Blog Post

New dining app Reserve hopes to challenge OpenTable by charging customers instead of restaurants

Look out, OpenTable, there’s a new player in the dinner reservation world.

Mobile app Reserve launched in beta Tuesday in New York, Los Angeles, and Boston, with a simple interface that lets users book their meals on the go. The killer feature is the Uber-like payment system, which automatically charges your credit card for the cost of dinner and tip. No more fussing with the bill at the end of the night. It’s a premise that convinced Google Ventures, Uber investor Shervin Pishevar’s Sherpa Ventures, and First Round Capital to take place in Reserve’s undisclosed seed round.

Screen Shot 2014-10-28 at 9.24.43 AM
Screenshots of the Reserve app

There’s only one problem: OpenTable has a similar product, a one-click pay button with participating restaurants. You have to take your phone out to hit it, unlike Reserve’s automatic system, but otherwise it’s not dramatically different. If Reserve is this late to the dinner-booking game and doesn’t offer anything particularly unique, how will it take on the incumbent?

Reserve sees itself as a “concierge” service, one that uses technology to deliver a white-glove restaurant experience. But as far as I could tell from the pitch and talking to co-founder Greg Hong, the main difference between booking through Reserve and booking through OpenTable, from a diner’s perspective, is that Reserve restaurants get a picture of you so they can try to greet you by your name at the door. There also may be an opportunity for diners to book tables that wouldn’t normally be available due to Reserve’s relationship with restaurants, although it’s not an official feature for the app.

From the restaurant perspective it’s a whole different story. OpenTable is hated by many in the hospitality world for taking a cut of the revenue while those in the dining industry struggle to turn a profit. Reserve, in contrast, won’t charge restaurants at all. It will charge consumers — $5 to book. That’s a great deal for the meal makers who want to bring in eaters without giving over the cash register.

Hong described this difference triumphantly, as though Reserve had fixed the true weakness in the restaurant booking system. But all I could think was, “Who would use this if you can book through OpenTable for free?” Hong pointed to the so-called concierge element of the service, which perhaps for the particularly wealthy is worth it. But for the rest of us, Reserve seems like a raw deal.

Down the line, though, Reserve’s restaurants-first system could prove fruitful. If the app gets a good enough reputation with the food industry for giving them customers for free, Reserve may wind up onboarding better restaurants than OpenTable has to offer. That, perhaps, would be the feature that keeps customers around.

Shifting the cost from the dining industry to the diners themselves doesn’t seem like a great trade for Reserve’s users, but the supply side of the chain will be pleased.

One Response to “New dining app Reserve hopes to challenge OpenTable by charging customers instead of restaurants”

  1. Dead. On. Arrival.

    Unless restaurants dump Open Table en masse so it’s no longer available, I don’t see any reason to use Reserve. Making it easier to pay is not worth $5, especially with EMV-compliant smart cards coming to the US next year (and already widely used elsewhere).

    This reminds me of mobile carriers trying to charge their customers for femtocells in the home. Nobody wanted to pay Verizon/AT&T an additional monthly fee because their home happened to get poor cell service.