Here is a good summary from Shai Goldman on top events in the VC and tech industry of 2009.

“Given that we are just about at year-end, I wanted to provide a recap of some of the most memorable moments that took place in the venture capital and technology ecosystem.  Below is a list of  the 10 most important events:

First VC backed technology IPO –  OpenTable goes public at $20/share on May 21st.

First VC backed acquisition (above $500M) - Pure Digital acquired by Cisco for $590M.

First VC backed cleantech IPO – A123 goes public at $17/share on September 23rd.

Khosla Ventures raises $1.1B – in 2009 most VC funds were shrinking in size, yet Khosla Ventures was able to raise $1.1B, this event was a sign that Limited Partners (L.P.s) we actively seeking investment opportunities in the VC sector – September 1st.

Tesla Motors receives $465M from the D.O.E – First technology company to receive a loan guaranty – June 23rd.

Twitter raises a $100M VC round of financing - at a time when there are questions about the consumer internet sector, this funding provided some positive support that $ can be made in the sector - September 25th.

NASDAQ closes above 2,000 – August 3rd- the previous time NASDAQ was above 2,000 was September 30, 2008.

Dow Jones Industrial Average closes above 10,000 – October 14th – the previous time the Dow was above 10,000 was October 2, 2008.

Apple App Store gets more that 100,000 applications published – November 4th – as you may recall the App Store launched on July 10, 2008 and the creation of the iPhone and App Store has created opportunities for both VCs and Startups to make $$.

Facebook Connect is widely adopted by 60M users and 80K sites – the utilization of Facebook Connect has allowed startup companies a way to reduce the time / effort for their users to sign up for a particular service.”

Read the full article here.

There is a trend emerging in the DC restaurant industry – ditching OpenTable pay-per-cover charges in conjunction with managing the online marketing of online reservations through sites like Urbanspoon, Citysearch, Yelp and TripAdvisor.

Mie N Yu - a hip Georgetown eatery featuring cuisine and decor from the Silk Road, is spending roughly half of its past OpenTable bill in order to power a new online marketing program that displays an online reservation widget across the different websites throughout internet.  The key differentiation between this new initiative and the old way of doing things though OpenTable is Branding. Restaurants can now be much more aggressive in attracting potential diners. For instance, Mie N Yu’s reservation widget is geo-targeted for Georgetown area users on Urbanspoon, and now potential diners searching for a Georgetown restaurant see Mie N Yu’s reservation module the second they click on that page. As per Mie N Yu’s Director of Operations Victoria Graham:

“On OpenTable we became a commodity and there was very little that differentiated the unique experience a diner gets at Mie N Yu from the hundreds of other restaurants in DC.  Now we are able to do that by being proactive and focusing our marketing strategy into driving online reservations from a number of portals, which is more cost-effective and gets Mie N Yu more online visibility.”

In the past these type of initiatives were only applicable to giant restaurant groups that could handle their own marketing such as Fogo de Chao.  Note that Fogo’s online reservation module isn’t powered by OpenTable.  The incredible part about this new initiative is that Mie N Yu is a stand-alone operation, albeit a very successful one.  The point is that they’re not a Mega restaurant group with millions of dollars at their disposal, but rather a single restaurant that wants to brand itself more effectively.  See example below:

Mie N Yu online reservations on Urbanspoon - Powered by BlueSkies HMS

BlueSkies Ahead

Mie N Yu could not do this all on its own, but rather they are doing it through the Blue Skies Restaurant 2.0 dining room management solution.  Mie N Yu can afford to engage in these different marketing initiatives because Blue Skies only charges a $150/month flat fee for its software.  Hence, the restaurant can re-allocate a portion of the thousands they were spending on OpenTable into a mix of different online marketing  initiatives – at a fraction of the cost.  Can you say ROI!  Not only that, but BlueSkies will track where all the online reservations originate from, so the restaurateur will know what campaigns are most effective in terms of driving reservations, which at the end of the day equal revenues.

A New Day

It seems as if this is just the tip of the iceberg in terms of how restaurants will continue to adapt to the changing economic conditions that have affected their bottom line throughout the economic crisis.  There will still be plenty of restaurants that won’t see the harm in becoming a ‘commodity’ on OpenTable so long as it translates into revenue.  But when it comes down to it – the restaurateurs that are a bit more saavy will understand the value in branding themselves more effectively.  The larger effects of which can’t simply be associated with the short-term benefits associated with slashing your OpenTable bill, but rather with getting your message out there, and taking the necessary steps to build the brand that is your restaurant.

I always look forward to the end of the year, when Time Magazine and other media outlets begin to reveal their Top Lists for the year. So when I saw Time Magazine’s Top 20 Websites of 2009 list, I was thrilled to see that they all share some common themes, one of which is organization (the other two are sharing and learning). Marketing Charts, which posted an article about the list, noted that the editors of Time, who picked the top sites, chose those that help reduce the day-to-day clutter in one’s personal or business life, or both. popurls, Flickr, Metafilter, OpenTable, and Kayak made the list for top sites that help organize and streamline activities, community events, and social networking news. As we look forward to 2010, what better time than now to take advantage of these top sites to move your business forward into the positive aspects of 2010? We’re leaving 2009 behind and starting fresh.

Busy weekend ahead…hope you can be a part of one, two, or all three events!

Friday 20th

• Club 58: Video Game Extravaganza! Join us afterschool til 5 PM for projected video games and fun!
• SWID Lock-In: Meet @ 9 PM for volleyball, basketball, dodgeball, pizza, and more! Bring $15. Return @ 8 AM Saturday morning.

Sunday 22nd

• OpenTable @ 5:30 PM before the evening service. Join us for dialogue concerning all things in regards to the youth ministry. Notice: This is a change-up from our normal meeting time.

Wer kennt das nicht. Da ist man in einer unbekannten Stadt unterwegs und plötzlich hat man Lust lecker Essen zu gehen. Doch wo ist das nächste Restaurant das genau das bietet was man sucht?

Nun, man kann sich auf die Suche begeben und schauen wo man was findet. Aber das muss nicht sein.

Besitzer des IPhones haben eine einfache Lösung (die sich für alle anderen auch am PC mit Internetzugang nutzen lässt).

OPENTABLE.com

Die Plattform macht die Restaurantreservierung einfacher als gedacht.

Einfach nach den Kriterien “Art des Restaurants”, Ort und Stadtteil, Preisniveau suchen, Empfehlungen anderer Nutzer lesen und entscheiden. Online ist sogleich der Tisch zu reservieren. Eine Bestätigung erfolgt per Mail oder im eigenen OpenTable Account.

Dabei ist sofort zu sehen zu welchen Zeiten noch ein Tisch frei ist, ggf. werden alternative Zeiten angeboten.

LINK zum App direkt bei Itunes: OPENTABLE

Links zu den Anwendungen für Blackberry, Android etc. gibt es hier.

Und das beste daran:

Für jede Reservierung werden Punkte gutgeschrieben… dafür gibt es dann später einen Gutschein.

I haven’t written in this blog in a long time – mostly due to my changing life and busy work week. That doesn’t mean I have lost passion in my personal finances. In fact, I’ve been pretty active with my trading over the past 6 months. I wrote a blog post back in May about protecting your assets when your sanity is lost. In it, I talked about a number of stocks, including a gold play (Yamana Gold (AUY)), the OpenTable IPO (OPEN) and Enterprise Products Partners (EPD), a midstream energy company.

