If you eat out a lot and are tech literate, you’ve probably heard of a service called Open Table. In fact, chances are you use that service to make restaurant reservations when you go out to eat. On the face of it, it seems like a brilliant idea. You don’t have to call the restaurant, you can just turn on your smart phone or go to opentable.com to make a reservation. It’s easy, straight forward and fast. And it’s free!
Well, it’s free to you. But it isn’t free to the restaurant. In fact, it’s very expensive for the restaurant — to the point of being harmful.
Most restaurants run very thin profit margins. The average marginal profit for a full service restaurant in the United States is about 5%. That means that if you go to a restaurant and have a $50 meal, the restaurant makes $2.50.
Open Table charges restaurants for its service. That’s why it can offer it to us — the consumers — free of charge. There are startup fees for software installation. There is a monthly subscription fee. And finally there is a charge of $1 per diner who books through opentable.com or the mobile app and $0.25 per diner who books through the restaurant’s own website. A recent study of the Open Table fee structure discovered that when you take into account the start up costs, the monthly subscription fee and the average number of tables Open Table actually fills for restaurants, the actual average cost per diner is more like $2.60.
That means that if you book through Open Table and eat a $50 meal, the restaurant doesn’t make any money from you. Zero. All of the profits go straight to Open Table. If you eat a substantially cheaper meal, it’s possible the restaurant could actually lose money from your visit.
So why on Earth do restaurants agree to this? Why do so many use Open Table? Well, because of us. Their customers who use Open Table. Because we don’t want to make that phone call. We pressure them. So much so, that some of the restaurants that don’t use it feel the need to explain themselves.
They’re afraid that if they don’t use Open Table, they’ll lose our business. Even though they don’t gain anything from our business when we book with Open Table. They hope and pray that next time we come, we won’t book using Open Table and they’ll actually be able to make some money. But more often than not we don’t. We book on Open Table, every time.
So what can you do? You can help out the restaurants who’s food you love by making a reservation the old fashioned way — calling! And you can spread the word to your friends who use Open Table — when you book with Open Table the restaurant loses.
