OpenTable files for IPO, finally

One of my favorite companies from the last Internet bubble, OpenTable, has filed to go public.

In this economy? Are they out of their minds?

Perhaps not. The company is marginally profitable, and its total addressable market is still largely untapped. The OpenTable reservation system is not in place at all restaurants that could benefit from it, especially those outside the United States. From a product perspective, since the system does increase the number of chairs filled in a restaurant, it's a good and proven investment for a restaurant to make.

However, this is no magic bullet to save the dining industry. Restaurant revenues overall will decline during the recession, as people strive to save money on all discretionary expenses such as dining out. Restaurants will go out of business and some will no doubt be OpenTable customers. So without a stepped-up sales push, which IPO funds could provide, OpenTable's growth would be destined to slow this year.

OpenTable benefits from a strong network effect: The more restaurants that use it, the more valuable it becomes to consumers, and thus the more potentially valuable it becomes to restaurants not yet using it. That's assuming there's no open standard for online reservations, but I haven't seen any drive toward that, and I wouldn't expect the restaurant industry to devote resources to it as long as OpenTable treats its customers well.

One could argue that investors are wary of the public market now, for good reason, and one might thus think that any company making a public offering now will generate much less cash by doing so that it would during a bull market. That is not necessarily true. As one of the few companies are currently able or willing to go public, OpenTable will get a lot of investor attention.

According to Renaissance Capital, there were only 43 U.S. IPOs in 2008, down from 272 in 2007 and 221 in 2006. The last U.S. IPO in the technology sector was Web hosting firm Rackspace (RAX), in August 2008.

There's a financial analysis of OpenTable on TechCrunch: OpenTable Files for IPO, Reveals Finances.

[nbvail]

I have used it for years and it need so much work, as a database solution, if you can call it that, i really fails. Plus they are so territorial - meaning they won't allow it to integrate with restaurants Point-of-sale systems, if it did it would be a much more valuable tool. It kind of like using windows after using MAC OSX, something just missing and it feels extremely old-fashion, was very cool when it came out but just feels old and obtrusive.

[arson451]

I never would want open table integrated with aloha. At one point or another all POS systems fail and not even being able to pull up reservations would create a serious problem. Not to mention 7/8ths of servers are mentally challenged when it comes to enter the correct guest count at a table so i cannot trust the number of covers aloha reads. Since OpenTable was merely meet to take online reservations from guests who prefer the internet over the phone and keep track of manually entered reservations on our end I have always been happy with it.
And as a mac user for the last 16 years, I can say that Aloha is a much better experience than windows.

[jkcouch]

Too bad Opentable's system is so cumbersome. I suppoted all their systems for a major national hotel chain. For restaurants that are part of a corporate network its almost impossible to get support for their product. They only support their system if they are NOT behiend a firewall (CRAZY).

The other problem I saw with their product is that it would never generate much business. It is a great product for restaurants who need a digital reservation system. But Its just a bonus that customers can hit it from the internet.

[idfubar]

Next up... waiter.com?

[Esteanil]

Wow. Their page looks just like one of those "parked domains" domainspam things. Colour scheme, lists and lists of links, etc. If I hadn't known it was a real site, I'd have left immidiately