During that time, we’ve all watched as gold prices have climbed $176 an ounce – nearly 20% – sending Yamana up over 16% in the same period. As I predicted, after the whirlwind OpenTable IPO in May, the stock has dropped over 15%. And finally, with Enterprise Products, the stock price is up 11.5% to go along with a couple of 55 cent/share dividend payments.

Why is that? If we’re to believe the media and our government, the recession is over. The time for national prosperity is back again, and hundred dollar bills should be raining from the sky. So what happened?

People have realized that the quick-fix that was the stimulus package isn’t having the immediate effect needed to bounce the economy back. These things take time. We’re seeing some very positive signs of life throughout the US, but there is still a very long way to go. For example, just this month the national unemployed jumped up to 10.2% – the highest in over 26 years. With so many people out of work (and therefore not spending), the economy isn’t getting the flow of cash it needs to restart.

In turn, the some of the speculation has died out of the stock market. Prices of gold have risen steadily. Oil prices have crept back up, causing prices at the pump to do the same. People are investing a bit more, but they’re being more cautious about it. Our money is like our hearts – break them, and we need time to heal.

There are still plenty of incredible investment opportunities out there. About a week and a half ago, I closed some December put options on MGM with a strike price of $11. I had bought them when the stock was above $12, and I believed the value would drop. Two weeks ago, when the price was around $8.75, I closed my options for a 40% gain.

Not everyone is comfortable with options – I realize that. But my example goes to illustrate that just because the market seems crazy these days (are we over 10,000? are we back below 10,000?!), you can find ways to make a profit. Invest in what makes sense and what you understand. Gold made sense in May. It might still. Just keep an eye out for a good opportunity and strike!

**
By the way, these days I’m very happy with General Steel (GSI) and Taseko Mines (TGB). I remain confident that materials and metals will be a strong play in the short and long term, and I own shares in both companies.

In my last post I focused on some of the problems Urbanspoon will encounter as they launch their new online reservation service – Rez.  While the theme of the post is that Urbanspoon can’t take on OpenTable alone, there is still a lot of upside in the service from a restaurateur’s point of view.  In this post I’ll focus more on the positives of Rez and how they could potentially unseat OpenTable as the leader in online reservations.  Let’s take a look at a few key aspects of Rez:

1. From my understanding Rez was built for one purpose and one purpose only – to drive online reservations.  That being said, it doesn’t seem as if the folks at Urbanspoon will be building the ability to manage a restaurant’s floor plan within Rez’s module.  While that is an obvious chink in its armor, Rez is still the biggest threat to OpenTable on the market today.  Why?  Because OpenTable’s entire model is based on an absurdly high Pay Per Cover (not to be confused with Google’s PPC – pay per click) fee that it charges restaurants when the restaurant is sent “new” business.  Restaurants pay between a couple of hundred dollars to thousands of dollars per month for these online reservations!  If Rez can help diminish those costs than it’s already a leg up.

   

   Image via CrunchBase

2. No table management, No problem. From everything I’ve heard and read, Rez won’t offer a console to actually manage your restaurant’s books.  By not offering a floor management module, Urbanspoon leaves it up to the restaurant to determine which Table Management solution they’d like to use to run their restaurant.  While OpenTable does have a better functional dining room management system than most software on the market, there is software on the market that is exponentially cheaper and much better.  Henceforth, Rez’s flexibility is another benefit to their model.
3. Urbanspoon has the online traffic to pull this off.  While Urbanspoon doesn’t attract quite as many users as TripAdvisor or Yelp, it does attract exactly the same amount of users as OpenTable.com and should easily surpass them soon due to their array of iPhone apps and a much better functioning website.  In fact, Urbanspoon’s web traffic has increased by over 400% over the past year while OpenTable has only increased by 40% despite getting a lot of PR for their IPO in January. The graph below is pretty self-explanatory and indicates that Urbanspoon is making much larger strides than OpenTable when it comes to attracting users/diners.
4. Restaurants like saving money. If you’ve ever dealt with a restaurant you know that it can be maddening at times.  They are notorious for their negotiation tactics, and the industry as a whole has accepted this.  While vendors can give restaurant’s significant price breaks on beer, wine and food – OpenTable has not shown any interest in offering price breaks when dealing with online reservations.  Whether your restaurant gets 1 online reservation or 1,000 – you generally pay the same online booking fee (at least $1/cover).  I assume Rez will either be packaged together with other Urbanspoon online advertising fees or simply charged on a separate basis.  Either way, it has the potential to save a very busy restaurant thousands of dollars per month.

Over the last couple of months I’ve met with the top restaurateurs in the DC Metro area in regards to switching from OpenTable to a more advanced and economical Dining Room Management solution.  The one constant in the restaurant’s response was “how will leaving OpenTable affect my business?”.  The answer is it would affect it slightly, but not nearly as much as you would think.  The fact of the matter is that OpenTable books most of its diners either directly from a restaurant’s website or from a third-party website referral (eg: Zagat.com, Washingtonian.com, TripAdvisor, etc).  The only drop-off you should really expect are the client’s that OpenTable labels as VIP’s.  These are OpenTable power-users that make 12 or more online reservations per year.  The assumption is that if you’re not an OpenTable VIP, but booked a reservation through OpenTable.com than you already knew where you wanted to dine and OT merely facilitated the reservation.  OpenTable leads the restaurant to assume that the reservation originated from OpenTable.com, so the average restaurateur wrongly thinks that OpenTable is responsible for driving them all their reservations.  In reality those online reservation could have come from any one of the hundreds of affiliate websites that OpenTable has partnered with.

I think the key going forward for Rez is to make the system open-source so that developers can make a back-end specifically designed to help manage the restaurant’s floor plan.  If Urbanspoon is to take one lesson from the current OpenTable monopoly it should take a page from Google’s famous quote of “Don’t be Evil”, otherwise you’ll risk alienating the paying customers, which in this case is the restaurant.  OpenTable has created a monopoly in the hospitality industry over the last decade or so and from my earlier post you can see that this is wearing thin on restaurateurs.  Similar to the current theme of Microsoft vs. Google, the move of online reservations from OpenTable to Urbanspoon is just further proof that web-based software continues to overtake traditional software applications.  Expect this trend to continue..

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• Are Restaurant Managers Monitoring the Web? (socialmediatoday.com)

As per the Seattle Times description of Urbanspoon’s new online reservation service it has dubbed ‘Rez’:

It’s pulling Urbanspoon into the business-software market and challenging the dominant online reservation company, San Francisco-based Open Table, which had sales of $55.8 million last year.

Rez adds a yellow button that pulses if one has reservations available. You can use the button to focus a search for restaurants with reservations available, and reserve with a few more taps.

Rez is a nice concept, and Urbanspoon will get restaurants to join just because Urbanspoon and Citysearch have a lot of clout and are recognized brand names.  But the fact of the matter is that restaurants will only be using Rez in order to get some free publicity on Urbanspoon – not because they really plan on using the system, which may deem Rez not very useful because restaurants won’t be able to manage the reservation data properly.  Consider that at least 20% of a restaurant’s business comes from walk-ins – how does Rez plan on capturing this info?  Unless Rez actually helps restaurants manage their dining rooms, eg: waiting list management, electronic reservation book, and most importantly – an interactive floor-plan, than it doesn’t have a whole lot of utility for an upscale dining establishment.

