Down with OpenTable!... Long Live OpenTable!

OpenTable.com, for those of you not “in the know,” is a website that allows diners to make restaurant reservations using the ease of the internet and also track availability at the “hottest” places, giving them a better chance and getting a precious table in temples of the new gastronomy in towns like New York and Chicago.

An aggregator like OpenTable should be a boon to the restaurant scene in any city where it crops up, and it has been popular enough to go into all 50 states, 22 major cities and now internationally in cities like Paris and Tokyo, but there’s a catch; to be a restaurant that can fill their open tables on OpenTable, one has to pay for the privilege.

And that is irking many of OpenTable’s current and potential clients.

In San Francisco, a bit of a furor has erupted over an “open letter” to OpenTable (clever, no?) on the website of a restaurant called Incanto.

Incanto’s owner, Mark Pastore, uses the space to somewhat excoriate OpenTable’s business practices and claims that the fees charged by the site to restaurants can, when broken down, run as high as $10.40 for a “four-top.”

That amount is undeniably problematic for a smaller restaurant operating on its own revenue margins, and we think it’s safe to estimate that the vast majority of American restaurants fit this description. 


Smaller (let’s just say “most”) restaurants would then be right to be fearful of OpenTable’s growing presence in their industry if the fee structure doesn’t adjust… and soon.

Pastore decries OpenTable’s “hegemony” and cites the $1.5 billion post-IPO valuation that the company currently carries as a newly minted public entity.

And that number is “the rub” as Shakespeare would pen if he had Pastore’s attention.

OpenTable’s success might be coming at the expense of the American Restaurateur, to whom Pastore is clearly trying to give voice, but they just might be too successful to be challenged with any real significance.

At the beginning of the month The Journal reported on OpenTable’s Q3, which was very healthy to say the least as earnings per share quadrupled from $.04 quarter-to-quarter from last year.

That type of growth does not create the image of a vulnerable venture and if we needed even more proof, they were even blessed by Sam Sifton a few weeks back.

When someone like “The Sifton,” who can move New Yorkers to restaurants like a pied piper, gets involved, it’s akin to powerful rivals eyeing each other respectfully across a battlefield.

So good news for OpenTable, bad news for the little guy? Or is this posturing by business owners trying to get a better deal from their already pretty good deal?