Food fight for dinner reservations in Minneapolis/St. Paul

Scooch over, OpenTable, another party wants a seat in your booth.

A Scottish upstart that picked the Twin Cities as its first U.S. market says it is now generating more reservations for local restaurants than the industry leader, though OpenTable disputes this.

The new arrival, Eveve, has found a significant niche for a more-basic service that costs restaurants less — more sit-down diner than white-tablecloth experience.

"People can go to OpenTable's website to find out about cool places to eat, see a poll about the 100 best bars and restaurants in the country and read or post restaurant reviews," said Dan McElroy, executive vice president of the Minnesota Restaurant Association. "Eveve doesn't offer that, but restaurants aren't paying for it, either."

Known only to restaurant insiders, Eveve has been steadily feeding on a banquet of some of the Twin Cities' top restaurants. Hell's Kitchen, Bar La Grassa, Burch, Smack Shack, Zelo, Bacio, Vincent, and Axel's Bonfire have all transferred their business.

CEO Timothy Ryan said Eveve now handles 51.7 percent of Twin Cities reservations, because it works with some of the busiest restaurants. OpenTable, without providing its own numbers, said it still handles the majority of local reservations.

Restaurant owners say Eveve's fees can run 50 to 90 percent below those of OpenTable, which still does business with more than twice as many local eateries as does Eveve. The Scottish firm's utilitarian, basic reservations system operates only through a restaurant's website, not its own, and doesn't attempt to create a community for guests the way OpenTable does.

OpenTable says this matters to many restaurants that rely on it as a marketing tool to draw customers.

Tiffany Fox, senior director of corporate communications for OpenTable, said its restaurant customers benefit from a variety of mobile features, access to more than 12 million diners who use the service each month and marketing support for holidays and special events.

Analysts say several factors made the Twin Cities' reservations market ripe for change: a wired population that makes an above-average number of online bookings, a lot of chef-driven independent restaurants and, especially, a sensitivity to high prices.

"This is definitely a market for a lower-priced online reservation booking system," said Michael Olson, a technology analyst at Piper Jaffray Co. "Some restaurants just wanted an easy way for customers to make reservations without all the marketing."

That's the hook that attracted the attention of Desta Klein, co-owner of Meritage restaurant in St. Paul. In 2011, she started getting cold calls asking, "Are you sick of paying high reservation fees?"

"Believe me, I was," said Klein, who became the first Twin Cities client for Eveve, which bases its North American operations in Minneapolis. With her restaurant operating on a wafer-thin margin, like any restaurant, she scrutinizes every expense.

Klein was paying Open­Table $1,200 to $1,500 per month in fees. "That might not sound like a lot of money," she said. "But to an independent restaurant, it's huge."

Unlike Eveve, which charges flat monthly fees in a tiered system, OpenTable charges reservation fees of $1 per guest, meaning that busy restaurants pay more. It gets an average of $635 per month per restaurant, according to the company.

Reservations made through a restaurant's website still go through OpenTable, although the restaurant is charged less — 25 cents per guest. OpenTable also charges set-up fees from $200 to $700, and a monthly $199 subscription fee.

Klein felt that OpenTable's pricing structure punished her for having a busy restaurant. After she switched to Eveve's flat fees, her monthly bill sank from nearly $2,000 a month to $400. "We saved nearly 80 percent," she said.

The savings were even more substantial at Hell's Kitchen in Minneapolis, which also switched to Eveve in 2011. With about 65,000 breakfast, lunch and dinner reservations in 2012 and 40 percent of them booked online, the restaurant paid about $3,000 to Eveve, said co-owner Cynthia Gerdes.

Several years ago, her annual bill with OpenTable was about $32,000. "It's stunning," Gerdes said. "We saved 90 percent with Eveve."

Still, OpenTable remains a formidable competitor. Top restaurants such as Parasole, D'Amico, Butcher & the Boar, Wildfire, Ciao Bella, and Murray's remain with OpenTable.

And not all restaurants have been pleased with Eveve. Some openly missed Open­Table's marketing after they left. J.D. Hoyt's in Minneapolis switched back to OpenTable in January, even though Eveve trimmed the monthly reservation bill from $1,200 to $280.

"Eveve is only a reservation system without any promotional bells and whistles," said Pat Montague, J.D. Hoyt's owner. "We're one of many steakhouse choices on Open­Table, so the ads help. It costs me a bundle, but people use it."

Hoyt's is one of 17 restaurants that have gone back to OpenTable, including Rock Bottom, Gianni's, Al Vento, Rinata, W.A. Frost and Sunsets.

Ryan attributes most of the 17 losses to technical teething issues when Eveve took on a lot of new business in its debut. His loss rate is lower since then, he said.

Some restaurateurs who made the switch worried that moving from a highly regarded name to an unbranded, no-frills plan would mean a drop in reservations or business. Open­Table sends out promotional e-mail newsletters, offers reward points at participating restaurants, and posts a lot of free and paid advertisements on its site to attract diners.

Eveve offers none of that and isn't even branded on a restaurant's site. But hardly any restaurants saw a drop in reservations after switching to Eveve's advertising-free system, according to Eveve.

Jodi Schoenauer, director of sales and marketing for nine Axel's and Bonfire restaurants, thinks their business held up largely because they are in the suburbs and rely mostly on locals who know the restaurant, not out-of-towners who are choosing based on Open­Table's reviews, online ads and other marketing efforts.

For restaurants in concentrated downtown areas, Eveve exploits the fact that Open­Table's promotions can sometimes work against a restaurant. If a customer can't get in at Butcher & the Boar in Minneapolis at 7 on a Saturday night, for example, it redirects them to places nearby that have a 7 p.m. opening, such as Buca di Beppo or Solera.

"We didn't want our guests to be shown that there are openings at a competing restaurant," said Hell's Kitchen's Gerdes, "or that they can get an extra 1,000 reward points if they dine across the street."

John Ewoldt • 612-673-7633