Here is just a small list of the foreseeable problems Rez will encounter when trying to expand their business:

1. Internet entrepreneurs & engineers don’t understand the way restaurants operate. Unless you’ve owned, operated or managed a restaurant you it’s very tough to build an application that dictates the way a restaurant should run its books.  Think of it this way – Theo Epstein is a genius when it comes to crunching saber metrics and finding the right players for the Boston Red Sox to build a championship team, but I seriously doubt if Dustin Pedroia were to ask Theo Epstein how to hit a curve ball.
2. Advertising professionals sell ads, not software.  Ad men know a lot about site sponsorship fees and CPM rates, but the integration of a table management solution for restaurants is not in the same category.  Citysearch is a great way for Urbanspoon to sell advertising, but an online reservation service is more of a software sale an online marketing service. 
3. Clients (Restaurants) don’t value Free. Ethan Lowry was quoted as saying that the key differentiation is going to be that “It costs you [restaurants] nothing when we send you business”.  Even if Urbanspoon plans to give Rez away for free, restaurants wouldn’t use it like they use OpenTable.  This has more to do with the psychology of a sale.  Good, reliable client needs to feel that they’re paying for something, and OpenTable gives their clients thousands of reasons (otherwise known as dollars) to use their software to its maximum capabilities.
4. Online Reservations aren’t as simple as clicking the button that says ‘Reserve a Table’. As per the article on Rez, “Restaurants use a special app that they tap and slide to notify Urbanspoon when tables are full or open. They can also use the system to add online reservations to their Web site”.  If it was only this easy.  What this article fails to note is that OpenTable has a rather sophisticated operating system behind the actual reservations.  Restaurants utilize this to manage their floor and waiting list so that their kitchen doesn’t get swamped, their servers are given the right client information, and a plethora of other details in regards to the reservation and how the restaurant can best utilize its floor in order to maximize covers and revenue.  Sending an email or text message to the restaurant saying that they can expect a party of four at 8 pm is pretty much worthless unless there is a very intricate system to help manage that data.

   

   Image via CrunchBase

The irony of the situation is that I’ve spent the last couple of months bashing OpenTable and singing the praises for Urbanspoon, but you have to give credit where credit is due – OpenTable has a good operating system and from all indications Rez doesn’t have such a system, and doesn’t really plan on building one.  The fact is that when OpenTable went public in January 2009 a bunch of innovative entrepreneurs said “I can do what they do”.  New players are jumping into the online reservation world without fully understanding the needs of the restaurant, which deal more with floor management, turning tables, maximizing revenue, etc.  The online reservation aspect is only one piece to the puzzle.

I think Rez could be a great application if it were linked in to an active restaurant management solution, but unfortunately software to help restaurants manage their books is not as easy as programming an iPhone app.  My suggestion is for Urbanspoon to build a platform that is open-source so that more sophisticated Table Management solutions can easily be hooked into the Rez online reservation module.  This would be a win-win – for Urbanspoon, and the restaurants they hope to do business with..

I recently had the pleasure of sitting in on a Washington DC forum bringing together members of the Washington Area Concierge Association (WACA), the Restaurant Association of Metropolitan Washington (RAMW), and Destination DC. As per the invite to the event:

This is an opportunity for us to exchange ideas and information as to how we can achieve one common goal; better service for our guests. This will assist us in not only meeting our guest’s expectations but exceeding them. This forum will benefit our guests and all of us in the hospitality industry as we learn & grow from one another and become a more cohesive and effective team within the tourism industry in Washington DC Area.

The restaurateur panelists focused their desire for concierge’s to build a more personal relationship with their restaurants, and to stop booking reservations through OpenTable! Why? Because if concierges truly wanted to help their fellow restaurants, it could start by booking reservations from the restaurant’s own website so that the restaurant didn’t need to pay OpenTable’s exorbitant booking fees.

What was interesting to note was that none of the concierges even knew that the restaurants were paying the tab for all these reservations, and that for the most part concierges had a much better chance finding an 8-top at 9 pm on a Friday by calling the restaurant rather than using OpenTable. The restaurant panelists implied that the reason was because they want to vet their larger parties, and make sure it wasn’t just a bunch of teenagers ordering 7-ups. But they also implied that they’d prefer not paying OpenTable as much as they do for these large parties. The restaurant industry’s dislike for OpenTable became the main topic of discussion in the forum for a good 20 minutes.  More and more the message of the forum was “Let’s build a personal relationship”, which essentially meant don’t use OpenTable unless you have to when you book your guests at our restaurants.

It’s odd to see a company that is so widely used, yet so utterly despised in its own industry. This is more or less the equivalent of an Auto Shop bashing the Michelin Tires they’re about to sell you. Based on the above, one would think that people in the restaurant industry are starting to think differently about the perceived benefits of being an OpenTable member, and that OT’s arrogance and lack of client-oriented business initiatives is wearing thin amongst their clientele. Buyer beware..

• Smarter Food: How Social Media is Making Our Cities Tastier (mashable.com)
• RentCycle Wants To Be An OpenTable For Local Rental Businesses (techcrunch.com)

Here’s our list of the top apps for the iPhone.  Please add your comments with apps you think are awesome too.  There are just so many and there are a few hidden gems lost in the clutter.

OrbLive.  Probably the best app of all time.  Bottom line:  Access almost document, photo, movie, or song from your home computer to view on your iPhone via edge, 3g or wifi.  You can even watch TV thru your TV tuner connected to your computer if you have one.  Works with webcams too.  It’s that simple, this is a must have app for your technologically superior iPhone.  Just get it, it rocks…

Facebook.  The new updated version of Facebook is outstanding.  Now you can virtually do the same things on your iPhone thru the app as you can do on your computer, with the exception of the games of course.  I assume since it is a free app and if you have facebook and an iphone, you’ve got the app already.

Fandango.  So simple, yet so effective for viewing and booking movie times at a theater near you.  Must have app if you like movies.

ESPN ScoreCenter.  Sportsfan?  Get it.  Add your favorite sports and favorite teams.  The app keeps you updated on all the scores.

OpenTable.  Connects with participating restaurants so you can view available times for a table and book your reservation right from your iPhone!!!

Pandora.  Do you get tired of your iPod and playing the same songs?  Pandora lets you create your own commercial free radio stations based on the artist or genre of music you like.

Shazam.  Hear an awesome song on the radio and want the info so you can download it?  Open Shazam, press Tag Now and about 15 seconds later it gives all info on that song.   Simply amazing.

QuickOffice. They’ve come a long way, but still have some to go.  But, if you need to open and edit word or excel docs, this is the definite app for you.  Price is very reasonable.

Tipulator.  Awesome app for figuring out simple and complex tips.  Have 8 people at dinner and trying to split it up?  No problem with this app.

CoolFacts.  Here’s a fun fact, if you have a few minutes or more to kill and want to pass the time, CoolFacts are definetly worth downloading.

21 Pro.  BlackJack enthusiasts best friend.  Want to learn how to card count?  This app will also teach you how to count cards and how to use the count to win!!!

