E-business Briefing: June 2008

Livebookings Network is a real-time restaurant booking service whose clients include The Ritz, Gordon Ramsay Holdings, La Tasca, Planet Hollywood and Rainforest Cafe, as well as portals like Time Out London and lastminute.com.

It bagged £6.5m in funding in a round led by Balderton Capital earlier this year and is planning to expand its presence in the UK and Europe.

Here, we speak to COO David Norris about which types of restaurants are making the best use of online marketing and what other opportunities are out there for its aggregated reservations model.

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Livebookings has been around for a while now, as has the idea of online bookings for restaurants. How well has the idea caught on with consumers and what types of restaurants have made the biggest strides on the web?

Livebookings Network as it currently exists has been around for two years, having been created in 2006 by the merger of two restaurant reservation system providers - Livebookings in the UK and Loghos in Sweden. The ambition then was to build the business model and prove it would work in our core markets of Sweden and the UK.

Having done so, the plan was to go for a second round of funding and take the business model further geographically. That's what we are now doing. We are now focusing on expanding through Europe - to France, Germany, Spain, the Netherlands and throughout the Nordics.

Our most mature market is London. There, there is a wide range of very sophisticated, fine dining restaurants that are looking to maximise their covers. It is obviously better to get two guests per chair in an evening than one, as it doubles your turnover. So a lot of those restaurants are using complex software solutions to manage their reservations and many of them are then connected to online distribution networks, such as ours.

The more advanced restaurants are also using a lot of online promotional activity to drive bookings, such as special offers to fill their shoulder periods. It is often difficult for restaurants to fill every session throughout the week so if you can put together offers for those periods, such as between 6pm and 7pm for the pre-theatre dining crowd, you have more chance of maximising your profitability.

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What about consumers?

Consumers are getting used to the idea of booking online. The majority of our bookings come through a la carte bookings but we do see major spikes in booking levels when we run a significant promotional campaign around events. Many bookings also come from secretaries that are reserving tables for their bosses.

In terms of how big the market is, we do know that around 62% of UK consumers are searching the web to decide which restaurant to visit, according to a study conducted by the American Express Hospitality Monitor last year. So that's a lot of people deciding which restaurant to book online.

Our mission is to make sure that when people have made that decision, our services are in front of them. We focus on a B2B model, rather than spending a large marketing fund on creating an audience for our own site. We focus on people that already have the audience and visitors that are willing to book.

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How many bookings are going through your network?

The highest number of covers booked for a single restaurant last year was 61,000. That was The Ritz. In terms of the number of covers we have done since we started two years ago, it is about 2m.

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What kind of uptake are you seeing from low and mid-tier restaurants?

We recently signed the Slug & Lettuce chain, which has 80 restaurants. Also, in the mid market, there's La Tasca, the nationwide group of tapas restaurants.

Those types of restaurants don't use more complex solutions; they use a web-based reservation diary which drops bookings straight into the diary and the restaurant manager can use to manage phone and web bookings online. They can also build a history against customers, which is great for CRM and marketing opportunities. A lot of restaurants are looking to generate more repeat business.

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What spending trends do you see from restaurants in terms of customer acquisition?

The advertising spend for restaurants is gradually shifting online. In the old days, advertising meant a listing in Yellow Pages. But because so many people are researching restaurants online, restaurateurs are realising they need a presence online.

Eighty to ninety percent of the restaurants we talk to have a website, but many will only have a phone number on that site. As more people adopt an online booking system, more restaurants will get into online marketing. We're therefore trying to teach our restaurant base through seminars about SEO and paid search.

If you compare restaurants with the hotel industry, restaurants are probably five to ten years behind. Due to the fact that a lot of owner-managers have to do a bit everything, they are often not fully up to speed on what the internet has to offer. As a result, they are slightly behind the curve when it comes to the web. That is now changing, particularly in the big cities.

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Do you see a similar trend among other businesses, like hairdressers, that have traditionally been slower to adopt online marketing and bookings? Are you looking at any other verticals?

There are a huge number of opportunities for this model of aggregation. The ones that are most interesting is where the supply base is very disparate. Take the example of hotels. Hotels are quite disparate in the UK but in the US there are a lot of chains, and the chains have the money to invest in their own distribution. With restaurants, however, there are very few chains.

The trick is to look at verticals where the supply base is very disparate. There are companies out there that do the same thing for B&Bs and golf tee times. Hairdressers are another obvious one.

We aren't focusing on any of those. We have to be absolutely focused on restaurants. If we think about going anywhere else other than our core business, it will be a recipe for disaster because of loss of focus. But there are certainly a lot of opportunities out there.

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Are you seeing much business from local search yet?

It is a very geographically focused vertical. If you are choosing a restaurant, locality does matter so Google Maps and local are two areas with a lot of potential.

Paid search is also highly under-developed and there is a lot of opportunity there for people that know what they are doing. Some of our booking partners are very good at organic search but in paid search, many of the key phrases aren't very competitive.

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People have been talking for ages about generating restaurant bookings through 'find your nearest' mobile location based services. Are you generating many bookings yet from those types of services?

It's interesting. The Windows Live Mobile campaign that went out earlier this year was showing an example of finding a restaurant on a map on your mobile. But then in the ad, you call to book. That is an obvious opportunity to exploit. If you happen to find a restaurant on your mobile, then why not book it on your mobile? The restaurant might be closed.

On mobile, there are two key opportunities, as far as I can see it. One is when a user is in a specific location and is using GPS technology to find restaurants near him and her. That does depend on GPS becoming fast, cheap and widely available. The hype would have us believe that is going to happen soon but it will take some time.

The other is if you are going to a city you don't know. The opportunity there is for you to download content to your mobile before you go in your own language, and then being able to interactively use that information to select and book a restaurant. I see that as a great opportunity but it is a little unproven as to what the return would be, so any investment in that area would have to have an element of caution.

In restaurants, there is plenty of growth in front of the PC screen. Just getting users to book restaurants on PCs offers huge growth and plenty to focus on. I do feel with mobile that there will be something soon, but I don't know whether it will deliver the numbers immediately.

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Do you have any stats on mobile bookings through your platform?

We don't know how many people are using search in that respect and we don't have a live mobile platform at the moment.

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What's the competitive landscape like in Europe?

In many European countries, it is a relatively new idea to book restaurant tables online. There has been some groundwork made in Germany by a company called BookaTable, which we acquired in February, adding about 300 restaurants that use their software to our network.

Throughout Europe, there are also a couple of players worth looking out for. OpenTable [an international restaurant reservation network] is investing and building a European team, which will build awareness so is good for us.

We're happy that there are other players out there trying to open up the market. In France, there is a company called Restopolitan, which provides a very good software solution for managing reservations and we have a partnership with them through which they sell our network services. TopTable, which is a well known restaurant bookings portal in the UK, is also, we believe, making some excursions into Europe.

The market is so young, there is not really a problem of dominance by any player. Success in the long term will come with scale and there is plenty of opportunity for all players to work on getting that scale.

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