OpenTable’s New Index Opens Potential Revenue Channels
OpenTable (NASDAQ:OPEN) recently launched the Restaurant Industry Index to help track the overall performance of the reservation-taking restaurant industry. [1] The quarterly index capitalizes on the database the company has built over recent years by providing its restaurant customers with solutions to manage their reservations and seating. The move is essentially the first time OpenTable has turned toward its database for offering a non-advertising service and is a pre-cursor to other data-driven, revenue-generating solutions it may offer in the future.
We maintain a price estimate of $54 for OpenTable’s stock, with a near 45% premium to its current market price stemming from our belief that there are several untapped potential revenue sources that OpenTable will realize in the years to come. Also, the current market prices are quite depressed as a result of the deteriorating European debt crisis.
See our complete analysis for OpenTable
- Savvy Acquisitions to Propel Growth in These Stocks
- Why Online Travel Companies Are Buying Restaurant Reservation Operators
- Priceline Forays Into Online Restaurant Reservations With Acquisition Of OpenTable
- How Much Is OpenTable Really Worth To Priceline?
- Why OpenTable’s 7% Decline Was Unwarranted
- Slow Customer Growth A Bigger Problem For OpenTable Than Q1 Loss
OpenTable remains the undisputed leader in online-restaurant reservation industry, with nearly 50% of all full-service, reservation-taking restaurants in North America enrolled as its customers. And while OpenTable’s online reservation system accounts for a huge chunk of any restaurant customer’s reservations, the Electronic Reservation Book (ERB) software that sits in the background manages the seating of all the restaurant’s diners. This includes diners who book via phone and also those who walk-in without prior reservation.
The recently launched OpenTable Restaurant Industry Index uses the total number of diners that were seated at a restaurant over the quarter – data readily available in OpenTable’s database. OpenTable then aggregates this data according to regions, and also for North America as a whole. The company claims to use data from 8,500 restaurant customers to arrive at the final index figures.
| Geographic Region | 2008 | 2009 | 2010 | 2011 | 1Q2011 | 1Q2012 |
| North America | -6.90% | -6.60% | 2.30% | 2.80% | 3.50% | 2.40% |
| Chicago Metropolitan Area | -7.90% | -5.70% | 1.40% | 2.90% | 3.40% | 3.30% |
| Metropolitan Los Angeles | -9.20% | -9.70% | 0.90% | 2.90% | 5.20% | 0.00% |
| Metropolitan New York | -4.80% | -5.80% | 4.30% | 2.60% | 1.90% | 4.70% |
| San Francisco Bay Area | -6.00% | -8.60% | 1.70% | 5.20% | 5.10% | 3.20% |
| Washington D.C. | -3.90% | -2.80% | 3.00% | 1.30% | 6.00% | -1.60% |
The table above represents year-on-year growth in the number of diners at full-service restaurants, and is a good indicator of the impact of macro-economic conditions on the country’s restaurant industry as it provides information about the growth or decline in the number of diners over a period.
This brings us to the big question – what’s in it for OpenTable?
This index in itself is available for free to everyone. And OpenTable has also modified its software so that restaurants can track this information. But it hints at potential future offerings from the company which can be monetized. We have always believed that OpenTable’s database holds more value than what is currently realized through providing advertising solutions.
One of the most imminent services is providing consultancy services to individuals and even restaurant chains looking to set up a new restaurant. OpenTable could help such clients come up with the best option in terms of restaurant type and location.
What services OpenTable comes up with, and when, remains to be seen. But when it does come up with something, we can expect to see a boost to its revenues.
Submit a Post at Trefis Powered by Data and Interactive Charts| Understand What Drives a Stock at Trefis
Notes:- OpenTable Introduces Restaurant Industry Index, OpenTable Press Releases, May 16 2012 [↩]