Open Table Case Study

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1.Why will OpenTable competitors have a difficult time competing against OpenTable?

OpenTable competitors will have a difficult time competing against OpenTable for several reasons. OpenTable's market share is large, "with more than 26,000 restaurants subscribing to the service" (Caro, 2012). This represents a growth of 35 percent over the previous year. About "44 percent of North American restaurants that take reservations are signed onto OpenTable, and about 12 percent of diners seated with reservations at any North American restaurants made those arrangements through Open Table" (Caro, 2012). In other words, OpenTable has done a great job of capturing and owning the market. OpenTable has been innovative, offering a service to restaurants that was previously unavailable, and enhancing it by offering the opportunity to track diners' visits, food allergies, and preferences. OpenTable has lowered the fee for reservations placed through OpenTable that originate on clients' Web sites to 25 cents for $1.00. Other challengers have appeared but they have matched the pricing of OpenTable, leading one to understand that the pricing is the company offers is reasonable, thus making it difficult to imagine a competitor could offer a lower priced option. OpenTable has also proven itself reliable, offering a dependable system for both diners and restaurants. Also, since OpenTable was the first Web-based reservation system, they have raised the cost of entering the market, and made their brand name a standard in the industry that allows consumers the "convenience and immediacy of booking a table online anytime day or night" (Pastore, 2010). Even with additional competitors now in the online restaurant reservation business, OpenTable has a market share that is estimated at greater than 90 percent (Pastore, 2010). OpenTable has developed a firm relationship with both restaurants and consumers that will be difficult for a competitor to break, and OpenTable is often seen as an important gateway "to a desirable set of customers" (Pastore, 2010).

2.What characteristics of the restaurant market make it difficult for a reservation system to work?

It is difficult to make a reservation system work based on several characteristics of the restaurant market. First, the ...