OpenTable Wants to Own Data-Based Dining

For years, OpenTable has faced a bevy of challengers rising up around the world. After its acquisition by Priceline Group (now Booking Holdings) in 2014, though, the online reservations giant is looking to differentiate itself among restaurateurs who are hungry for more advanced data and analytics.

At Skift Restaurants Forum in New York, OpenTable CEO Christa Quarles said that consumer and diner trends have increased the need for cloud-based insights for restaurant operators.

"On the diner side some of the interesting trends we've been pushing towards is the near-me-now phenomenon," said Christa Quarles, CEO of OpenTable. "One of the stats we've seen is that 25 percent of bookings on the app are happening within 90 minutes of seat time. The denser the geography, the fewer people are willing to travel. How do we get the right diner in the right restaurant at the right time?"

OpenTable is tapping its user data to create lists for users based on the habits of tastemakers. The company is trying to become more of a recommendation engine than it has been in the past, with a particular focus on appealing to travelers.

"Discovery and transactions are starting to collapse in on each other," said Quarles. "Discovery is moving into transactions and transactions into discovery. Being in a transactions business is difficult, we are trying to move into discovery layer. What we're trying to do is know that giving you a list of 7,000 rests is not useful."

Quarles wouldn't comment on how OpenTable has fared as part of Booking Holdings. She did say that the current setup allows it to look more long-term, without having to be as beholden to shareholders looking for quarterly gains.

"OpenTable is not a stand-alone public company, so we're not beholden to that drumbeat," said Quarles. "The reality is you can invest over a longer time period. The other most important thing is the travel aspect, the best users on OpenTable are travelers. If you've used OpenTable in two cities or more, you have the most frequency of any users."

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[Updated with full transcript]

Full Transcript of Discussion With Christa Quarles

Skift Table: Alright, grand finale time. Thank you so much for being here.

Quarles: Thanks for having me.

Skift Table: OpenTable has been around for twenty years which almost sounds crazy to say in the world of restaurant technology. Needless to say the company has seen a lot of change, things have come and gone, trends have come and gone, technology has come, really, arrived I would say. What are some of the recent product changes and developments that you are excited about at OpenTable?

Quarles: Yeah, I mean you're right it is really invented the industry that it now offers in terms of online restaurant reservations. You know, on the dire side some of the interesting trends that we have been pushing toward are a couple things:

One is, this near me now phenomenon. One of the statistics we've seen is that twenty-five percent of our bookings on the app were happening within ninety minutes of seat time. That's not a reservation anymore, that's this homing beacon for what's available and around me right here, right now. We know for example in a place like Manhattan people are not willing to travel more than ten blocks from where they are.

The denser the geography the less people are willing to travel so the polygon that we would draw around your space and make a set of restaurant recommendations. All that is in a goal to really become the ultimate restaurant recommendation engine. We look at all of our data and say how do we get the right diner and the right restaurant at the right time.

On the restaurant side we've been in a chock-a-block with innovation. I think that with the stuff that I am most interested in, first of all is just the amount of data that we are putting in a restaurateur's hands. I think JJ, who was speaking here earlier, was referencing the percentage of his diners that were local versus travelers and she showed me on his OpenTable GM app in the green room, "Hey look. This is where I got that data and information."

And what's great about that is because we are in the cloud now, the data and information has been pushed out and now we can do a whole lot more things. So we can make a restaurateur smarter than they ever were before so then they can make better changes and more operational changes in their restaurant as a result of the information that we are supplying to them.

Skift Table: You have a dedicated data science team, which is a very buzzy term in the industry, but will you tell us a little more about what they are working on?

Quarles: The cool thing — well first of all data science is a buzzy term — so is artificial intelligence and machine learning and all these other things that go around it. The truth of the matter is, as any data scientist will tell you, that eighty percent of the work is getting, organizing, and cleaning and really making ready the data. The thing that I think is most unique and special about OpenTable is the unique data we have. If you think about the top-of-funnel players that are very, very large out there in the universe, what they don't have is which butt sat in which seat.

