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Restaurant reservation platforms without open network (marketplace) for the diners are growing +22% faster than their marketplace counterparts
Restaurant reservation platforms without open network (marketplace) for the diners are growing +22% faster than their marketplace counterparts
Is the marketplace no longer the biggest competitive advantage of online reservation systems?
Are no-marketplace online reservations providers a second wave of restaurant reservation technologies?
Why so much success in no-marketplace space?
Is the marketplace no longer the biggest competitive advantage of online reservation systems?
Is the marketplace no longer the biggest competitive advantage of online reservation systems?
When it comes to choosing an online reservation platform, restaurants are faced with many choices. There are different pricing, functionality, interface, marketing options etc. But what we see in the data, is that more and more restaurants are choosing platforms that do not offer a marketplace for diners. These restaurants rely on other channels of marketing, and enjoy these reservation providers because of their other benefits.
At analytics.restaurant we looked and analyzed how the top 24 largest online reservation providers in the world trended in the last 2 years. And here is what we found:
The majority of restaurants world-wide are still choosing market-place platforms (73% of all using online reservation providers), and only 27% are choosing no-network providers. This data suggests a shift is underway - 2 years ago only 24% of all restaurants were choosing a no-network approach.
Then we looked at how the top 24 grew over the last 2 years. It turned out no-marketplace providers grew by 30% in the last 2 years while providers with marketplace only grew by 8% respectively.
Thus, it seems that while the majority of restaurants still value the marketplace, and it is still a significant benefit, the shift towards no-network providers is already happening. No-network providers gain more and more popularity lately with their own key selling points.
Are no-marketplace online reservations providers a second wave of restaurant reservation technologies?
Are no-marketplace online reservations providers a second wave of restaurant reservation technologies?
We looked at the top 24 biggest restaurant reservation providers and the year they were established. Below you can see them with the percentage of growth over the last 2 years (x axis), and color-coded breakdown of network vs no-network.
As seen above, since 2011, 10 big no-network restaurant reservation providers were founded versus only 5 networks.
ToastTable went from 0 to over 3K customers in a little over a year. CoverManager experienced strong growth, and almost doubled its customer base over the last 2 years, Sevenrooms expanded to 12.5K+ customers worldwide, Zenchef (mainly due to acquisition of Formitable and Resengo) grew by 49%. Only 3 out of 12 no-network platforms had some decline in the last 2 years.
For the marketplace platforms, we see that only 7 out of 12 have grown in the past 2 years, and 5 had a decline. 3 out of 5 declining platforms are Japanese (Ikyu, Rakuten Gurunavi, and Retty), one French-based TheFork and the US-based Tock. Top 3 fastest growing platforms are Indian Zomato, EazyDiner, and Swiggy Dineout (part of Swiggy). The US-based Yelp grew thanks to enabling Google reserve (Google Activities now), and OpenTable grew since they had a change of management and reimagined strategy.
Thus, based on the data, we can tell that no-network platforms are the second wave of online reservations for restaurants. There were more of them founded in the last decade, and they grew faster. But we have to keep in mind that technologies change every day, and tomorrow the tables might turn.
Why so much success in no-marketplace space?
Why so much success in no-marketplace space?
As the head of analytics at analytics.restaurant I spoke to José Antonio Pérez Moral, CEO of CoverManager who shared some thoughts on the no-network approach. In his words, "CoverManager is the technology partner for restaurants. We rely on Google, Instagram, OpenTable, and some other channels when it comes to discoverability. And we stay focused on partnering with restaurants on their needs for the best technologies. CoverManager has 400+ Michelin Star restaurants that choose us for our tech. The secret to our success is to listen constantly to the most demanding restaurants who tell you where innovation is going, and develop it. And you have to keep in mind that above any technology is always an amazing hospitality and amazing people who are close to our restaurant partners”. Thus, they focus on the technologies for restaurants and leave discoverability to other channels. With this approach, CoverManager is already +15,000 restaurants.
Sevenrooms is the third largest and fast-growing no-network platform. They captured the hotel-restaurant space which has its own marketing for diners. In addition, they use Google as their marketing channel.
DISH, the biggest no-network provider, was developed by METRO AG, a leading international wholesale company, designed to support independent restaurants and hotels. So their main channel for marketing is their network of wholesalers. While DISH is the biggest no-network provider, in September 2024 they launched the DISH dine app for diners in Germany. Now we can find a part of their network available for diners’ discoverability. It seems that when they created sufficient critical mass of restaurants to create a network, they decided to go for it. We will soon be able to tell if this strategy helps them grow more or it will slow them down.
Key takeaways
Key takeaways
Platforms without network are growing much faster than their network competitors. No-network providers focus more on the backend technologies, and they rely on Google, Instagram, and other channels for marketing.
Google has changed how restaurants are being discovered, and with the launch of Google Reserve in 2017 (now Google Activities), it got much harder to justify the value of marketplace when Google is one stop-shop for many diners, and #1 discoverability platform for the majority of diners. In the last few years the majority of covers comes from Google anyway, so why compete with Google when you can focus on other functionality for your restaurant partners and leave discoverability to the most popular search engine?
In addition, the network niche is very hard to break into, with big players like OpenTable in the US, theFork in France, RakutenGurunavi in Japan holding majorities of market shares, new players need to create their own value proposition. Marketplace requires a critical mass of restaurants and diners, and newcomers need a value proposition to create that mass. So they focus more on back end functionality, customization, seamless integration with other restaurant tech, and leaving marketing to other channels.
On the contrary, marketplace within online reservation platforms is still bringing value such as verified diners, lower no-show rate, convenience for the diner to search for restaurants that offer online reservations for the particular time slot etc. It may not be the biggest competitive advantage anymore, but it is still a major draw.
There is no right answer on which type of platform is better, network or no-network. Each of them has their own customers and deserves to exist. Restaurateurs are left with many opinions to choose from, and good competition keeps reservation providers innovative.
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