OpenTable’s app breaks into delivery business
OpenTable is getting into the food delivery business.
The world’s biggest online restaurant reservation service — founded 21 years ago — has been watching warily as more and more diners opt for delivery. Between May 2018 and May 2019, U.S. restaurant visits were flat at 23.8 billion, but deliveries rose 3% to 2 billion, according to NPD Group, a market research company.
So OpenTable decided to partner with three delivery companies — Caviar, GrubHub and Uber Eats — to offer that service through its iOS app.
“We want OpenTable to be the go-to dining app for every meal occasion,” said Steve Hafner, who leads OpenTable and Kayak, an airline fare search engine. Both companies are owned by travel conglomerate Booking Holdings.
OpenTable’s updated app gives diners a delivery option for 8,000 restaurants in 90 U.S. cities. If they select delivery, users will be directed to the restaurant’s preferred service to complete the transaction. If a restaurant works with more than one delivery company, each option will be shown. Eventually, OpenTable wants to post estimated delivery times and costs for each service as well.
Hafner said OpenTable decided to add a delivery option about nine months ago. Partnering was the easiest and fastest way to get into the business, Hafner said. OpenTable didn’t want to operate its own fleet in what’s already become a booming sector.
According to Technomic, the top-five food delivery companies in the U.S. had $13.5 billion in sales between May 2018 and May 2019.
OpenTable had to get into delivery because it’s the only part of the restaurant business that’s growing, said David Portalatin, a vice president and food analyst at NPD.
He thinks delivery will continue to grow, but providers will start to consolidate. Delivery companies are struggling to make money between aggressive discounting to attract customers and pressure from restaurants to lower their fees. GrubHub’s first-quarter profit tumbled 78%.
Restaurants, investors and customers are subsidizing delivery companies now, Portalatin said. But to stand on their own, they’ll need significant scale.
OpenTable — which says it seats 123 million diners each month — offered delivery companies access to a huge customer base.
“All these companies are in a chase for growth, and they want to be where the consumers are,” Hafner said.
Hafner said the delivery function will make it easier for diners, who may use multiple delivery apps but don’t always know which companies work with which restaurants.
OpenTable chose its three partners because they have the biggest reach, Hafner said. Eventually, the service will expand to more of the 51,000 restaurants OpenTable works with. OpenTable is active in 20 countries, including Australia and Japan.
GrubHub says the partnership is another way for diners to discover delivery and try a restaurant’s food even if a reservation isn’t available, the company said.