We have the understanding of where the inner section of our diner and restaurant comes together, so it's an incredibly rich and unique data set that I think that is a big, big chunk of why we can actually then apply things like our neural networks on machine learning algorithms. If you ask me four more questions [about this] I probably wouldn't be able to answer them. But the point of the matter is what it enables in real life is that I put better restaurant recommendations in front of each of you.

If we take all forty-seven thousand of our restaurants, you are going to have a different list and ranking than someone else is going to have. The importance of personalization for your experience because ultimately our business is in the business of connection and if we don't connect the diner to a restaurant we really don't make money and so we have to be really smart about how we make those connections.

Skift Table: When we talked before you told a story from one of your restaurant partners about the dishwasher. Do you remember which one?

Quarles: Martha Hoover from Patachou and she's amazing, I got to meet her at the fan conference earlier this year. A lot of it was talking about how we treat our employees in the restaurant industry and how, you know, if you think about the opportunity when you treat the people in your restaurant with a certain amount of respect, but also with the data and information can come from a lot of different places. That was borne out by a simple thing where she pays her dishwasher way more than minimum wage, and she says that the value that comes from this dishwasher is extraordinary.

I know in a five-minute conversation, that the soup sucks. Just by having a conversation with the dishwasher because he's dumping it out over and over and over again. This also speaks to the kind of leader she is because she is having this conversation with people in her organization and that dishwasher has stayed with her for twenty-two years. The reason for which he is staying with her is he feels like he's valued and he has an opinion that she is going to use and redeploy in the restaurant.

Skift Table: I love that story. I actually used that a couple times because they think it's so fascinating, but I'm curious, so how can technology split OpenTable's technology or does restaurant technology generally support those types of relationships while still innovating on a technical level.

Quarles: Technology is everything we do and having been around for twenty years that technology is more often changed than pointed out. We look at providing value along three main pillars: marketing, operations, and hospitality. And technology is a driver or all of those. On the marketing side, you know, it's how well am I getting diners to come to OpenTable, then I can put diners inside of your restaurant.

On the operations side, it's being smarter. As a restaurateur you are trying to maximize the throughput in your restaurant and if we can through better analysis of, "Hey your two tops are turning at forty-nine minutes instead of the hour and a half you have set for them," you could actually get more in. Putting it in a position that we are going to maximize that throughput and on the hospitality side, it's really about creating those special moments.

To the extent that we can demonstrate if someone is a wine lover, making sure that the somm is getting over to the table as quickly as possible. All of those though, hopefully, the guest doesn't really see them happening in real time. What they see and experience is the warmth and energy and joy that you are creating in your space, and that's the kind of environment we are trying to create.

Skift Table: I want talk about OpenTable's marketing efforts. Four years ago OpenTable was acquired by the Priceline Group — now Booking Holdings — you've been with the company since 2015. How has working under the larger umbrella of that group changed, I guess, operations and specifically marketing strategy?

Quarles: I think one of the first benefits is OpenTable is no longer a standalone public company and so not necessarily pressured to that quarterly drum beat of "meet that number." Booking Holdings has a results orientation, but the reality is that you can invest in a longer time period. You could say look, this is something we can move toward and it's going to take twelve months to get there and so you have the ability to invest in bigger time frames.

The other most important thing is the travel aspect of it. Obviously this is a Skift, so we should talk about it. The best users on OpenTable are travelers. If you've experienced OpenTable in two cities or more, you have the highest frequency of any user group in our entire network.

The other — this is a huge revelation — but one hundred percent of travelers need to eat. How do we get back to that ultimate restaurant recommendation when we know that you aren't at home? I literally landed in New York this afternoon. If I land in a city that I don't know as well [as New York] how do I get a recommendation for something? How do I know? It may not be the three Michelin star restaurant, but it may just be like how do I get that great local haunt.

We have to be in a better position to provide great recommendations to travelers and we know that those are our best customers here at OpenTable.

Skift Table: So recommendations are already personalized, correct?

Quarles: We can go way, way, way better than we can today.

Skift Table: So when is that going to happen?

