In the latest move by restaurant reservation
giant OpenTable (
) to attract more diners as well as restaurant customers by
focusing on mobile technology, the company announced this Monday
that it has acquired Quickcue - a provider of guest management
systems for restaurants. This acquisition is the third by OpenTable
this year, following Foodspotting in January (see
OpenTable Looks To Boost Diner Growth With Foodspotting
) and JustChalo in June (see
OpenTable Acquires JustChalo To Bolster Its Mobile Push
). Given that all three deals are mobile-focused, it looks like
OpenTable is doing everything it can to improve its mobile
offerings. After all, mobile-based reservations already form a
major chunk of OpenTable's restaurant reservations, and strong
growth prospects makes this avenue impossible to overlook in terms
of long-term profitability.
The news should be encouraging to investors who fear that Apple
) is set to join the list of big-ticket tech firms looking to move
into the nascent restaurant reservation industry, after reports
surfaced late last week that the company has filed a patent for a
cloud-based application that handles restaurant ordering and
reservations. OpenTable's shares fell nearly 4% on Monday as
investors reacted negatively to the prospect of Apple becoming a
direct competitor in the industry in the near future.
See our complete analysis for OpenTable
We are in the process of updating our $70 price estimate
for OpenTable's stock, to factor in the impact of this latest
Although OpenTable is the undisputed leader in the restaurant
reservation industry, the company has stepped up its
technology-related activities substantially in recent years to
ensure that it maintains this strong position. Besides the series
of tech-related acquisitions, OpenTable also completed an overhaul
of its existing reservation software earlier this year.
A number of new competitors presenting themselves as low-cost
alternatives, as well as the looming threat of new entrants, are
largely responsible for this frantic activity from OpenTable, with
the company being forced to look for ways to differentiate itself.
This is where acquisitions like that of Quickcue figure in the
As a provider of diner management systems, Quickcue has about 40
restaurant customers using its proprietary mobile waitlist
technology. Notably, the waitlist product offering is suited for
primarily walk-in restaurants which also accept reservations. This
is the segment OpenTable targets with its OpenTable Connect
product. So we can expect the next version of OpenTable's software
to come integrated with Quickcue's solution in the near future.
Coming to the impact of the acquisition on OpenTable, the most
immediate effect will be a reduction in the company's cash by $11.5
million - not really a problem as it reported about $103 million in
cash & short-term investments at the end of Q3 2013. The
9-member Quickcue team will add to OpenTable's existing employee
base of just above 600. In return, the acquisition should help the
company add more restaurants across North America to its customer
base, and also boost growth figures for diners using its service.
You can understand how an increase in diners helps the company's
share value by making changes to the chart below.
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