Is OpenTable Worth The Cost?

No question the Internet is rapidly remaking the way restaurant customers make reservations. Yet a new study from Cornell University finds that 71.7 percent of reservations are still made over the phone, with many of those calls coming from your online-savviest patrons. So are OpenTable and similar services worth it?

The title of the latest research study from Cornell University Prof. Sheryl Kimes—“The Role of Multi-Restaurant Reservation Sites in Restaurant Distribution Management”—makes her work sound a lot less interesting than it actually is. Full-service restaurant operators should find her results helpful in deciding how to play the online reservations game.

Working under the auspices of the Cornell University School of Hotel Administration’s Center for Hospitality Research, Kimes and coauthor Katherine Kies surveyed 472 consumers online about their restaurant reservation-making habits. They found that while 31 percent of U.S. adults had made an online reservation in 2009, 55 percent had done so in 2011.  Because this was an online-only survey, it can be inferred that the sample was as least as up-to-speed with current technology as the general U.S. population, if not more so.

There are several ways to make a reservation. So which ones did survey respondents use? Kimes and Kies found that 95 percent had made a reservation by phone, 48.5 percent had made a reservation through a restaurant’s individual website, 30 percent had done so through a multi-restaurant site and 16.5 percent had used a multi-restaurant site’s mobile app.

But despite the ubiquity of online reservation technology and the respondents’ experience with using it, the study found that 71.7 percent of reservations are nevertheless made over the phone. Individual restaurant sites process 15.5 percent of reservations, multi-restaurant sites control 9.3 percent and multi-restaurant apps handle 3.5 percent of the volume.

The key finding to keep in mind when you’re weighing the merits of participating in a multi-restaurant service might be this: your customers, even those who hold memberships in multi-restaurant services, use multiple channels when making reservations. “Multi-restaurant site users made 38.7 percent of their reservations by phone, 20.9 percent on a restaurant website, 29.4 percent through a multi-restaurant site, and 11 percent through a multi-restaurant app,” the authors point out.

These findings give operators food for thought. Signing up to list your restaurant on an online multi-restaurant service costs you money—$270 per month and $1 per seated diner for OpenTable, Kimes and Kies report. And you also lose control of part or most of your dining room’s table inventory when you do.

However, there are advantages to appearing on a multi-restaurant service site. One big one is the prospect of incremental business. Hard evidence on this point is hard to come by—for restaurants. But exposure on third-party sites does seem to pay off for hotels.

“The question, then, is whether incremental business is being booked through these sites,” Kimes and Kies note. “While this question has not been examined for restaurants, a study of hotels found that being listed by the OTA (online travel agents, i.e., Expedia or Priceline) did drive reservations on the hotels’ own websites, in a phenomenon known as the billboard effect.”

Let’s hope Kimes and her colleagues do a study that will assess whether restaurants experience a similar billboard effect. Many, many operators would like to know the answer to that question.