrated restaurant owners argue that the per-diner fee is excessive, a complaint similar to the one that concertgoers levy against Ticketmaster. Restaurant owners understand the system has its benefits, but they can't always quantify how those compare to its costs. Part of the challenge stems from their inability to differentiate between a "new" diner who was brought to the restaurant by Open Table and one whose mind was already made up and just happened to book through Open Table's page. If owners could count only diners who are truly "new," the cost of bringing in customers through Open Table would no doubt ratchet up even higher.

The most expensive option for restaurants is Open Table's rewards program, which gives diners an incentive to book at off-peak times. The diner who makes the reservation receives 1,000 dining points—good toward $10 worth of food at an Open Table restaurant. But while the program does help restaurants fill empty seats during less-busy hours, Open Table also charges them a steep $7.50 per party member. Unless the diner rings up an especially large bill or becomes a repeat customer, a restaurant can lose money on the deal. Even diners who have benefited from the system would admit that it seems a little unjust for the restaurant to pay more for a computer to book your seat than to the person who cooked your meal.

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