OpenTable and Savored partner for discrete discounting


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Interesting announcement this past Monday in the restaurant sector that illustrates how OpenTable–the online real-time restaurant reservation service–is incorporating special pricing elements into its core business offering by partnering with Savored – a Groupon-like service that caters to restaurants and their diners.

According to the story in the San Francisco Chronicle;

Starting today, OpenTable will have Savored 30% Off Deals on its San Francisco Bay Area homepage. It will expand the deals to other markets in the next few weeks.

When users book one of the Savored tables, they’ll be able to pay $10 up front and receive a 30% discount on meals. The discount process is seamless: as soon as a reservation is made, the restaurant is notified. Savored estimates the average OpenTable diner will save $40 per 4-person meal.

In the past, OpenTable competed strictly on its ability to streamline the reservation process for both diners (who pay nothing for the service) and restaurants – who are charged monthly and per-reservation fees for their use of the service. OpenTable also provides restaurants with a comprehensive restaurant reservation management system. And that business model has been highly effective for OpenTable as they have dominated the online restaurant reservations marketplace – capturing up to 90% market share in some U.S. markets.

But faced with growing competition from upstarts like Rezbook and Eveve, OpenTable is looking for ways to differentiate itself and one way to do this is by offering a pricing angle to their services. Partnering with Savored seems to make perfect sense…

Savored, which was originally called VillageVines and started last year in New York, aims to be an alternative to Groupon for high-end restaurants and those that want more control over the use of coupons. Restaurants can limit when people can book a discounted reservation — only on weekdays or before 7 p.m., for instance — and can offer tables in real-time, like if the weather is bad and the restaurant is empty.

Because there are no paper coupons, the service works better for high-end restaurants that do not want to tarnish their name, said Benjamin McKean, Savored’s chief executive. And because Savored offers 30 percent of the bill, people are inclined to spend more, while they may spend just the minimum if they buy a $50 for $25 coupon on another site, he said.

“It’s very dicy for a restaurant to offer a discount,” Mr. McKean said. “That’s why you hear all these horror stories about the daily deal sites, because it can make it look like you need to offer a discount to get people in the door. For us, they’re doing it truly as yield management.”

Here’s the takeaway: Any type of discounting at the high-end restaurant business is risky, but if you can cloak it with discretion, you have a fighting chance. I think the OpenTable + Savoyed partnership makes sense on a number of different levels. I would love to hear from those who think otherwise.

Republished with author's permission from original post.

Patrick Lefler
Patrick Lefler is the founder of The Spruance Group -- a management consultancy that helps growing companies grow faster by providing unique value at the product level: specifically product marketing, pricing, and innovation. He is a former Marine Corps officer; a graduate of both Annapolis and The Wharton School, and has over twenty years of industry expertise.


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