Postman.  Such a fun app.  Take a picture or use a Google map location to send a postcard to someone and easily send it via email or post to your Facebook page.  Very cool.

Those are our favorite apps, what are yours?  Leave a comment below, thanks.

I know it must seem like I’m the sort of person who thrives on fancy dinners, dressing up and drinking fine wines late into the night, and while that’s not entirely false, I can’t ignore the fun in mid-week lunches.  There’s something decadent and sly about sitting down in cashmere and silk to a four-course mid-day meal, then afterwards sneaking home to change into an oversize sweatshirt, order in a pizza and watch previous seasons of Dexter on On Demand.  What makes lunch at Jean-Georges Vongerichten’s eponymous New York City restaurant Jean-Georges even more luxe is the price — for only $29.00, you can get two courses, with each additional course costing $14.50 and dessert setting you back another $8.00.

Basically, it’s the best lunch deal in New York.

I know what you’re thinking: since when is fifty dollars a steal for lunch?  Well, if you can tell me anywhere else that we can have a three-Michelin-star, multi-course lunch for less in this town, I’ll buy it for you. If it’s as good as this, I’ll be happy to do so.  And if they offer housemade ginger-lemon soda ($6.00) to both warm and refresh our palates, even better.

If we’re really lucky, we’ll start with the sea trout sashimi draped in trout eggs, lemon foam, a smear of dill and horseradish shavings, like I did last week.  I’ll admit I was a bit disappointed to learn my dish came with foam (on the menu, it is listed as simply lemon), because sometimes I get so bored with it.  After all, it seems as though everyone in a chef’s hat is foaming it up these days, but Jean-Georges’s is more of a cream than a froth, and far more substantial in both flavor and texture than your everyday spoonful of miniature bubbles.  It went surprisingly well with the smooth sashimi, though I could’ve done with a few less horseradish curls zinging their vapors up my nose.  Maybe I’m being a bit nitpicky here, but personal preference is personal preference, no?

My personal preferences, after all, are what led me to order the young garlic soup, which is served with a trio of sautéed frogs’ legs.  Dotted with teensy little leaves of thyme, it was absolutely redolent of garlic, though definitely not at all  in an overpowering way.  I’ve got to say, and maybe this is a bit unsporting to admit, but I sampled Joann’s risotto and eyeballed Keith’s bacon-wrapped shrimp, and, had lunch been a contest, my soup would’ve won for sure.  I mean, not much can beat all that is lovely about garlic — its original bite and its transformation into something sweet and buttery and mellow.  To top it off, my frogs’ legs were light and crunchy; I was encouraged by our server to dunk the meat into my soup.  Afterwards, I was given a much-needed fingerbowl of rose water.

Since I can rarely resist sweetbreads, for my third course  I selected the option that served them with toasted pine nuts, dried cherries and pumpkin.  These were wading in a vinaigrette, and as I lifted each forkful to my mouth I inhaled a not-unpleasant jolt of vinegary zippiness; you would think the vinegar would overwhelm everything else on the plate, but it actually sharpened taste of the bittersweet cherries, the sweet pumpkin, the surprisingly-flavorful pine nut and the meatiness of the sweetbreads.  Though my instinct is to wolf down delicious food, I instead managed to savor each bite as much as possible.  Still, I was finished with my dish long before either Joann or Keith.

Should you choose to get dessert at Jean-Georges, you’ll notice that its menu isn’t as straightforward as in other restaurants.  Rather than listing options like tarte tatin or tea cake, it instead categorizes ingredients or even a concept. Last week, we chose from Market, Harvest, Chocolate or Strawberry; underneath each heading was a description of components we would then receive. I chose Chocolate, and ended up with Jean-Georges’s signature chocolate cake, vanilla bean ice cream and a wintergreen soup with chocolate noodles.  I quickly slipped the most creative item on my plate, the wintergreen soup, onto Keith’s, but that was only because I’m no fan of mint.  Besides, the normally-boring molten chocolate cake and usually-uninspiring ice cream were both utterly superb, proving once and for all that sometimes simple trumps complex every time.

Jean-Georges is open for lunch Mondays through Saturdays from noon to two-thirty.  Reservations, which are a must, can be made at OpenTable or via the phone at 212.299.3900.  The menu changes seasonally, and, unfortunately, the price has gone up from last year’s $28.00 for two plates to the current $29.00.  Regardless, it’s still a bargain.  If dressing for lunch is not for you, a similar deal can be had next door at Nougatine, Vongerichten’s more casual eatery.

Jean-Georges
1 Central Park West
New York, New York 10023
212.299.3900
jean-georges.com

I use Opentable often to make my lunch and dinner reservations.  It is very convenient and I love the idea of accumulating points, and when you’ve stockpiled enough, you can turn those points into a check to use at an Opentable restaurant of your choice.  What a genius idea (if only I had thought of that).  I’m curious to see if others who use Opentable would agree with me on a recent, disappointing experience we had with one of the restaurantsthat uses Opentable.  Here is our experience in a nutshell:

 We had made a reservation at Zinnia in San Franciscothrough Opentable on October 3rd at 8pm.  We showed up, checked in with the hostess and she seated us at a rather undesirable table.  As a guest’s first time in the restaurant, (there is a selection that you can chose to inform the restaurant on Opentable’s reservation confirmation site that it is your first time dining here) I find it is ridiculous for them to sit you out in Siberia. We wanted a table where we could sit next to each other yet still enjoy the restaurant’s ambiance (something that can’t be done when you’re stuck behind a potted tree).  Since nothing else was available in the dinning room where we it would have been possible for us to sit next to each other rather than across, we asked the hostess if we could order from the full dinning room menu at the bar.  She said yes, so we sat at the bar, were we could be next to each other, and proceeded to order a full meal from their dining room menu (I have receipt documentation of our order). 

 As we were sitting at the bar, with our drinks, anxious for our first course to arrive from the Chef (Sean O’Brian) whom I have followed from his previous but now shuttered cooking address (Myth), an email came through that our reservation was cancelled by Zinnia.  I immediately got up and questioned the hostess about the email I received.  She replied in a very snooty manner that because we chose not to sit in the dining room, that our reservation no longer counted and was cancelled.  I tried making the point that it shouldn’t matter where we sat in the restaurant, as long as Opentable brought us in, and we were having a full meal, the reservation was honored by us, and that Zinnia should recognize this (and I’m a VIP Opentable member for goodness sakes).  She disagreed and dismissed me to attend to the couple that walked in behind me.  Had we have not already ordered with the friendly, knowledgable bartender, Brandy, we would have left then and there. 

 I feel the Hostess, whose business card lists her as: Marketing/Owner Pat O’Brian, was trying to get out of paying Opentable the fee it deserves for bringing in customers.  Opentable gets paid by the restaurant, not when reservations are made, but when the party actually shows up for the reservation.  I don’t feel Zinnia’s policy of “only sitting in the dinning room counts” is fair to Opentable, nor to customers who make reservations to accumulate points and want to be able to review the restaurants they dine at through Opentable’s follow-up feedback form. 

 I’ve made reservations at plenty of restaurants on Opentable where the seating was for Bar only (i.e. O Ya Sushi in Boston), so I know this is not an issue with Opentable as a company.  It is clearly an issue with Zinnia and their policy as a restaurant.  If they don’t consider eating at the bar to be an acceptable place for dining, than they shouldn’t offer the dinning menu there and should just stick with the small bar menu. I’m curious how those of you whom use Opentable, would feel about what how Zinnia chose to discount our reservation.  Please VOTE below!

