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As CEO of OpenTable, Matthew Roberts led the dining reservations’ company through a 2009 IPO, its $2.6 billion sale to the Priceline Group in July, and now he’s helping to orchestrate the company’s expansion from a primarily local-oriented restaurant-transactions company into a global dining experiences company that hopes to be front of mind for travelers in the U.S. and internationally.
As the largest online dining reservations company in the world and with operations in six countries, consider where OpenTable stands: It has relationships with some 32,000 restaurants, powers reservations for nearly 600 online partners, and facilitates the seating of more than 15 million restaurant patrons per month. OpenTable did $190 million in revenue in 2013.
In the grand scheme of things, when you consider how large the restaurant industry is, and how backward much of it is in terms of technology, there is a gigantic potential upside.
As OpenTable and sister brands within the Priceline Group work on integrating dining recommendations, reservations and mobile payments, Skift spoke with Roberts about working within the Priceline Group, the challenges and opportunities in international expansion, the current mergers and acquisitions environment, and OpenTable’s evolution as it grappled to figure out the proper balance between focus and investment.
An edited version of the interview follows:
Skift: I’m only saying it slightly jokingly, please don’t say it’s business as usual. But how have things changed in the early days under the Priceline Group and what are some of the big things you are working on now?
Matthew Roberts: So I won’t say it is business as usual because it really hasn’t been. We really do run OpenTable independently. That is absolutely the case. We continue to run the business as an entreprenuerially led independent operation and that’s a lot of fun. It’s fun for the team and it allows us to continue to take our mission forward.
There are not a lot of operating synergies that would be at play because of the way the Priceline Group has structured itself. I would say if you look at dining it is absolutely one of the key focal points for travel. So that it is a perfect complement to many of the Group brands. So we are looking for seamless integration points, really at the right touchpoint, to help the traveler find and book the perfect restaurant for them. We can do that really by close collaboration. We can do that by making sure that the recommendations are highly personalized and highly relevant.
The content we can display is a a lot of things like the menu and reviews because we have the largest verified review content of our restaurants than anybody. We also have the killer content, which is availability. So it is great to know what the restaurant serves and where it is located and you can look at pictures. But really understanding whether you can actually go to the restaurant at that time is one of the most — if not the most — valuable of all those pieces of content.
The other thing is we have a really heightened focus after the acquisition on international expansion. The Booking.com brand, in particular, has had a tremendous success record in this area around markets globally and navigating different languages, and all the consumer segments etc. We are the largest network in the world, connecting diners and reservations-taking restaurants, but it is very U.S.-centric historically. And we are looking forward to taking that same thing we’ve done in the U.S. and bringing it to many, many more countries on a global basis.
Skift: So when you mention integration points, can we expect sometime in the future after someone makes a hotel booking that they might get some dining recommendations or where is that headed?
Roberts: Yes, absolutely. Those are what I would call the obvious ones. We are looking for some of the more subtle points, as well. I think what is going to be a key to having it be a highly successful integration is to look for the areas where it makes the most sense and delivering the right message to the right person based on the understanding of that person’s preferences. It is not just saying here are restaurants near your hotel in Dallas. But here are restaurants based on our information and based on the particular brand information we think you would really like. And it is that extra bit of effort to personalize the integration that we think is the homerun.
Skift: You mentioned international and Booking.com’s great success in that area. So what are some of the biggest challenges you face in being not so U.S.-centric and going for international growth?
Roberts: I think in any company there are some inherent challenges to launch a brand outside your core market. While we are in six different countries our history has been predominantly U.S.-centric. We put most of our development resource and bandwidth into the U.S. market. It is really things like understanding the market dynamics, learning if there are any cultural differences in terms of how people make reservations versus walking into the restaurants.
What are the average turn times for different restaurants. How can we help our restaurant customers achieve their business goals and their hospitality goals. You have different languages, different laws and regulations. There are a lot of complexities, but being part of the Group is really an asset in that regard because many of those lessons have already been learned. And now we can just benefit from that past experience.
Skift: I see OpenTable has integrated with Apple Pay for mobile payments. What do you think the impact of that is going to be for payments and any other trends you are seeing in the future of dining reservations?
