I’m a big user of OpenTable (NASDAQ:OPEN) — I’ve used it to reserve three lunches just this week, and I’d use it to book dinner on Wednesday, too, if it wasn’t for the fact that the restaurant I want to go to doesn’t take any reservations at all. I like its reliability: I’ve been using it for over a decade now (my first reservation, according to the site, was in June 2001), and so far I’ve never had a reservation lost. OpenTable’s particularly good for business lunches with someone you’ve never met before: you just give the name on the reservation at the front desk, you’re shown to your table, and there’s none of that weird shuffling around trying to work out who it is you’re supposed to be meeting.
All the same, for a hot San Francisco technology company, OpenTable does seem to be changing diners’ habits at a veritable snail’s pace. Even at restaurants with the OpenTable system installed, a large majority of diners still prefer to make their reservation by phone. And at reservation-accepting restaurants in general, just 12% of reservations are made online.
Using the telephone really doesn’t make much sense, most of the time, if you have the choice; Bret Easton Ellis once crafted an entire comic set-piece in American Psycho using nothing but restaurant reservations and call waiting. Maybe it’s just my natural misanthropy coming through, but I don’t like calling restaurants on the phone, and it seems to me that the only people who could credibly claim to prefer it are the elite who can drop the right names and make empty tables magically appear when they do.
So what’s preventing online reservation services from being more popular? Why do they still have such low market share? I think that OpenTable CEO Matt Roberts is more right than he thinks when he says that it’s a function of his service having to be sold, essentially, door-to-door, one restaurant at a time.
There’s a slogan online that “if you are not paying for it, you’re not the customer; you’re the product being sold” — and this, to me, is probably the main issue facing OpenTable. The company sees itself as selling reservations systems to restaurants, much more than it sees itself as selling convenience to diners. And as a result, OpenTable is having difficulty gaining traction in a world where social media is doing most of the heavy lifting when it comes to connecting our online and offline worlds.
For instance, it still insists that you use your unique OpenTable username and password to log in. It should, of course, be asking you to log in using Facebook, instead. Indeed, OpenTable should more or less live on Facebook, much as Farmville does, most of the time. And even when you go to a restaurant’s website, or to opentable.com, it should take just a couple of clicks to invite any of your Facebook friends to lunch or dinner. When they accept, that reservation should then turn up in their OpenTable account, as well as yours. Similarly, when you’re searching for a place to eat, and looking at the reviews from OpenTable diners, the site should show you where your friends eat and what they’ve said about the restaurants you’re looking at. Foursquare is miles ahead of OpenTable on this front, which is crazy; if OpenTable wants to encourage people to leave reviews, then a really good way of doing so is for those people to know that their reviews will be seen by, and useful to, their own Facebook friends.
For most of 2010 and the beginning of 2011, OpenTable’s stock went on an absolute tear, rising from $25 to over $115. A lot of that was misplaced excitement about OpenTable entering the deals space, I think, but the company absolutely should have used the currency of its highly-valued equity to make a big investment in consumer-facing communication generally, and social in particular. If OpenTable could make restaurant reservations fun and easy enough that people actually started eating out more, then the pushback from restaurants in terms of OpenTable’s cost would surely dissipate overnight.
Instead, OpenTable decided to double down on its restaurateur-facing strategy, wheeling out new software which makes it easier for the computer to combine tables on the fly, to create say a 4-top from two 2-tops, and also a new iPad app for owners giving them detailed analytics on their restaurants.
All that new flashy software is great, I’m sure. But as far as a consumer like me is concerned, I still get asked, the tenth time I’m making a reservation at one of my regular lunch spots — and after I’m logged in to the site — whether or not I’ve ever eaten at this restaurant before.
I’m not asking, here, for sophisticated Netflix (NASDAQ:NFLX)-style algorithms which look at where I eat, and where my friends eat, and how I rate restaurants, and which then make personalized recommendations for me and which will give me hints as to where I might like to take a certain person for dinner. (That might be a bit creepy, actually.) I’m just asking for a level of polish and customer service from OpenTable which matches the service I get from OpenTable’s participating restaurants. Because it seems to me that if OpenTable wants more people to make use of its product, then it should probably work on getting more people to like that product. Right now, it’s a clunky utility, albeit one which is much better than the telephone alternative. It can, and should, do a lot better.