The strategy: virtual reservations, real money. But it faces some real competition.
FORTUNE — When OpenTable launched in 1998, you booked a restaurant table by picking up the phone. Most restaurant owners were wary of adopting computerized reservations because of the perceived cost and complexity. It has booked more than 350 million diners since inception — and is expanding into Europe. For a modest setup charge and a monthly subscription fee, OpenTable (OPEN) creates a hardware/software-based reservation system in each restaurant, which pays $1 for every seated diner who books through OpenTable and 25¢ for every diner who books through the restaurant’s website. The average restaurant makes $42.50 for every dollar that it pays OpenTable, according to CEO Matthew Roberts.
No. 43
HQ: San Francisco
Employees: 579
The business: Online booking network that serves one-third of all North American restaurants that take reservations.
Reward/risk: Thanks to its growing scale, OpenTable benefits from the network effect: As more consumers use the service, it becomes more valuable for restaurants to join the network. After 14 years in business, the company has also gathered a vast trove of data about the dining preferences of its users that it can use to offer customized dining recommendations. However, OpenTable faces increased competition from services like Urbanspoon’s Rezbook and Livebookings, a large U.K.-based booking platform that’s eyeing the U.S. market. Google (GOOG) may also launch a rival online booking service. Morningstar analyst R.J. Huttovy notes that North American revenue per seated diner, a key metric, has dropped slightly in recent quarters as OpenTable’s cheaper web-only service grows in popularity. “Restaurants are finding ways to drive traffic to their own sites,” he says. In short, now is not the time for OpenTable to sit on its laurels.
This story is from the October 8, 2012 issue of Fortune.
