Press Release

If the Maitre D' Won't Get You a Table, Try Your PC

August 6, 2000

So you find yourself in Manhattan for a long weekend when suddenly, on Friday afternoon, you are overcome by a desire for a world-class meal. Why not call Lespinasse, that temple of Francophile fantasies, where a bowl of soup (albeit with truffles) can set you back $35?

Why not? Because in most cases, the next available table at one of the city’s few four-star restaurants may not become available until days, or even weeks, from now.

But about 1 p.m. just a few Fridays back, if you had bypassed the reservation desk and logged on to a Web site called OpenTable.com, you would have found after five or so clicks of the mouse that the impossible is sometimes possible: a table for two, available at 7:15 p.m., most likely because of a late cancellation.

No busy signal. No voice saying, “I’m terribly sorry.” Just a credit card number, an e-mail confirmation and the table would have been yours.

It is the kind of easy online transaction that has already transformed the way that millions of people book airline flights, hotel room, rental cars and concert and movie tickets – even doctor’s appointments. But until recently, online reservations were seldom used in the restaurant business, mostly because of its fragmented nature and the traditional leanings of many chefs and owners.



About six months ago, however, an invasion of young Web entrepreneurs began in earnest in the industry, restaurateurs say. And two companies, OpenTable and Foodline.com, have emerged as early leaders in a field that continues to grow.

Mark Kalinowski, an analyst at Salomon Smith Barney, estimates that 1,200 independent restaurants – still a tiny fraction of the industry – have signed up with online reservation companies. Just a year ago, there were virtually none, with the exception of a few restaurants that had developed their own online reservations systems, including Tavern on the Green and the Russian Tea Room.

“The rush is really on, and I think this is an industry where you’re going to see a shakeout pretty soon,” said Andy England, a vice president for marketing at OpenTable, which is based in San Francisco.

OpenTable and Foodline, which control about three-quarters of the online reservations market, and about 20 smaller competitors have thrown up makeshift offices in dozens of cities. They have hired a squadron of sales agents, who have been knocking on restaurant doors and staging flashy computerized sales pitches, to convince restaurateurs that, like it or not, they will inevitably have to branch out from their handwritten reservation books and reliance on the memories of maitre d’s.

While there are big differences in the companies’ hardware and software, as well as their appearance on the Web, their argument is essentially the same: Online reservations are both easier and more accurate. A customer can check on the availability of tables at any time, the companies say, and can worry less about a reservation being lost. (Some people carry along printouts of e-mail confirmations to the restaurant.) And if a Web surfer’s restaurant of choice is full, he or she can easily scan a list of others, read reviews or scan prices and menus. ESeated.com, a Boston company that concentrates on corporate reservations, is even working to bundle restaurants into business travel packages.

Restaurant owners may see benefits beyond an immediate increase in sales. They can more easily determine not only who their regulars are, but also their semi-regulars and their dedicated summer vacation visitors. They can figure out which ones are allergic to shellfish, or which ones break the bank on wine. They can also identify the chronic no-shows who leave restaurateurs holding precious tables empty. (Absentees take note: Foodline says it may charge $20 for not keeping a reservation, depending on the restaurant.)



The information collected in online reservation systems is intended to help owners track customers the same way they now keep tabs on orders using computers and touch screens, which have appeared in most big restaurants over the last decade.

But Web reservations sites have not had an easy time convincing restaurateurs that all these things are worth the money. Most online reservations companies sell the hardware – touch screens, computers and other equipment – and then charge monthly for connections to the site, for technical support and for backing up all the information on the restaurants’ computers.

Foodline charges a $500 installation fee for the hardware, which includes a touch screen that is usually placed near the front of the restaurant, plus $200 a month for the service. OpenTable’s monthly service charge is $100, while its installation fee also starts at $500 but can go higher if more equipment is needed. Both services charge $1 a head for each online reservation.

Sirio Maccioni, the owner of Le Cirque 2000, another of New York’s four-star restaurants, has given much the same response to every one of the pitches he has heard: “He says, ‘If there is a database better than me, you’re welcome to put it in,’” said Mr. Maccioni’s son, Marco, co-owner of Osteria del Circo in New York and a director at Le Cirque. In other words, the elder Mr. Maccioni, who has run Le Cirque 2000 and its legendary predecessor, Le Cirque, since 1974, will never need a computer to keep track of his best customers and their predilections.

But that may not be the case for restaurants that are not family-operated. High staff turnover can mean that valued patrons are sometimes overlooked be chefs and owners whose time is being increasingly stretched by the commitments of writing cookbooks, appearing on cooking shows and opening new branches.

“Restaurants will tell us, ‘Our maitre d’ is great and he remembers everybody,” said Mr. England of OpenTable. “And we say: ‘Well, what happens if he falls in love and moves to Barcelona? Your database is in his head.’”



Drew Nieporent, who owns and manages several top New York restaurants, including Nobu and Montrachet, recalled that he once missed greeting Steve Forbes, the former presidential aspirant, because a reservationist’s handwriting made the name look like Ford.

“I don’t want to know everything about everybody who comes through the door,” Mr. Nieporent said. “But I do want to be able to manage the information I do have a little better.”

Soon, he said, many of the 2,000 seats in all his restaurants, including those in San Francisco and London, will be available for reservations through Foodline.com, on whose board Mr. Nieporent serves.

It is still much too early to tell which of the companies, none of which have gone public, will emerge as the Ticketmaster of the field. All are scrambling to get an edge not only in quantity of restaurants, but also in quality, on the theory that many restaurants and chains will gravitate toward companies that have signed up the best.

While Mr. Nieporent has allied with Foodline, Danny Meyer, co-owner of the Union Square Café, Gramercy Tavern, Tabla, and 11 Madison Park in New York, works with OpenTable. Charlie Trotter, whose namesake restaurant in Chicago has been consistently rated as one of the best in America, announced recently that he would take reservations through eSeated.com. And the Four Seasons in New York now works with iSeatz.com, based in New Orleans.

Despite the flurry of activity, the restaurant industry has far to go before it catches up with airlines and hotels in the use of online reservations. The Industry Standard recently estimated that fewer than 1 percent of all restaurant reservations are now made online.



“Basically, what we’re trying to do is change the way a whole industry operates,” said Paul Lightfoot, the president and chief executive of Foodline. “It’s going to take a little time.”