Dining concierge app Reserve today announced the launch of its new instant restaurant reservations system. With Reserve for Restaurants, the company will be going head-to-head against other reservations companies, including OpenTable and Yelp's SeatMe.
Reserve isn't new, but its table management and instant reservation service is. Reserve's concierge service allows users to select from a "curated list" of restaurant partners. Users then give the app a time window of when they would like to visit. The concierge service is still available, but now users can visit the site and make an instant reservation at any of the company's 150 restaurant partners (users can request reservations at an additional 350 restaurants through the concierge service). Last month, Reserve acquired a mobile payment app, which it hopes will allow it to become an all-in-one solution for reservations and payment.
Reserve has 150 restaurant partners; OpenTable has more than 36,000
Reserve's 150 restaurant partners is a far cry from OpenTable's more than 36,000 restaurants. But despite the fact that OpenTable still remains the industry leader, some decidedly high-end and hip restaurants are looking for other options. In the New York area, Russ & Daughter's Cafe, Blue Hill at Stone Barns, and Mission Chinese Food, for instance, are all on Reserve. "OpenTable is obviously the dominant player in that industry and new companies started coming onboard in recent years — but they're kind of cloud-based versions of the same thing," says Reserve's Head of Restaurant Product, Peter Esmond. "None of them really have an understanding of what a restaurant needs."
Before he landed at Reserve, Esmond worked for decades in the restaurant industry — most recently as general manager of Per Se in New York City — and believes he has a pretty solid understanding of what a restaurant needs. He and several of his colleagues spent the last several months shadowing workers at a handful of Reserve's partner restaurants.
Annie Stoll, co-owner of San Francisco's Delfina, recently switched from Yelp's SeatMe to Reserve for Restaurants. "What a lot of these reservations systems don't understand is that it's not an exact science," she says. "They'll say, 'We set it up, so you don't have to do anything.' But that's not how the restaurant business works. It's fluid."
In Boston, the owners of Townsman have made the switch to Reserve from OpenTable, citing similar concerns. General Manager Rachel Isenberg says her OpenTable rep was available only on weekdays, 9 a.m. to 5 p.m. "Outside of those times, you would have to sit on a phone call waiting," she says. "Five o'clock isn't even when we start our dinner service. There's always the option for something to go down and having someone continually on call is important. Those scenarios happen much more frequently than you might think."
But when asked whether reps are available outside of traditional business hours, both Yelp and OpenTable say they have representatives working around the clock, on weekends and holidays. Reserve also promises its reps are available throughout the day, every day of the year.
Vish Prabhakara, GM of Yelp's SeatMe, says restaurants are primarily looking for two things in a reservations system: "They want to put more butts in seats and they're also looking for software, which helps the management side."
Prabhakara says Yelp has cornered the market in terms of software. "We have an entirely native iPad app, a partnership with Apple, and a team of double-digit engineers." As for the "butts in seats" bit, he admits that SeatMe isn't the largest reservation system — yet. "In terms of getting more butts in seats, OpenTable is the largest. But we are probably the fastest-growing system out there. We have more than 3,400 paying customers and more than 21,000 use our free product [Yelp Reservations]."
Reserve and SeatMe share a similar pricing structure. With its new system, Reserve charges a flat, $99 monthly fee for table management software, and there are no cover charges (i.e. restaurants aren't shared per reservation). Yelp also charges a flat rate of $99. OpenTable charges a flat rate, too, but charges additional fees per reservation.
Isenberg, the GM of Townsman, says the restaurant was charged every time someone booked a reservation via OpenTable — a dollar per reservation if booked on OpenTable's site, 25-cents per reservation if booked on the restaurant's website. "As you can imagine, at a reservations-driven restaurant, that adds up," she says.
Prabhakara compares OpenTable's pricing structure to a pay-by-the-minute cell phone plan, saying, "Why pay per minute, when you can just get an unlimited rate?"
"Why pay per minute, when you can just get an unlimited rate?"
Last year, Yelp doubled the number of restaurants using its SeatMe reservation platform. The number of reservations being made more than doubled. "We are currently the number-two, hoping-to-be-number-one player in the space," says Prabhakara, who attributes the growth to Yelp's massive network (more than 146 million people have used Yelp this year alone). "Diner demand is increasing faster than the number of restaurants we can add," he says. "It took Openable 15 years to build a diner network. If you're a restaurant, why would you stick around with that?"
An OpenTable spokesperson says the company "continues to experience growth in both the number of restaurants and diners we serve." When asked whether the company has noticed restaurants leaving in favor for other systems, the spokesperson said the company's churn rate (i.e. the percentage of customers who stop subscribing) is approximately one percent, which OpenTable attributes primarily to restaurant closures.
According to a quarterly report filed by Priceline (which acquired OpenTable in 2014) in May, OpenTable's success is subject to a number of risks and uncertainties, including the company's "ability to increase the number of restaurants and diners using its products and services and retain existing restaurants and diners." So can Reserve scale and continue to attract the hottest restaurants in America's biggest dining cities? This remains to be seen.