Last week, Eater Chicago reported that an unnamed OpenTable employee in Chicago had attempted to undermine competing restaurant booking company Reserve.
To do so, the person made hundreds of fake reservations over a three-month period on Reserve, which translated to a flurry of no-shows, a huge deal for an industry that operates at razor-thin margins. Many of the restaurants hit had just recently canceled their OpenTable accounts in favor of Reserve.
OpenTable acknowledged the incident, firing the employee and releasing an apology by CEO Christa Quarles: “On behalf of OpenTable, I extend our sincerest apologies to the restaurant community in Chicago and to Reserve for this disgraceful, unsanctioned behavior.” Quarles said it was only one “rogue employee,” who “was not in a sales function and had no managerial duties.” OpenTable plans to reimburse affected restaurants for any lost revenue.
But why were restaurants gravitating away from OpenTable in the first place? That’s the question I put to a handful of restaurants in Chicago.
Boeufhaus in West Town switched from OpenTable to Reserve, only to receive a number of no-shows over the past few months. Manager Jamie Enskat thinks that it was retribution for the restaurant leaving OpenTable. “OpenTable began losing customers because they were charging restaurants an outrageous amount of money,” says Enskat, “and in an attempt to make the reasonably priced competitor look bad, ‘one rogue employee’ went out of their way to cost us even more money.”
Currently, OpenTable costs a restaurant $249 a month, plus $1 for every customer who made a reservation through the company’s website. Reserve also has a monthly fee of $249 but does not charge per customer.
“Without blowing anything out of proportion, it’s a big deal to us,” says Enskat. “We’re a small restaurant — there are 36 seats and only five tables that can accommodate a group of four. Empty seats in a restaurant our size has a very real impact on every employee.”
Paul Fehribach, chef and owner of Big Jones in Andersonville, says that Reserve is still investigating, so he doesn’t know the full extent of the situation, but he acknowledges that Big Jones had “ridiculously high no-show rates” on Valentine’s Day and Mardi Gras. “Valentine’s Day, sure, that’s notorious in the restaurant business,” says Fehribach, noting that no-shows are slightly more common then. “However, we never have no-shows on Mardi Gras, and cancellations are rare, too, as we are one of the top destinations in Chicago on that day. However, we had several large parties no-show on Mardi Gras, even after confirming reservations.”
Even with the issue caused by the “rogue” employee, Fehribach believes he has “much better control of our customer relationships” after leaving OpenTable. In fact, even after ending their contract, Fehribach experienced headaches with OpenTable. “They continued to take Google Ads out using our identity,” says Fehribach. As he explained, if you searched for Big Jones on Google, the first link would be for OpenTable’s page for the restaurant. Click on the link, and you’d be taken to a page telling you that Big Jones is not available, but there would be a big red button saying, “Find Similar Restaurants.” He believed this intentionally drove customers away from Big Jones.
“Fortunately, they stopped before we had to take legal action,” says Fehribach. “As long as we used them, we understood they didn’t have our best interests in mind. So none of this is a surprise, but it is frustrating.”
Another person who is not surprised about the current OpenTable incident is Nick Kokonas, co-founder and co-owner of Alinea, Next, Roister and The Aviary. Kokonas is OpenTable’s most pronounced critic, having penned multiple articles on Medium about the company’s supposed failings. It should be noted that Kokonas is also the founder of Tock, a competing restaurant reservation service, though he explains in his most recent Medium post that one of the reasons he created Tock in 2011 was that he “disliked OpenTable so much.” He even created a page to see if restaurants are overpaying for using the service.
In his latest post, Kokonas says OpenTable “has erroneously charged restaurants as a matter of business practice, locks restaurants into contracts, and penalizes a restaurant’s success by incrementally charging $1 for every diner that books using their system, even if they’ve dined at that restaurant previously or discovered a restaurant on Google or Facebook.”
Tock is best known for offering prepaid restaurant reservations, where guests pay upfront for their dinner. But Tock actually offers a number of different plans, and even allows restaurants to offer some free reservations on its site. The original, or Pro plan, charges a flat $699 a month, while the Plus plan costs $199 a month in addition to 2 percent of all prepaid revenue. An Intro plan has no monthly fee but comes with far fewer features, and charges 3 percent of prepaid revenue.
Kokonas says Tock dramatically cuts down on the amount of no-shows a restaurant experiences. And since it often requires diners to pay ahead for the meal, it’s nearly impossible for a “rogue” employee to make fake reservations.
A few restaurants told me they weren’t sure yet if the OpenTable employee had made fake reservations with them, so they didn’t feel comfortable speaking on the record. But there’s no doubt that a number of high-profile restaurants are worried about the cost of no-shows on their bottom line.
According to Reserve COO Michael Wesner, the company has a number of systems to prevent another person from making fake reservations, and quickly added that it wasn’t a simple process for the OpenTable employee. “It wasn’t easy,” says Wesner. “It required a lot of work on (their) end.”
He added that disrupting an industry comes with challenges like this one. “We are going to challenge the (online restaurant reservation) space, which has been dominated by one company,” says Wesner. “And we understand that it will put us against those who want to maintain the norm.”
nkindelsperger@chicagotribune.com
Twitter @nickdk