Sarah Lacy, a superstar blogger and Silicon Valley reporter wrote two scathing articles regarding OpenTable’s service right around the launch of their IPO in January 2009.  Given how clearly unimpressed she was with the company and its technology it came as quite a surprise when I viewed her uncharacteristically softball interview with OpenTable CEO Jeff Jordan last month on Yahoo Finance.  This leads to the question – is Lacy’s bark louder than her bite, did she get cold feet in the heat of the moment, or did she feel the need to tone her criticism down in light of OpenTable being one of the only tech stories of the year?

Lacy’s 1st article, titled “OpenTable: So Web 1.0 it Hurts” is a piece lambasting the user experience on OpenTable.com, specifically their rewards program.  She is pretty direct in her analysis and writes the following harsh critique of the service:

OpenTable makes thousands selling reservation software. I spend thousands of dollars in business dinners I book through them dating back to 2003 when I joined. The restaurant doesn’t get much, because I probably would have dined there anyway.  And I get less than $100 in a dining check that I’d probably never actually redeem. Pretty lame as rewards programs go.

She goes on to note:

I’ve long hoped Yelp might get into this game. I know they’d never get in the console/software business, but maybe there’s another way to use the Web to solve the reservation problem.

Actually Sarah, there is.  New reservation software is out there that seamlessly integrates with all social media platforms and portals alike.  Unlike OpenTable 1.0, the user would never have to leave the web page they’re on to make an online reservation.  In reality, Yelp could get into the game very easily – they’d just need to embed the relevant reservation widgets into the participating restaurant’s Yelp page.

Sarah’s next article was posted in Seeking Alpha, a finance site that offers commentary on the stock market.  In her typical no-nonsense fashion, Lacy titled the article “OpenTable: 5 reasons to hesitate before buying it”.  Her 5 reasons for not drinking OpenTable’s IPO Kool-Aid are as follows:

1. The crappy market conditions in early 2009.
2. Lacy interestingly points out that OT is a local business and writes “They have to conquer territory market-by-market, restaurant-by-restaurant. Local is one of the hardest and most expensive things to do well. It’s also one of the only things that the Internet doesn’t particularly make easier.”
3. OpenTable isn’t very profitable selling software-as-a-service.
4. “Restaurants are going to be closing and cutting corners as the recession wears on”.
5. The “Travel Agency Effect”, which she identifies as the notion that “[restaurants] don’t want to pay the fees, and why should they when building and maintaining a Web site isn’t exactly hard in this day and age? OpenTable may have brought restaurants into the online age, the way sites like Expedia and Travelocity did for the airlines, but increasingly vendors hate middlemen. Especially middlemen who control the customer relationship and take a cut of the proceeds.”

Based on these two articles, one from the consumer end and the other from the business end, I believe it would be accurate to say that Sarah Lacy is not a fan of OpenTable.  That being said, Lacy had  the platform to stick it to OpenTable CEO Jeff Jordan and instead she threw him an 85 mph fastball right down the middle.  Even a ballplayer not taking steroids can hit that one out of the park. Part of the reason might be due to the audience, which is geared more towards investors than techies. That being said, it would have been nice to see her touch on some of the points she so accurately pointed out in the past.

If you missed it, here’s a link to Sarah Lacy’s interview with Jeff Jordan.  Maybe after she’s done getting chased by baboons in Africa she can let us know why she went so light on a company she seemingly despised just months before..

I recently published a post on the relatively new Near+now app for the iPhone which acts like Pandora but for dining establishments near you. Today I installed Where onto my iPhone and am beginning to figure it out. The poll for this Tuesday, the first day of September is: Which iPhone app do you use when it comes to finding places to eat?

I personally use a few: OpenTable, Urbanspoon, AroundMe, Near+now, and WHERE.

What do you use? And though for me this is a question of iPhone apps it doesn’t necessarily have to be for everyone else.

Here is a recent article from CNN.

“If you have been an investor in technology IPOs in recent months you’ve done well.

Starting in April, and really gathering momentum this summer, there has been a slew of tech companies that leapt through the public market window including Changyou (CYOU), Rosetta Stone (RST), OpenTable (OPEN), and most recently Emdeon (EM).”

The article continues,

“Right now in Silicon Valley, investment bankers are busy making the rounds of promising portfolio companies trying to convince them of the wisdom of an IPO. There is always the question of what kind of company can – or should – go public. During the last wave of tech IPOs, after the dotcom bust, the rule of thumb was that firms with $100 million in revenue and profitability were IPO candidates.

Investment bankers on the prowl in Silicon Valley

Now, according to one prominent venture capitalist who asked to remain anonymous, investment bankers are telling him, “If a company can show revenue of $15 million per quarter, a good business model – and if not profitability, a path to profits – they can deliver an oversubscribed offering.” (One wonders wonder whether these simply are investment bankers who have had nothing to do for the last 12 months, trying to make their bonus figures.)

Venture capitalists have not had much to be happy about, either. It wasn’t just IPOs, but acquisitions that came to a screeching halt during the recession. Both of these groups desperately want the IPO window to stay open, and so far it is.”

And concludes,

“In Google’s day it was bulge-bracket investment banks – Morgan Stanley (MS), CSFB (CS), Goldman (GS), Lehman Bros or no one. The economics of the banks (characterized as going “down-market” to even do $500 million IPOs) required bigger deals. Today’s deals, with their much more modest size, are better tailored for the boutique banks – Thomas Weisel Partners, Jeffries, JMP Securities, Piper Jaffray, and the like. These are the banks pounding the streets in Silicon Valley the hardest.

Could it all end badly? Of course, and usually it does when the rush toward IPOs at some point sends half-baked companies into the public markets and they tank. But between now and then we are likely to see a group of very high quality tech companies look to go public – think Greenplum, LinkedIn, Pacific Biosciences and Zynga among many others.

For those investors with the stomach, it might not get much better.”

Will 2009 go down as the year the tech IPO returned?

Rosetta Stone is part of the 2009 summer IPO surge. Image: Rosetta Stone

If you have been an investor in technology IPOs in recent months you’ve done well.

Starting in April, and really gathering momentum this summer, there has been a slew of tech companies that leapt through the public market window including Changyou (CYOU), Rosetta Stone (RST), OpenTable (OPEN), and most recently Emdeon (EM).

According to IPO research firm Renaissance Capital, the average overall return from the 10 tech IPOs since April has been 30% (with the biggest return, 138%, coming from online gaming company Changyou.com). Of the 21 companies that have gone public since the beginning of 2009, 10 have been tech companies.

Which means what, exactly? That as long as the market doesn’t melt down completely, more tech companies will go public, of course. And if you thought there was momentum this summer, just wait for October and November, a time of year when historically private companies have clamored to make their public debuts.

Right now in Silicon Valley, investment bankers are busy making the rounds of promising portfolio companies trying to convince them of the wisdom of an IPO. There is always the question of what kind of company can – or should – go public. During the last wave of tech IPOs, after the dotcom bust, the rule of thumb was that firms with $100 million in revenue and profitability were IPO candidates.