Quarles: I think it's iterative process. I mean I think again we talk about artificial intelligence. There's a woman that works at OpenTable that's named Francesca, that is artificial intelligence. If we could bottle her and put her into the market and she knows who I am and she knows what I like and what I don't like, she knows where I live. You know we aren't there yet, where somebody really understands deeply who you are and can make that personalized recommendation. But it's a march towards that and even in that situation, even if she knows who I am, I have to tell her what kind of mood I am.

The beauty of dining is that you know you are sometimes in a Thai mood or in a fried chicken mood or a pasta mood. And nobody can get that out of you unless we are actually inside your brain somehow. I'm not recommending that.

Skift Table: I'm curious if people actually want that personalized recommendation or how far to go because I think now in a personalized world and everything is moving towards personalization, or perhaps we've gone too far; serendipity now sounds exciting.

Quarles: I think part of what's in there is interesting trend around discovery and transaction starting to collapse on each other. The discovery players are trying to move into transactions and the transaction players are trying to move up into the discovery layer.

The good news is that I think being in the transaction business is relatively challenging and the plumbing associated there is relatively hard. We are very much trying to move into the discovery layer. We are recognizing that giving you a list of seven thousand restaurants is not useful, and that we have to make sure that sometimes the list that we give you is the right list.

The other thing is, how do we supply our own list? We spent the summer and we launched a bunch of new lists that contained both sort of an editorial component plus also a data-driven component. We took markets like Chicago and we said okay here's three great restaurants on Chicago, how many of our diners ate at all three of them?

Interesting, we have a sample now of seven thousand diners, where else did they go to eat? Now we have a sort of sense of these are tastemakers and so that became a basis for how was can generate back at that moment of serendipity and then create moments.

Christa Quarles, the Chief Executive Officer of OpenTable, speaking at Skift Restaurants Forum in New York City on September 24, 2018.

Skift Table: How important is international expansion for you? Because I know you've had a number of big announcements recently.

Quarles: Our ambition is to create the global dining passport so that you can open up your app in any city around the world and experience recommendations for where you should go out to eat. Today we are meaningfully in about twenty-two markets, we've been in places like the UK for a very long time, we have about eight thousand restaurants there. And we've launched in markets like the Netherlands and Spain and have come back at it at trying to figure out what is the right way to continue to expand globally.

Thing about OpenTable is that it is a two-sided marketplace so you need both restaurants and diners. Every new market you go into you need restaurants and diners; and the diner part is more challenging because you have to actually get the demand flywheel spinning again.

The good news is that I can take global travelers and put them into a market, so we saw for example in Barcelona a big pop after Mobile World Congress because you had a bunch of travelers coming into market and then all of the sudden, you know, the bubble pops and it was related to that. To the extent that we can get global travelers into the market and then that starts feeding the local market as you move them in.

Skift Table: No one likes to talk about competition, but after twenty years the OpenTable has seen competitors on all fronts — you've seen them come, you've seen them go. Lately the speed of technology seems to be picking up and there's obviously more competition. How does a legacy brand like OpenTable stay relevant and stay kind of nimble in a start-up world.

Quarles: I look at competition as really just an engine to drive our own teams faster. If I think about how we do compete though, again along the vectors of marketing operations and hospitality I would say, we've seen less competition in the marketing side of things just for what I answered on the international side.

It's actually quite hard to get that demand of generation flywheel spinning. On the operations and hospitality front, there are competitors out there. I think OpenTable has been historically slower to move into the cloud but we are the largest cloud-based table management operator in the world by a pretty wide margin and so we continue to make pace and change.

We put data into the restaurant owners' pockets so we want to make sure that we are in a position by virtue of the twenty-seven million diners that are coming to OpenTable every month that we are giving data and information that helps make the restaurateurs smarter at the end of the day.

But I love and welcome competition and again I think it enables us to move faster but I think the nice thing about being the number one player in the industry is that you get to focus on the customer and less the competitors and usually the competitors are focused on who is number one.

