Restaurant reservation website OpenTable's Way and killer

Who's OpenTable?

From the business point of view, OpenTable and the domestic Food Network, ordering a small secretary similar, they are trying to use the Internet tool to change the custom of people, different places in the Food Network and the small secretary also accept a large number of telephone orders.

OpenTable not only provides online booking services, but also helps restaurants build IT systems. This and domestic easy to Amoy food and a la carte network more similar.

Catering industry is a huge market, but also a highly fragmented market, the integration of the upstream supply chain is very difficult. And the most lethal is the downstream user's consumption habits have not been "Internet."

And the hotel, air tickets in the field of booking is not the same: people travel always planning, so air tickets and hotel reservations are just needed. Therefore, the Internet is indeed a tool for the industry to bring great convenience, so the industry quickly be internet. The catering planning itself is not as good as the airline ticket, the hotel, and the traditional telephone order or the on-site line has been solidified into a deep-rooted habit, most consumers rely on change. OpenTable has been the "habit" as the company's biggest enemy of business.

The way of accumulating wealth

OpenTable's revenue comes mainly from three parts: the customer's booking commission, the monthly fee for the restaurant management software, pre-installed and other revenue.

OpenTable provides an electronic ordering system Erb to the restaurant. Erb In addition to the basic reservation system, but also integrated restaurant on-site management, CRM, marketing and other functions. The ERB solution also includes hardware devices such as touch-screen terminals. Restaurants that purchase the OpenTable Erb system need to pay a certain initial cost to the OpenTable and a monthly fee of USD 249 per month (North American market).

Of course, the restaurant can also choose not to install the ERB system, but use the Connect system provided by OpenTable directly from the website or app side to obtain orders.

The booking commission varies greatly according to the channel and the customer. If the consumer enters from the restaurant's own website and uses the OpenTable system to order the meal, each order restaurant will have to pay a commission of 0.25 dollars to the OpenTable. If the consumer through OpenTable's website or the app orders, ERB customer each order only to pay 1 dollar commission, but connect customer must pay 2.5 dollars commission. In addition, OpenTable also provides "1000 points" for members of the promotional activities. The customer needs to pay a commission of USD 7.5 for the corresponding order.

In 2013, OpenTable's booking commission was 115 million U.S. dollars, accounting for 60.6% of total receipts, the company is the main source of revenue. But before 2010, OpenTable's main revenue was the software monthly fee. The OpenTable was more like a restaurant-oriented software company. But OpenTable is now suddenly transformed into a catering reservation platform that gathers a large number of consumers.

Killer

In the client, OpenTable did not put too much marketing costs, more by Word-of-mouth transmission driven. We also mentioned earlier, the planning of the meal is not strong, at the same time, although the internet ordering can bring great convenience to consumers, but the habit of telephone ordering is deeply rooted. So, what is the OpenTable way to guide consumers to order their meals online?

OpenTable's killer is the integration plan. Every time a customer subscribes through OpenTable, he can get 100 points, worth 1 dollars. When the points reach 2000, consumers can make cash vouchers in any opentable business. But if the consumer does not place a single order for 12 consecutive months, all points in his account will be cleared.

OpenTable to Erb Merchant Order Commission also happens to be 1 dollars, just to reduce the OpenTable to the user's rebate. OpenTable the Commission in the form of integral to the full return to consumers, but also in the spare no effort to cultivate the user's consumption habits. This is also a disguised marketing costs.

But the consumer is not too high in the exchange rate. In 2013, OpenTable confirmed 20 million dollars in points consumption, and the company's balance sheet had a debt of $37 million for the corresponding consumption points. OpenTable estimates that the company's revenues would be reduced by about 6.8 million dollars if the user's points were increased by 10% per cent.

In addition to the slow maturity of consumer habits, the start of the mobile meal market is also a driving force for the rapid growth of opentable reservation business.

Target customers for meal mode

Erb customers are required to pay a monthly fee of up to $249 per month to OpenTable, as well as an extra commission for each order. In 2013, the average total cost of customers in OpenTable North America was $6400 trillion, a huge expense. Can a regular restaurant support it?

First of all, OpenTable itself is not all restaurants. OpenTable the restaurant pyramid from the top down to the reservation priority, the bulk of priority, only to receive the bulk (not accept reservations) three categories. OpenTable's ERB system aims at the preferred restaurant, OpenTable recommends connect system to the restaurant that is preferred but still accepted.

A large number of small and medium-sized restaurant-oriented restaurants are not OpenTable target customers.

OpenTable's target customers are high-end restaurants that are more cost-resilient. On the other hand, the return on the restaurant's investment in OpenTable has been improving.

OpenTable estimates that the two types of restaurants in North America are only 35,000 and 20,000 respectively. The penetration rate of opentable in these two markets was 54% and 13%,opentable was initially completed the target market coverage.

According to the information provided by OpenTable, the OpenTable service restaurant's per capita consumption is 42.5 dollars. The variable cost of serving these consumers is only 35%. That is to say, each order of OpenTable will add 28 dollars of gross profit to the restaurant. Compared with the 1 dollar order cost, the OpenTable channel investment rate is very high.

If it's just a matter of reckoning, OpenTable is a three-win business.