{{ searchResult.published_at | date:'d MMMM yyyy' }}

Loading ...
Loading ...

Enter a search term such as “mobile analytics” or browse our content using the filters above.


That’s not only a poor Scrabble score but we also couldn’t find any results matching “”.
Check your spelling or try broadening your search.


Sorry about this, there is a problem with our search at the moment.
Please try again later.

Later tonight, OpenTable plans to announce its IPO. The San Francisco-based restaurant reservations system, headed by former eBay and PayPal executive Jeff Jordan, filed for a $40 million initial public offering in February, which then made it only the third venture nationwide to file for an IPO this year.

So how did the company manage 21% growth in revenue since last year and position itself to IPO in such a beleagured market? By forgoing advertising for a subscriptions model and some formidable marketing muscle.

People may not eat out as much during a recession and restaurants may be subsequently suffering, but when diners do make reservations online, they are doing so on OpenTable.com. Or at least more than half of them are.

57% of diners make reservations via opentable.com and the remaining 43% book via the restaurant website, which means that OpenTable provides valuable marketing opportunities to restaurant owners.

Rather than provide its service free and offer restaurants advertising opportunities on the site, OpenTable charges restaurants a one-time starter fee to use their service, a monthly subscription fee, and a per use fee of $0.25 for each reservation created on the site.

When OpenTable announced its IPO intent in February, tech analyst Jonathan Wegener estimated the cost/earnings of the site for restaurants and found that it's the marketing potential that makes a subscription worth it:

The real value that OpenTable delivers, therefore, is the 197 NEW customers generated due to the marketing exposure on opentable.com.  Restaurants are really paying $515 to gain 197 new customers, which comes to $2.61 per customer.

Compared to the money that restaurants might spend advertising in print or elsewhere, $2.61 spent to acquire a new customer isn't bad at all. It's in the restaurants' interest to be seen on the site, even if there are paying to be there. And by figuring out the value they are providing to both restaurants and their customers, OpenTable has manged to create a sustainable business model without advertising. A route especially useful when the advertising market is in freefall.

Meghan Keane

Published 19 May, 2009 by Meghan Keane

Based in New York, Meghan Keane is US Editor of Econsultancy. You can follow her on Twitter: @keanesian.

721 more posts from this author

Comments (1)


Ben Price

I just had a look at opentable.com but it is not a scratch on toptable.com

These usage figures must be for the US.  I had never heard of it before this article.

over 7 years ago

Save or Cancel

Enjoying this article?

Get more just like this, delivered to your inbox.

Keep up to date with the latest analysis, inspiration and learning from the Econsultancy blog with our free Daily Pulse newsletter. Each weekday, you ll receive a hand-picked digest of the latest and greatest articles, as well as snippets of new market data, best practice guides and trends research.