Businessmodel of OpenTable

Customer Segments

OpenTable has a multi-sided business model, with two interdependent customer segments that are both needed in order to operate:

• Consumers: Individuals who want to make restaurant reservations online
• Restaurants: Foodservice venues that want to generate more business from consumers ### Value Proposition

OpenTable offers four primary value propositions: accessibility, convenience, cost reduction, and brand/status.

The company creates accessibility for consumers by enabling them to save a spot at restaurants over the Internet. This provides an additional booking option when the phone option might not be possible. For restaurants, it provides an additional source of reserved customers.

The company offers convenience by enabling consumers to search for restaurants and reservations on its website using parameters such as dates, times, price range, and cuisine. For restaurants, it provides an Electronic Reservation Book (ERB) that handles and simplifies many processes, including reservation management, guest recognition, table management, and email marketing.

The company reduces costs by providing deal opportunities. Consumers are awarded Dining Points when they honor a reservation made through the website. If they earn enough points, they can redeem them for a reward, such as a Dining Rewards Gift (a discount) or an Amazon Gift Card. OpenTable also saves restaurants the cost of using paper systems to take reservations.

The company has established a powerful brand due to its success. It bills itself as the leading provider of online restaurant reservations, having partnered with over 37,000 restaurants worldwide. It serves over 19 million diners per month, and has served over one billion since its founding. These customers have spent over $42 billion at the restaurants and generated more than 40 million reviews.

Channels

OpenTable’s main channels are its website and mobile app; the company utilizes a sales team for restaurant clients. It promotes its offering through its social media pages and online advertising.

Customer Relationships

OpenTable’s customer relationship is primarily of a self-service, automated nature. Customers utilize the service through the website or app while having limited interaction with employees. The site provides self-help resources such as restaurant reviews, a listing of the most popular restaurants among OpenTable users, and answers to frequently asked questions. That said, there is also a community element in the form of forums where customers can interact with each other.

Key Activities

OpenTable’s business model entails maintaining a robust common platform between two parties:  consumers and restaurants. The platform consists of its website and mobile app.

Key Partners

OpenTable maintains the OpenTable Affiliate Program. Program members promote the company’s service by including links in their platforms (websites, mobile sites, mobile apps, etc.). Members receive a payment when visitors click on the links and make a reservation; those who generate more than 100 reservations a month qualify for revenue share opportunities. Partners typically fall into the following groups:

• Local or national dining directories
• Local and yellow page listing sites
• Food/restaurant blogs and online communities
• Magazine and newspaper websites
• Theater, movie, or music venue sites
• Chamber of commerce and/or culinary sites Specific partners include Menupages, Yelp, and Google.

Key Resources

OpenTable’s main resource is its proprietary software platform, which serves over 37,000 restaurants and over 19 million monthly customers. It also depends on its human resources in the form of technology, customer service, and sales employees. Lastly, as a startup it has relied heavily on funding from outside parties, raising $48 million from 11 investors as of October 2000.

Cost Structure

OpenTable has a cost-driven structure, aiming to minimize expenses through significant automation and low-price value propositions. Its biggest cost driver is likely marketing expenses, a fixed cost. Other major drivers are in the areas of customer support/operations and sales, both fixed expenses.

Revenue Streams

OpenTable has four revenue streams:

Upfront Fees - The company charges a one-time fee to restaurants for installation of on-site terminals and training services; it ranges from $200 to $700.

Reservation Fees – The company charges a transactional fee to restaurants each time a customer makes a reservation; the amount is $1 for reservations made through the site or app and $0.25 for reservations made through the restaurant’s site using the company’s software.

Subscription Fees – The company charges a fee to restaurants for monthly access to reservation management services (Electronic Reservation Book software); the minimum amount is $199 per month, with extra features costing $25 - $89 per month.

Marketing Revenues – The company charges restaurants a fee to be featured on its website as part of the promotional POP program or to be a part of e-mail marketing efforts. It also obtains revenues from its Spotlight program, through which it sells discount coupons to customers (it splits earnings from these sales with the restaurant).