Why OpenTable Is A Lousy Deal For Some Restaurants

Incanto restaurant
Incanto restaurant doesn’t accept OpenTable reservations.

[credit provider=”Incanto” url=”http://incanto.biz/”]

OpenTable, the online and mobile restaurant reservation system, is great for consumers — it lets them look at a bunch of different restaurants, see which one has the most convenient available reservation time, and book the reservation without ever picking up a phone.But some restaurant owners hate it.

Last night, social marketing startup Roost hosted a dinner in San Francisco with several restaurant owners and other local food industry people. When the conversation turned to OpenTable, reactions were heated.

Mark Pastore, a former tech entrepreneur who now owns Italian restaurant Incanto and cured meat shop Boccalone, believes that OpenTable does nothing to increase the total number of people going out on any given night — all it does is shift the dining audience around to restaurants who participate in the system. (He explains in more detail on his blog.)

In other words, it’s become almost like extortion — restaurants must to pay a one-time set-up fee of about several hundred bucks, plus up to several thousand dollars a month in various subscription fees, or risk losing customers to competitors. Restaurants pass these costs along for consumers in the form of higher prices, which reduces the number of people going out to dinner.

Worse yet, OpenTable owns the customer data that restaurants collect through its system. If they cancel their subscription, they lose access to that data.

OpenTable responded to Pastore’s original blog post by noting that the average restaurant only needs to get three more reservations per month to make its OpenTable subscription pay off.

But Pastore is suspicious of that claim, noting that restaurants often operate on very thin margins. He says that one restaurant in the western part of San Francisco (he wouldn’t name it) spent more than $47,000 on OpenTable last year. That’s more than the restaurant has ever made in profit.

Pastore’s solution: build your own Web site and pay somebody to answer the phone. Just like the old days.