As Urbanspoon Beefs Up Rezbook, Is OpenTable in Trouble?

If you've ever made a restaurant reservation online, you've used OpenTable. Founded in 1998, the company has long had a lock on the market, with no viable competition. But with the recent growth of Rezbook, Urbanspoon's rival online booking service, that's changing. For the first time, OpenTable is feeling the heat.

Urbanspoon, which today announced the launch of a revamped version of its popular restaurant-finding app, has also been beefing up its online reservation service. Rezbook has been available since April 2010 to diners in Seattle, but in the last year it's expanded to Atlanta, San Francisco, Los Angeles, and New York. It now serves 1,300 restaurants—a fraction of OpenTable's 25,000—but it's growing fast: Kara Nortman, Urbanspoon's general manager, says Rezbook's customer base grew 700 percent in the last year.

More significant than Rezbook's numbers, perhaps, are the restaurants using it, including some of the hottest places in the cities where it operates: State Bird Provisions and Locanda in San Francisco, and Birreria (inside Eataly) in New York. (New York's RedFarm is also using Rezbook internally for table management and waitlisting, though—since it has a walk-in-only policy—not for reservations.) They also include more established restaurants that have defected from OpenTable. A year and a half ago, the owner of San Francisco's Incanto, Mark Pastore, wrote a now-famous essay questioning the value of OpenTable. Guess what Incanto now uses for online reservations?

The services come with pretty similar costs. OpenTable charges restaurants $199 a month for its software and hardware, plus a transaction fee for each reservation to the tune of $1 per person for reservations through OpenTable and 25 cents for reservations made through a restaurant's own website. That parallels Rezbook's $1-per-diner charge, a $200 monthly fee, and a subsidized iPad to run the system on (if a restaurant wants to buy its own iPad, the cost is $2 per reservation and no monthly fee).

But there's one big cost difference that appeals to owners like Pastore: Rezbook doesn't charge a penny for reservations made through a restaurant's own website, only the reservations it drives to that restaurant through Urbanspoon. "We are fundamentally about discovery," Nortman explains. She says that's the core of what made Urbanspoon popular in the first place.

Then there's the factor of Rezbook's accessibility. Since it's cloud-based, restaurant owners can view and modify their reservation info from anywhere they happen to be, on smartphones or tablets. "I really don't mean to denigrate OpenTable," Mark Pastore says, "they were real pioneers. But it requires dedicated hardware, and Rezbook runs on an iPad that you can run five other applications on at your host desk." Pastore notes that customers just like coming in and seeing an iPad. "There is a sexiness to it." Plus it has the advantages of an old-fashioned paper reservation book, since hosts can carry it around the restaurant.

But don't think OpenTable is resting on its laurels. Ann Shepherd, the company's senior vice president of marketing, says an iPad version of OpenTable is already on the way. It's also working on a remote-access solution to make it easier for restaurant owners to use the system from anywhere.

Despite Rezbook's growing market share, Nortman says the company's business plan isn't focused on picking off OpenTable's customers. It's instead working with the estimated 60,000 to 100,000 restaurants still using paper reservation books (the majority of its new customers) and moving them over to digital.

But other online reservations start-ups are more aggressive about poaching from the competition. Boston restaurateur Jeffrey Gates recently announced the launch of UReserv. He talked about his motivation with the Boston Globe: "UReserv was born from me wanting to take all my websites and Facebook pages away from OpenTable." With OpenTable poised to launch updates to its service, this is a fight that's just heating up.

Roxanne Webber is the former senior features editor at CHOW.com.