Is the party over for OpenTable?

April 16 2020

OpenTable recently published some data on the change in restaurant bookings on the platform since late February this year, showing the sharp decline as restaurants closed and countries went into lockdown.

I went ahead and graphed the dataset:

OpenTable's reservations

Obviously, the plummeting of restaurant reservations is not surpirsing. One quarter of the world’s population is under some form of lockdown and people are unlikely to head out for a meal where there aren’t any lockdowns, even if they’re technically allowed to.

What’s interesting however, is what will happen once the pandemic subsides and people start going to restaurants again.

Pricing Model

OpenTable charges restaurants $249 per month and an additional $1 per seat booked through their app. Meanwhile, restaurants accepting bookings on their own website or social media, both via OpenTable’s rails, are charged 25c per head. Anyone who has booked a table on OpenTable will know that diners aren’t charged for using the service.

Industry Boom

The restaurant industry has seen a boom in the last decade and experts were predicting that by 2020, there would be more people in the restaurant sector than in manufacturing.

OpenTable is the dominant player in the online reservations space, followed by Resy who feature far fewer locales. This restaurant boom has obviously also been good for OpenTable and 2014 they were acquired by the owners of Booking.com for $2.6bn.

Restaurant Closures on the Horizon

The restaurant business has notoriously thin margins and now that just about every restaurant in the United States has closed because of the pandemic, revenue streams have dried up rapidly.

“The coronavirus epidemic, it’s unchartered territory for us,” Sean Kennedy, a spokesman for the National Restaurant Association, told NPR.

Many restaurants have scrambled to maintain some degree of cash-flows by starting to do take-out and selling gift cards that can be redeemed in the future.

Inevitably, though, the industry will come out of the crisis serverely bruised and many restaurants will have had to close for good. Nor are we likely to see a restaurant boom given the dire economic forecasts being put out by economists.

Fewer Restaurants Means Fewer OpenTable Customers

OpenTable dominates the reservation platform market, but if restaurants across the country start to go under, then OpenTable will have fewer subscribers paying the $249 monthly fee. In that case, the dinner party is over for OpenTable.


Source: OpenTable, Eater