Young and Hungry

Are Simple Economics Behind Mike Isabella’s Split With OpenTable?

Graffiato's Mike Isabella yesterday cited new restaurant web portal CityEats' partnership with the popular Food Network as part of the reason for his decision to sign exclusively with the upstart and split with the otherwise dominant OpenTable online reservation system. The financial blog Seeking Alpha offers some specific analysis of the costs to restaurateurs who use OpenTable—albeit in comparison to an altogether different competitor in the United Kingdom—which might shed some light on the financial part of Isabella's decision: In short, restaurants pay on average $525 per month for the service, with expectations of a whopping 970 percent return on that investment, which the author describes as a major selling point in sales presentations to restaurant owners. "However, some restaurant owners don't believe this math and believe paying for regular diners is a tax on their profits."

Logo courtesy of OpenTable

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