Investment bankers on the prowl in Silicon Valley

Now, according to one prominent venture capitalist who asked to remain anonymous, investment bankers are telling him, “If a company can show revenue of $15 million per quarter, a good business model – and if not profitability, a path to profits – they can deliver an oversubscribed offering.” (One wonders wonder whether these simply are investment bankers who have had nothing to do for the last 12 months, trying to make their bonus figures.)

Venture capitalists have not had much to be happy about, either. It wasn’t just IPOs, but acquisitions that came to a screeching halt during the recession. Both of these groups desperately want the IPO window to stay open, and so far it is.

So are these 10 tech IPOs the start of a new wave of exits for venture capitalists, a strategy that doesn’trely on Google (GOOG), Cisco (CSCO) or Microsoft (MSFT) buying the companies they’ve financed in hopes of hefty returns? It sure could be.

Mutual funds like growth, too

Clearly, there is an appetite in the public markets for growth. And even in the teeth of this recession, technology companies are showing signs of expansion (the other sector that’s growing is energy).  With hedge funds licking their wounds, analysts say, other kinds of institutional investors, including more sober-minded mutual fund managers, are emerging as the group most interested in IPO shares of tech companies. They want to show growth too, and tech IPOs at least at the moment, are giving it to them.

What is different from when Google went public is that these are not billion dollar IPOs for the most part, but companies that will garner market caps of several hundred million dollars. For that reason it’s also a different set of bankers taking these companies public.

In Google’s day it was bulge-bracket investment banks – Morgan Stanley (MS), CSFB (CS), Goldman (GS), Lehman Bros or no one. The economics of the banks (characterized as going “down-market” to even do $500 million IPOs) required bigger deals. Today’s deals, with their much more modest size, are better tailored for the boutique banks – Thomas Weisel Partners, Jeffries, JMP Securities, Piper Jaffray, and the like. These are the banks pounding the streets in Silicon Valley the hardest.

Could it all end badly? Of course, and usually it does when the rush toward IPOs at some point sends half-baked companies into the public markets and they tank. But between now and then we are likely to see a group of very high quality tech companies look to go public – think Greenplum, LinkedIn, Pacific Biosciences and Zynga among many others.

For those investors with the stomach, it might not get much better.

OpenTable, the online reservation service, is one of the few venture-backed companies to go public this year. Its secret ingredient? Technology that restaurateurs actually like.

From left: OpenTable boardmember Thomas Layton, financier Bill Gurley, and CEO Jeff Jordan

When online reservation service OpenTable (OPEN) went public in May, tech pundits gushed like foodies at a five-star restaurant. Some entrepreneurs and financiers hailed the $60 million initial public offering as a sign that tech startups — and their valuations — were poised to rebound from the economic downturn. “This was an overwhelmingly successful offering,” a CNBC columnist declared, “and now others are lining up.”

There’s a delicious irony to OpenTable’s status as a symbol of the (still unrealized) IPO renaissance: The San Francisco–based company almost didn’t survive, let alone make it to a Nasdaq listing.

Formed during the dotcom boom, the company veered from one strategy to the next, burning through cash, and its venture capitalists nearly closed its doors. Eventually the backers brought in new executives, who reined in OpenTable’s efforts to build a consumer brand and instead focused on forging relationships with restaurateurs — a painstakingly slow and labor-intensive process that proved to be crucial to the company’s success.

Today the outfit provides reservation services and, perhaps more important, customer-management software to more than 10,600 establishments worldwide.

By giving notoriously tech-averse dining establishments a simple set of tools to help owners attract new diners and keep tabs on customer preferences, OpenTable is establishing itself as a valuable technology partner in the $145-billion-a-year restaurant business. Amid the recession the company eked out $366,000 in profits on $16 million in the first quarter of the year, reversing a fourth-quarter loss. “In times like these restaurants need to look for ways to optimize their operations,” says CEO Jeff Jordan. “And what we provide them with helps them achieve these goals.”

OpenTable’s business model is simple: For $199 a month, restaurants rent a computer terminal and network connection, and they pay OpenTable an additional $1 per diner seated via the company’s website. The terminal contains a real-time map of the restaurant’s floor, showing how many tables are free and when busy tables might next be available. The terminal can retain individual meal patterns for each party — how many courses they ate, where they sat. It’s a bit like a CRM (customer-relationship management) system for gourmands.

A few reservations
The restaurant industry’s technophobia proved a challenge from the outset. Founder Chuck Templeton started the company in 1998 as a way to link restaurants’ websites to a central reservation website for diners. But Templeton found that most restaurants at the time didn’t even have computers. Still, venture capitalists were eager to fund any Net-related business, and Templeton, who previously worked as an engineer at a semiconductor firm, managed to raise $36 million over two years. His investors told him to “grab all the eyeballs you can get and figure out how to monetize them later,” recalls Templeton, who is now a Chicago-based consultant.

CEO Jordan (center) and founder Chuck Templeton (left of Jordan) celebrate OpenTable's listing on NASDAQ.

So OpenTable tried to grow as a consumer dotcom, paying online restaurant reviewers for links to its site and targeting national chains for fast expansion. By 2001, it was in 50 cities but wasn’t making money; it was spending $1 million a month to bring in $100,000 in revenue. Investors were ready to pull the plug.

“It was one of those moments,” recalls Impact Venture Partners’ Adam Dell, “where you had to look into the abyss and wonder, ‘Do I really believe in this business?’ ” Dell had his, um, reservations. That year the board gathered to review the business. The conclusion: OpenTable was worth saving but needed to be retooled.

Angel investor and board member Thomas Layton, founder of CitySearch.com, became CEO. He slashed the staff, shut down spending on consumer outreach, and pulled the company out of all but four markets (Chicago, New York, San Francisco, and Washington). The company fine-tuned its terminals and software to make them easy for staff to use (restaurants have a lot of employee turnover) and deployed a door-to-door sales force to woo high-end restaurants.

A few years ago management began to think about taking the company public. Layton had announced his intention to step down, and the board in June 2007 hired Jordan, who brought public company experience from his days as president of PayPal, a subsidiary of eBay (EBAY). (Layton remains a board member.)

Jordan’s first big move as CEO was bold: He pushed ahead with the IPO despite the collapse of the economy and the unfriendly financial markets. Jordan’s gamble paid off. On its first day of trading OpenTable’s shares climbed 59%. Sure, subsequent tech IPOs never materialized, and some critics now wonder if OpenTable, with a $655 million market cap, is overvalued. But for OpenTable’s long-standing supporters, the stock’s performance probably feels like just “desserts.”

The last couple of years more social networks have popped up than zits on a 14 year old chocolate-holic.  I have been exploring the social media waves as never before since I launched Reservation DC , and my latest addiction is FohBoh – the creatively named social network for restaurateurs (front of house, back of house).

As those who have read my blog can clearly see from my first post, I don’t shy away from controversy – so I pose the question.. is FohBoh simply a glorified Facebook group with way too much funding or does it actually have a purpose?  As per CEO and Co-founder Michael Atkinson:

MySpace and Facebook are clear leaders in generic social
networking today and have educated the market, but they are entirely horizontal, so they don’t cater well to niches of specific interest. This is where FohBoh excels.