Roberts: We have a lot of experience in this area. What we are most excited about as a business is our evolution from a transaction company to more of a dining experiences company. We have played a very active role historically in what happens before you go out to eat. We have unbelievably great content to help you discover the right restaurant, including menus and reviews that are verified. That means the only people who can leave reviews for on our site are people who have actually eaten at those restaurants, which is a big differentiator versus others.
And then of course we have brought a lot of convenience to what has historcally been a a pain point, which is having to pick up the phone and make the booking. A lot of our focus has been around that and we are absolutely best-known for that aspect. What is exciting for us as a team is to broaden that out. Now that we have done a lot of the hard work to set ourselves up to excel in what happens before we wanted to branch out into what happens during your dining experience.
How can we add moments of delight or ease moments of anxiety during your meal so you can really have a great dining experience. And one of those examples of what happens during the meal is that just like how we brought the convenience for online reservations’ booking, we can do that to what is often a pain point — settling the check.
Very few people like the dance of flagging the waiter down, the waiter comes, you give him the credit card, he walks back. My wife and I are sitting there saying, OK, we are going to be late for getting back and relieving the sitter. That’s not a fun part of the evening. What we’ve created is a very seamless experience that when you are ready to go you just take out your OpenTable app, you can review what you’ve ordered, you can leave a tip, and get up and walk out.
And we’ve done a lot of work to make sure that is a very organic part of the service delivery for the restaurants by applying a lot of technology to communicate to make sure they are really comfortable with it. And on the diners’ side of the equation, as well, making sure we haven’t introduced weird, geeky things into the mix.
I think a lot of mobile payments historically have suffered from the substance of what was being solved for and they got tripped up with the form of how it was being solved. In other words, you’d have to enter a code or you’d have to scan some type of barcode and that was the way you facilitated it. At that point you might as well just take out your credit card and pay. What we’ve created is a seamlessly integrated, almost invisible if you like it to be, part of the dining experience. We have just launched in New York and have had a lot of success in that area.
Specifically about Apple, we were excited to be selected to work closely with them on the launch of Apple Pay, which will be coming here, I think, next month. You can really think of it as an enabling technology for the experience we have already built. Simplistically, one of the greatest benefits of it is that as an OpenTable diner, you don’t have to take the time to store your credit card in your profile with us. That is the most straightforward benefit that I can articulate, but it is an important one.
Skift: Given all this work you have done on improving the dining experience and payments are there learnings that you can share with other companies in the Priceline Group and do you seen any applicability for this sort of thing? Perhaps if there is an expansion into tours and activities or some other areas?
Roberts: What’s great is that at its core OpenTable is very similar from almost like a DNA perspective to many of the Priceline Group businesses. We really have taken the time to do the hard work of putting an infrastructure in place that brings restaurants and diners together online. And so have many of the companies like Priceline.com, like Booking.com and Agoda that do exactly the same thing. Namely putting the infrastructure in place to bring consumers together with hotels.
So the technology that we use to convert a customer on the desktop or mobile device may be extremely relevant to other brands. We can take some of the elements that they’ve used that have worked really well with hotels and maybe try and test and learn how they would have applied to restaurants. And the opposite as well.
On the business to business side of the equation, a lot of our existence has been about not just selling restaurants to purchase our technology, but it is about engaging the restaurants operating their businesses in a way that is different than they’ve ever done it before. Typically a restaurant will have no system in place to manager their reservations, their table management or their guest management. And we are often the first time that they’ve done it electronically.
One of the key differentiators for us historically, and I believe continues to be, is our focus and passion around engagement. Making sure the restaurant is getting maximum value from our solution. And so I think there are elements that we can do, or learnings that can happen for other brands, on our methods there.
Skift: You mentioned how you are differentiated from some of your competitors in that only diners who have actually eaten at the restaurant can leave a review. I’m not sure if that was a reference to Lafourchette, but I wanted to ask you about them and what they have been doing under TripAdvisor so far. And whether there are any things they are doing that you think are pretty cool or whether they are making mistakes? I see they are doing percentage discounts off the meal and dining reservations within the TripAdvisor app. I know they are a lot smaller than OpenTable, but how do you view them as a competitor?
