OpenTable, the market leader in the online restaurant-booking world, is embroiled in a scheme that affected 45 Chicago restaurants that use Reserve, an OpenTable rival. Last week, OpenTable confirmed it fired an employee who made several hundred reservations at restaurants using Reserve, which resulted in hundreds of no-shows over the course of the past three months. Reserve and several Chicago restaurant workers allege that the employee, who remains unnamed, wanted to convince those Reserve customers that OpenTable was a better product and intended to use the no-shows in their sales pitches.
“This was obviously done with the intent to harm Reserve,” said Reserve COO Michael Wesner.
Reserve’s security team conducted an investigation and brought that evidence to OpenTable and started a dialogue between the two rivals. OpenTable confirmed that it fired the employee in question and had this to say: “We extend our sincerest apologies to the restaurants in Chicago that were impacted by the disgraceful, unsanctioned activity of a lone OpenTable employee. When this activity was brought to our attention, we swiftly investigated and the employee was terminated immediately. We have begun reaching out to the restaurants and are committed to making it right.”
According to Reserve, the former OpenTable employee created several email accounts to make fake reservations. The scheme started in December and peaked on Valentine’s Day, a notoriously busy and profitable day for restaurants. Reserve’s software engineers noticed a spike in prospective fraudulent activity on the afternoon of February 14. They then began more carefully examining their data. Reserve attempted to cancel suspicious reservations and alerted the restaurants. It’s difficult to estimate how much money the scheme cost the affected restaurants: In some cases, they were able to fill some of the falsely booked seats with last-minute reservation seekers.
Wesner and Reserve CEO Greg Hong said this was the only time they’ve ever tracked such behavior, which they don’t believe is criminal in nature. OpenTable claimed this was an isolated, rogue employee. Regardless, several Chicago restaurateurs — including Presidio, City Mouse, and Tavern on the Park — that fell victim are furious. Case in point: Tavern, a Downtown Chicago restaurant that overlooks Millennium Park, used OpenTable after opening in 2007. It was targeted after it switched to Reserve in June 2017.
“If you’re the biggest guy on the block, you’re supposed to lead by example,” Tavern on the Park co-owner Peter de Castro said. “Why would they stoop to the level of undermining the competition and hurting the restaurants that went to that competition?”
In addition to Reserve, OpenTable rivals include Resy (a company started by Eater co-founder Ben Leventhal) and Tock. In wooing restaurants, these reservation-booking services promise they’ll keep costs low while offering restaurants exposure. They also purport to reduce the risk of no-shows, which are a well-documented huge problem in the restaurant industry, costing restaurants thousands of dollars by taking away dining-room availability from interested diners. OpenTable has a “four strikes” user policy where an account is deactivated if there are four no-shows over the course of 12 months.
“Our commitment to reducing no shows made this egregious behavior by a former OpenTable employee all the more painful,” an OpenTable statement read.
Reserve declined to share the specifics of its security protocols. Despite attempts by the OpenTable employee to hide traces of their identity, Reserve’s software engineers tracked the IP addresses, which led them to OpenTable. During the week of February 18, Reserve’s executives quietly contacted OpenTable and shared their evidence. After an internal investigation, OpenTable fired the employee. Neither Reserve nor OpenTable provided any details about the employee’s identity.
The company’s rapid response satisfied Reserve’s executives, who said OpenTable CEO Christa Quarles also internally communicated that these tactics were unacceptable and encouraged employees to report any signs of suspicious activity.
However, restaurant owners aren’t so easy to forgive. There was no settlement or money exchanged between OpenTable and Reserve, Wesner said. Reserve offered the contact OpenTable on any restaurant’s behalf or provide further data if any owners wanted to pursue another course of actions. Meanwhile, De Castro noticed several large group reservations were no-showing starting in December at Tavern. There wasn’t a spike, but a gradual build up. The no-shows were accompanied by an OpenTable inquiry about Tavern’s “sagging sales,” with a renewed attempt to convince them to switch.
“It seemed a little too convenient given what their employee was doing,” De Castro said.
Restaurant workers, some wanting to remain anonymous, were the ones who contacted the media. One worker at a West Loop restaurant that opened last year was angry over throngs of vacant tables on Valentine’s Day. As a new restaurant, it’s trying to become established, and given Chicago’s turbulent restaurant market — with several recent high-profile closures — he was angry that OpenTable would risk damaging a restaurant’s bottom line. De Castro echoed those frustrations.
“I’m so upset with OpenTable that I think the company should leave Chicago,” he said. “But that would never happen.”
Reserve doesn’t believe other cities were affected by the scheme. One of OpenTable’s most vocal critics is Nick Kokonas — the Chicago restaurateur behind the city’s only three-Michelin-starred restaurant, Alinea. Kokonas runs OpenTable competitor Tock. He said he wasn’t surprised to hear about the incidents.
“OpenTable doesn’t truly care about restaurants,” Kokonas said. “If they did, they would never try to exploit no-shows on Reserve while hurting the restaurants’ income in a major way.”
Kokonas believes his system, where diners pay upfront, eliminates no-shows. He praised Reserve for noticing: “I’ll bet the same thing happened to Resy and they didn’t even know it.”
De Castro told the story to a few diners at Tavern and said they were so angry that they pulled out their smartphones and deleted the OpenTable app.
Reserve’s Hong is disgusted that his company was dragged into this situation.
“Quite frankly, it’s not something that we want to be spending time on,” he said. “We should be spending more time making our restaurant partners more successful, helping them run better businesses, and creating better experiences for their guests.”
Disclaimer: OpenTable is an Eater advertiser and uses Eater content on its website and app.
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