First off, I won’t address the MySpace blurb as lumping them with Facebook is akin to comparing Chrysler with BMW, and while Mr. Atkinson makes a valid point, he fails to mention that Facebook and LinkedIn created a nifty tool called “Groups”, which essentially cater to the verticals.  But this doesn’t merit writing FohBoh off entirely, as I personally have never spent much time on LinkedIn or Facebook groups, but I have recently spent a good amount of time perusing around FohBoh.

In my opinion the bottom line with FohBoh is their user base – if I know that every general manager, chef, service provider, etc. in the restaurant industry is on FohBoh, similar to everyone I’ve ever known is on Facebook, than that makes it a worthwhile tool for any and every one in the hospitality industry.  Let’s take a look at the numbers:

Ok, so they reached their peak of 30k uniques in February and have dipped every since leveling off at about 17k unique users/month.  Consider as you must with all social networks that 25% of those users are spammers that post hot chicks as their profile pics, and you’re looking at between 10-12k unique users/month.  Their current Alexa ranking is 174,498 which basically means that they get a couple of hundred users/day at most.  That being said, that’s pretty good progress in one year, but it’s not at the tipping point quite yet.

In my estimation FohBoh needs to reach 100k unique users/month to have any appeal to the mainstream industry professional.  As they clearly haven’t gone viral yet, and their organic growth isn’t huge, the only way they can do that is to somehow attract celebrity chefs that become active.  Does anyone remember that Ashton Kutcher vs. CNN Twitter Showdown? That marked the tipping point for Twitter as can be seen in the Compete stats below:

Although it won’t necessarily serve the ultimate purpose of FohBoh, this social network needs some kind of Emeril vs. Anthony Bourdain showdown to attract more industry users – otherwise it will continue to flounder as just another social network that probably should have just been a Facebook group.

"MySpace and Facebook are clear leaders in generic social
networking today and have educated the market, but they are entirely
horizontal, so they don't cater well to niches of specific interest.
This is where FohBoh excels." 

First off, I won't address the MySpace blurb, and while Mr. Atkinson makes a valid point, he fails to mention that Facebook created a nifty tool called "Groups", which essentially caters to the verticals.

Related articles

• Twitter is Top Social Media Platform at Fortune 100 Companies (mashable.com)
• The Facebook Era is for Business (socialmedia.biz)
• Facebook and Twitter are for oldies (nevillehobson.com)

More and more restaurants are beginning to discover the power of social media and realizing the potential that lies within.  With that being said, not many restaurants actually have a social media strategy beyond just adding ‘friends’ and spamming them with updates that most of them don’t find too interesting.  In this post I will disclose the strategy that helped make one of the top social networks in the world a sensation in Asia, leading it to acquire over 30 million active users, and how you can apply the same strategy at your restaurant to help build brand loyalty to your establishment.

First things first, if your restaurant doesn’t have a Facebook page than you’re already behind.  It’s not hard to start one, so get on top of it ASAP.  Now to those of you who already have a Facebook page – listen carefully.  The reason that social media sites like Youtube, Facebook and Twitter have became overnight sensations is due to one thing and one thing only – self empowerment.  People want to broadcast their personal experiences to the world – whether it be a video of your child’s first steps on Youtube, or photos posted in Facebook from a girls night out.  Moreover, many people are simply addicted to commenting on friend’s status updates, photos and random material posted on their profile.  In short, social media enables you to go viral – a message can literally spread like wildfire and be seen by thousands of people in a matter of seconds, and the best part is that this is all free!

Now let’s get down to it.  This is how you transform your bricks and mortar dining venue into a social media powerhouse.

Step 1:  Hire a professional photographer.

Step 2:  Have this photographer walk around your bar during busy hours or private parties snapping beautiful pictures of your guests – with their approval of course.

Step 3:  Give the recipients of the photos a card with your Facebook page listed.  Tell them that they can view the pictures on your Facebook page in X amount of days.

Step 4:  Post the pics taken from your venue to your Facebook page.

That’s it.  From here on out the process is pretty much automated.  Everyone want to see photos when they go out.  For one, they’ve spent time and money making sure they look good.  But more importantly, they want their friends on Facebook to see them – so they tag themselves.  Once they do pictures of people having fun at your dining venue are spread across hundreds of profiles!  This is the viral effect.  What better endorsement of your restaurant than people posting pictures on their profiles highlighting how much fun they’re having there.

This strategy help Perfspot become one of the fastest growing social networks in the world.  They started posting pictures from clubs throughout their site and gained more than 30 million users in less than a year.  While I can’t guarantee you get 30 million fans on Facebook, I can guarantee that this will be a much more interesting way to engage your customers, and people will definitely notice!

I am a firm believer in loyalty programs, but I know that with some of them it almost feels pointless to give your number/card since it looks like it could take years to reach a reward level.  But these past two weeks were great for me on that front, and I want to offer you a note of encouragement.

Two weekends ago, I received $2.50 Extra Bucks back (a free ½ gallon of milk or cereal?) from CVS for purchases I made during the spring.  A few days later, I redeemed $20 in cash back I had accumulated on Discover for a $25 gift card on Banana Republic, which I used over the weekend to get a top for free!  I use my Discover card mostly for purchases that give me a 5% cash back bonus, which means it takes me a little longer to accumulate cash back than if I used it as my primary card, but I still usually accumulate $20 every 3 or 4 months.

A $5 certificate on Best Buy also came through my Inbox last week.  Their Reward Zone program gives $5 for every $250 spent, and the netbook I bought for my mom last month was $250 and some change.  In the mail, I also got a $10 certificate from DSW just to welcome me to their rewards program (I have only ever made one purchase there before) – and there, $10 goes quite a long way.  And, a year since we first started using OpenTable, we finally reached the points for a $20 gift certificate, which can be redeemed at any member restaurant.  Admittedly, $20 is not much compared to how much we spent dining out over this past year, but being rewarded for using a service that makes life more convenient (no calling restaurants for reservations) is always great.

And in terms of future rewards, thanks in part to my AAdvantage/Citibank credit card, I recently reached enough miles on American Airlines for a free flight to Europe.  While I haven’t booked my ticket yet, I am planning on going to England in a month, and if my recent experiences with reward programs are any indication, I expect redeeming my miles for a flight will be a breeze, too.

Some rewards programs are obviously more generous than others, and I think that the instances in which it may make sense to spend money just to get a reward are few and far apart.  Nonetheless, if you diligently use your loyalty number/card whenever you do make a purchase, there just might be a reward coming your way sooner or later.

I read this article on Alfred Lin on TechCrunch and it blew me away.  Whatever he knows I want to learn it because it is amazing what he has done with the companies he has been involved with.  If you haven’t read this story I highly recommend it.  “Investments included Zappos, TellMe, OpenTable, MyAble, Mongo Music and Ask Jeeves, all of which have been acquired or went public.” I am going to take TechCrunch’s advice and follow this guy as to what company he goes to next and watch it closely.

Here is the link: http://tinyurl.com/l5bu4e

In March 2009 Sheryl E. Kimes, the Singapore Tourism Board Distinguished Professor of Asian Hospitality Management at the Cornell University School of Hotel Administration, wrote a comprehensive study on How Restaurant Customers View Online Reservations.