Skift Table: Another thing we had talked about ahead of this was some of the changes that you initiated at OpenTable internally in terms of hiring. I would love if you could talk through a little of that and then part two of this question which I will ask now is, Are there any ways that restaurant businesses can adopt sort of the ideas ethos of what you are doing internally to their own hiring practices?

Quarles: Yeah and what Kristen is referring to is I put a call out to the market to be fifty-fifty in gender equality. It was really important to me, especially being in Silicon Valley where there are so many challenges out there. The most important thing was that we stood in front of the organization and said this is important.

The reason we said it was important is because not just that it's the right thing to do from a [just from a] moral objective. It's actually better for business.

The data has proven over and over again, that when people they feel like if you come into work and actually do their job or feel like they belong, they perform better. So I look at it as more of a fiduciary obligation that we have. We look from top to bottom on our entire recruiting platforms. At the very top we did things like, we looked at our job descriptions and we realized most of our job descriptions were really driving toward male applicants. This is really on the engineering side; male applicants versus female applicants.

We gender neutralized the job description and then we anonymized our resumes so we took out gender identifying and also person of color identifying information out of that next layer. Then we made sure we had diverse slates and diverse panels. The data shows that you can't just have one diverse candidate because then they become the diversity candidate and then their odds of hiring are zero.

You actually have to fill the pipeline up and then the results the first quarter we did this, half of the engineers we hired were female. When I look at the restaurant industry, first of all I want to honor the struggle that a lot, especially I see female restaurateurs and actually people of color who have gone through and have surmounted the challenge that has been in the restaurant industry, but I also look to them and say it doesn't necessarily have to be this way. I look at restaurants sometimes and I go, "wow this looks like wall street did 1996, we have a long way to go."

But back to the business side of the equation: If you can get your organization to a place where the people are loving that they are coming to work, then your turnover is going to be less, you are going to have fewer expenses, you are going to have better service — all of this is going to yield a result for your business. That's something that I am excited about, we've done a few things and continue to do more and for me it's personal.

I have struggled in very male-dominated industries throughout my life and I think I am very excited to see the changes that are starting to happen in particular in the restaurant industry.

Skift Table: Hiring in Silicon Valley is different than hiring in a small restaurant. Do you believe that there are practices that ...

Quarles: I'm watching the smartest restaurateurs get it, they get it. They understand that if you invest in your people that you are going to have a better product. And at the end of the day, to quote Maya Angelou, it's not what you did or what you said, it's how you made them feel.

Most restaurateurs I know, they say "Well my purpose for getting in the industry was to create joy in my space." When you do that you something special can happen and the guest feels it, and the guest knows.

Skift Table: I'm going to take probably just one audience question but we will just start from the top. Do you plan to improve transparency with regard to letting restaurants see certain analytics like, for example, which ads drive the most business?

Quarles: By ads I assume they mean on our platform? I mean the short answer to this is yes. We are continuing to add the amount of data that we put at the restaurants fingertips. We know that data is everything, we tell our sales team all the time, which I see a few people out in the audience that data is not just a selling tactic here and there, it needs to be the foundational pillar of who and what we are.

We have a lot of data, we need to arm our restaurants with that data so that they can make better decisions. So yes, we are going to increase the amount of data we show, and if you are a restaurant owner and you are in the audience please reach out. Not everything has been productized or operationalized yet but there's probably a lot of data that we could get to you and so I would submit that you ask sometimes as we get better at producing it for you.

Skift Table: Okay, I'm going to ask one more because I'm personally curious about this question: Would OpenTable be in a better position if it was independent from Booking? As a restaurant editor it was a hard pill to swallow to see a restaurant-focused hospitality company go under bigger umbrella for me so I'm curious of your thoughts here.

Quarles: I think solving the problem of travel and dining is one worth solving. I can't even say we've solved it yet, we certainly have not but I think that you are seeing a lot of different tie ups across not just Booking and OpenTable but in other competitors and other competitor spaces and I think it's something we are all working toward and I think we have the best shot as our organization to go do it.

Skift Table: Great, Christa thank you so much for joining us today.

Quarles: Thank you.

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