Roberts: On a high level we completely think that dining and travel are a logical fit. They are very complementary.
Skift: Have you thought that way for a long time or has it just been since the acquisition?
Roberts: It has always made a lot of sense to us that those two would come together. We have historically focused more on the local dining experience versus the traveler dining experience principally because that’s just been our history. That was our business model. What is exciting for us now is to really look at opportunities to leverage this connection of travel and dining together given the scope and breadth of the consumer side that exists across the Priceline Group brands. It wasn’t as relevant to us as a predominantly local-based dining experiences company because we did not have the breadth of the travelers on the consumer side. Now that there is the breadth of consumer demand on the traveler side it is just a whole other arena that we can play in.
Another interesting area which you referenced is where do offers and discounts play into the mix. We have a pretty educated point of view, which is we’ve had an a dynamic discount offers program for many years. What we’ve found is that offers and discounts in and of themselves don’t really form the foundation to build a dining experiences brand, but is really just one piece of content that is more compelling to some diners than it is to others.
The real key foundation and focus point for us has been and will continue to be bringing a selection of the best restaurants with the best availability and putting that together with a tremendous amount of knowledge around diners and personalizing it. That along with some of the technology, including payments, will be the foundation of our growth going forward.
Skift: And specifically about TripAdvisor and Lafourchette? What is your take on how they are doing? I’m reading between the lines that you are saying that they are not building an experiences brand but they are appealing to the lowest common denominator with discounts and special offers?
Roberts: No, I definitely don’t intend for you to read between the lines. I think the offers commentary was more around a question that you sent over, which was what are your thoughts about offers and what does that mean. It is one of those areas that we just have a lot of experience in and we know how consumers experience with those. The real valuable content is about the best availability at the best restaurants.
Skift: In OpenTable’s life before Priceline, I believe you were involved in a lot of merger and acquisition activity along the way. The 46% premium that the Priceline Group paid to acquire OpenTable spurred a lot of attention, to say the least, and everyone is talking about the sky-high valuations that are going around. Is the M&A world heading toward a bubble or is this merely the new reality going forward?
Roberts: Right now I see some really creative, innovative, disruptive companies and business models out there. There are quite a few and I think they are well worth investing in. Relative to the level of investment, I think that should be left to the people who are closer to the individual situations, either the analysts or the companies involved. Our focus, as you would imagine, is just around our business and making sure we are and adding as much value as we can to our customers.
Skift: Would you have any lessons for travel startups or even more mature businesses out there from your journey to date?
Roberts: I think one of the things I could share is our own journey around the tradeoff or balance between focus and investment. And it is really a tough one to get right and often in hindsight it is one of those you say, oh we stayed too focused too long or we jumped the gun on that investment. From an OpenTable perspective, when we first started out we went into heavy investment mode and very broad reach. Maybe we can participate all these geographies all at once and in all these different product areas around restaurants.
And what we quickly found is that trying to do everything well you are not excellent at any one thing. So the company did a very deliberate exercise to stay and just hyper-focus. I would say “hyper” is not an exaggeration. We became hyper-focused on just four cities and to prove out that there is something to the business model in a controllable way that manages your expenses and your all-important cash flow. Once we were able to establish that we really had something here in terms of a model, then that’s when we started to expand again.
But there are really these ebbs and flows that continue to happen because even once it was clear that the business model really had traction and was creating network effects, meaning the more supply you had the easier it was to diners, and the more diners you had, the easier it was to add restaurants. Once that formula was clear, we stayed pretty focused for a long period of time on adding restaurants, and under-invested, looking in the rearview mirror, in the technology on the diners’ side. And then we went heavy on investment there and became slower than we should be on investment in the restaurant side of the equation. Then we switched back again.
And then there’s international and international expansion, which is a pretty significant level of investment for any business. The trying to figure out if you can set up some kind of triggers or some type of measurements that force you to evaluate where you are on that balance between appropriately focused and investment for the future.
Skift: Do you see any change going forward in the mix between building the OpenTable brand for consumers the B2B part for restaurants?
Roberts: No, both continue to be the foundation of our business. Our business is about a network connecting a fantastic selection of restaurants with the diners that they serve. We will continue to aggressively put new products out that address both of those clusters.