Here is the executive summary of her study:

Restaurant customers appreciate the convenience of being able to make restaurant reservations online, but they also like the personal touch of telephone reservations. A study of 696 restaurant customers found that nearly one-third had made an online reservation. Those who made reservations online tended to be younger than those who did not, and online users also ate out more frequently. Those who made online reservations considered those reservations to be significantly more convenient than telephone reservations, and the online users also thought that websites gave more information about a restaurant than what they learned by calling on the telephone. At the same time, those online users felt that they had a better personal connection with the restaurant when they made telephone reservations. This tradeoff between efficiency and service perceptions points to a strategy of offering reservations via both methods. Emphasizing the convenience of online reservations may encourage customers to use the website, and that will give restaurant operators more information about their customers. Whether a restaurant uses a third-party reservation service or builds its own website, one key to ensuring a successful reservations process is to make the electronic process as straightforward as possible.

Professor Kimes offers this chart as a reference to the different options at a restaurateur’s disposal:

Amongst the Professor’s most interesting points is that “restaurant customers appreciate the convenience of being able to make restaurant reservations online, but they also like the personal touch of telephone reservations”, which leads to her conclusion that “this tradeoff between efficiency and service perceptions points to a strategy of offering reservations via both methods.”

Coincidentally, this is vision that led us to the creation of Reservation DC.  By partnering with the first and only full-service Restaurant Call Center, and the most cutting edge Table Management and Online Reservation software, we are able to offer restaurants a solution that increases service, decreases labor costs, and grows business. Instead of being bogged down with demanding phone calls in the middle of your lunch or dinner rush, you can now focus solely on your in-house guests, and let Reservation DC take care of all the rest.

Call Center Cost/Benefit Analysis

The fact of the matter is that restaurants can actually reduce their labor costs by up to 50% by using a professional call center to deal with all their dining inquiries.  How is this possible?  Let me explain.  Instead of paying a host/hostess between $12-$15/hr a restaurant can now employ a full-service call center that will handle all dining inquires at between $4-$6 less per hour.  This approach enables your in-house staff to focus on giving your guests the best experience possible, all the while running a more efficient operation that will increase covers and revenue.  While Professor Kimes is spot on with most of her analysis, the above statistics show that her claim that dedicated call centers are “probably the highest-cost solution” is way off the mark.  As she points out in her study, a dedicated call center improves a restaurant’s level of service and operational efficiency by offering:

• increased reliability
• reduced wait time
• more staffing flexibility
• and improved record-keeping

So far, so good.  Now let’s move on to the online reservation aspect.  As the professor notes, online reservations provide customers with the following benefits: (1) increased convenience, (2) increased control, and (3) a more consistent and reliable reservation experience.  She goes on to write that while online reservations certainly have benefits, many restaurant operators have been concerned about the loss of a personal connection with the guest, the costs associated with the reservations, and the potential loss of business. Let me weigh in on this analysis.  In terms of a loss of a personal connection, my view is that if the online reservation is completed via your own website, and not a 3rd party portal, than the effect of that loss of a personal connection is mitigated dramatically.  As for the costs, let me say categorically that if your restaurant is paying over $500/month for a table management and online reservation solution than you are paying way too much! As for the potential loss of business, this is in the restaurateur’s hands.  Look at this as you would an investment in the stock market – DIVERSIFY!  My recommendation is to explore social media, along with search engine optimization.  Building a Twitter page, maintaining your Yelp profile, and a Facebook presence cost you nothing, and shouldn’t take up more than 5 hours a week.  Furthermore, there is no substitute for a high ranking in Google, so invest in search engine optimization.  If you’re an Italian restaurant in Dupont Circle and you don’t show up in the top 10 search results when someone types “Italian restaurant Dupont

Circle” in Google than that is a major problem!  Google is viewed by consumers as the #1 trusted brand in the world – your restaurant’s listing in their search results will not only drive you traffic and guests, but it will improve your image dramatically in the eyes of the beholder.

Since its founding in 1998 restaurateurs have been fed a steady dose of PR in regards to how many diners OpenTable (OT) is responsible for bringing through the front door of their dining venues.  Essentially OT has been telling us that their Web 1.0 portal is the reason your restaurant thrives – well, it’s not like they’re completely lying to us, but do you really believe them?  With the advent of Web 2.0, the ability to cut and paste web applications and place them on 3rd party websites became a breeze.  OT took advantage of this technology to the fullest, now you can see little OT reservation buttons on just about every dining portal, which in turn enables users to make “FREE” reservations.

OT sidesteps the whole issue by not telling restaurants where their traffic originates from, whether it be Zagat, Washingtonian, Washington Post, etc.  The reason is simple – if OT actually told restaurants where their OT reservations were originating from, restaurants would realize that OT isn’t responsible for most of their guests, even though they charge restaurants as if they are.  This article attempts to bring some clarity to this issue by comparing OT with Yelp, and poses the question should restaurateurs start looking elsewhere to get more bank for their buck?

The Yelp-olution

Before we dig in to study the effect Yelp has had on the restaurant industry, a few things you should know about this social media powerhouse:

1. Yelp was founded in 2004
2. As of June 2009, more than 22 million people visited Yelp in the past 30 days
3. Every business owner (or manager) can setup a free account to post offers, photos and message her customers
4. Yelp makes money by selling ads to local businesses – you’ll see these yellow, clearly labeled “Sponsored Results” around the site

Basically, Yelp and OT cater to the same end users, albeit at a completely different scale.  A modest estimate has Yelp’s internet traffic at more than 20 times that of OpenTable.  So basically, if I’m a restaurateur, I’m asking myself why I spend an absurd amount of marketing dollars for OT when I could be reaching a much wider audience by advertising on Yelp?!

Let’s take a closer look at the numbers:

Basically, there’s no comparison.. Yelp dwarfs OT in total eyeballs + it is growing at a rapid pace with just about 10 million new users over the past year alone.  Now for the kicker..  Not only does OT attract far less users than Yelp, but most of the end users actually originate from your own website or 3rd party websites that link to OpenTable!  Essentially, by linking up with the OT button on your website, you’re driving traffic away from your own site – a BIG NO-NO in the advertising world.  Why let your potential customers go to a portal that offers reservations at hundreds of other restaurants in your direct area?  Not only are you driving your users to a portal where you can actually lose them, but you’re helping OpenTable build brand loyalty to YOUR customers.  So let’s get this straight – not only are you being charged $1/cover for OT diners, but that diner is no longer loyal to your establishment.  The most ludicrous thing about this is after you pay OT for that diner, they in turn give that user a gift certificate to a restaurant of their choice.  This is clearly a Win-Win situation, for OpenTable of course..

Now with all that being said, why do restaurants continue pouring so much money into a solution (OpenTable) whose value proposition is vastly overrated.  There is only one answer – FEAR.  The notion that you will lose your current OT customers if you jump ship to another table management solution is a farce.  The fact is that in this day and age of search engine optimization through Google (SEO), and all the social media outlets out there such as Twitter, Facebook, and YouTube, you can launch a viral campaign that will cost you peanuts and get you an equal amount of butts in your seats, if not more.  The numbers above don’t lie, and with the dark days of the recession still looming, it’s time for restaurateurs to reconsider their options.

Related articles:

• LetsEat.at Helps Local Restaurants Build Targeted Websites (mashable.com)
• How to Get Your Free Business Listing in Yelp (growmap.com)
• The Changing Face of SEO (ducttapemarketing.com)