OpenTable Makes an IPO Reservation

Yesterday OpenTable filed an S-1 to go public and there was a lot of commentary. From the S-1:

We initially focused on acquiring a critical mass of local restaurant customers in four metropolitan areas: Chicago, New York, San Francisco and Washington, D.C. These markets have since developed into active, local networks of restaurants and diners that continue to grow. We have applied and continue to apply the same fundamental strategy in developing and penetrating our other markets. As of December 31, 2008, the OpenTable network included approximately 10,000 OpenTable restaurant customers spanning all 50 states as well as select markets outside of the United States. Since our inception in 1998, we have seated approximately 90 million diners through OpenTable reservations, and during the nine months ended September 30, 2008, we seated an average of approximately 2.8 million diners per month. For the twelve months ended December 31, 2007 and the nine months ended September 30, 2008, our revenues were $41.1 million and $41.3 million, respectively.

(emphasis mine)

OpenTable has built, over time, a successful business. It makes sense that they want to go public. Whether it’s a good investment is another question.

The real issue is where does the company go to grow? OpenTable is angling to become Zagat I believe — though it has a considerable way to go in terms of brand strength — and it could also expand horizontally into other areas where booking/ticketing is involved. Even though OpenTable is supported by fees from restaurants I believe we’ll see advertising introduced at some point.

However, there are competitors out there that offer reservations without the inventory software management integration and could pose a problem if they become viable alternatives in any of OpenTable’s core markets.

Compare Yelp:

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