The restaurant industry isn't exactly showing signs of life, but don't tell that to the growing number of foodie haunts turning to OpenTable (UNKNOWN:OPEN.DL) to fill their eateries.
OpenTable posted blowout quarterly results after Tuesday's market close. Revenue for the leading dining reservations provider soared 18% to $46.7 million. Analysts only expected a 16% advance. Adjusted earnings of $0.50 a share obliterated analysts holding out for flat growth at $0.42 a share.
OpenTable is growing even as it gives restaurateurs a better deal. Let's take North America, which accounts for 87% of the revenue mix. There are now 23,287 North American eateries on the platform, 23% ahead of last year. OpenTable squared away 30% more seated patrons than it did a year earlier. So, seated patrons are growing faster than the number of establishments on the system. That translates into more reservations per restaurant. Factor in that OpenTable's revenue is growing at a slower clip than that, and we see that each reservation is now costing the restaurant less.
These are all important factors because critics argue that it's just a matter of time before Yelp (NYSE:YELP) or Google (NASDAQ:GOOGL) storm the market with a rival platform. Yelp is the undisputed champ in local restaurant reviews. Google has its industry-leading Google Maps for navigation, and we can't ignore its acquisition of Zagat two years ago. Isn't it only natural for these two companies to approach area restaurants with their own solution and electronic reservations book?
Well, for now it doesn't seem to be even close to happening. Yelp has found it easier to work with OpenTable as a partner, and Google has bigger fish to fry than to be dabbling in enterprise software for a retailing niche. If this really was important to Yelp, it wouldn't have signed up as a partner. If this really was important to Google, it would probably just buy OpenTable.
Besides, it's getting too late to attempt to catch up. OpenTable is targeting adjusted earnings of $0.49 a share to $0.53 a share on $50.7 million to $52.1 million in revenue for the current quarter. It's been able to grow even during the economic lull that finds folks hesitant to eat out, and one can only imagine how well it will be doing once people feel confident enough to begin dining out more often.