) has become synonymous with the concept of online restaurant
booking in North America. But the company does far more than
provide you with free and real-time online restaurant reservations.
OpenTable has gone on to add Groupon to its list
of competitors that, previously, only included online
restaurant reservation providers like Urbanspoon, owned by
), and the UK-based liveRES Ltd and Livebookings Ltd. Groupon also
seems to have hit the right note with its decision to sell
third-party restaurants coupons through its website.
We currently maintain a $94.90 price estimate for
, which is in-line with the stock's market price.
The 'Other' Sources of Revenues
OpenTable is able to provide its services to diners for free by
collecting a monthly subscription fee as well as a per diner
reservation fee from the restaurants it hosts on its website. These
subscription and reservation revenues are by far the biggest
sources of value for the company - an estimated 80% of the
company's stock value by our analysis.
But over the past few months, OpenTable has successfully
implemented new features with significant revenue potential in the
years to come. These features include Spotlight, OpenTable
advertising, OpenTable Connect and Private Dining. We estimate that
these features, together, constitute almost 17% of the company's
Focus on Spotlight
Spotlight is the star pick among the 4 newly launched services
by OpenTable. It allows restaurants to sell Groupon-like restaurant
coupons as weekly deals through the opentable.com website. Groupon
has already demonstrated the effectiveness of group-based coupons
in attracting new customers to try a product or service. And full
service restaurant owners would clearly prefer OpenTable over
Groupon for selling their discount coupons, as it addresses their
requirement for a more focused target audience.
The fact that OpenTable retains half of the revenue generated
from the sale of coupons, and weekly deals are featured separately
for different cities/regions means there is substantial revenue
potential in Spotlight. One analyst estimate pegs the possible
revenues from Spotlight to be between $18 million and $24 million
To derive our analysis of Spotlight's value, we estimate that
600 people buy coupons worth $25 each as a part of a deal on
average, which represents a revenue of $7,500 per deal for
See our full analysis and $94.90 price estimate for