Can Yelp Reinvent Itself as a Reservation Service?
November 9 is a date that will live in Yelp infamy. The review site’s stock plummeted over 25 percent after an earnings call revealed that advertising revenue wasn’t up to expectations and the future wasn’t guaranteed to be better. Even if you aren’t part of the Wall Street crowd, you’ve likely instinctively felt like Yelp isn’t quite what it used to be: Though Yelp’s reviews still serve as a valuable resource, being a Yelper has lost its cachet as competitors like Google have moved in on that territory and rumors of impropriety and pay-to-play tactics caused Yelp’s reputation to take a hit. Even Yelp’s own factsheet isn’t particularly inspiring: Though app users continue to grow, mobile visitors have flat-lined and desktop users (though admittedly a dying breed) are down significantly.
But speaking of “a valuable resource,” whether Yelp is still your go-to review site or not, it’s a massive database of restaurants (and other businesses) all in one place. And even if Yelp’s reign as the king of reviews may be waning, the billion-dollar brand isn’t going down without a fight.
This morning, Yelp touted the success of another part of its business — one some diners might not be as familiar with: online reservations and waitlists. The company says it had “a record-setting Valentine's Day week,” with these two digital services helping to seat 5.6 million guests. And looking back on December, Yelp, which currently operates in 30 countries, says reservations and waitlists were utilized by 22 million diners, with the number of people booking through the Yelp app tripling year-over-year in the fourth quarter of 2018. By comparison, OpenTable averages about 27 million reservations globally each month, according to its own figures, and Resy seated 28 million reservations over the entirety of 2017 but currently touts seating one million diners weekly.
In the announcement, Yelp specifically used the word “evolve” to describe the current mindset. “Product innovation in 2018 has paved the way for us to build even stronger relationships with current restaurant partners and to attract thousands of new ones,” Devon Wright, General Manager of Yelp Restaurants Marketplaces, stated. “This momentum is the early result of Yelp’s long-term strategy to acquire and integrate leading restaurant technologies into Yelp and offer a seamless dining experience for both restaurants and consumers.” (And speaking of "seamless," Yelp is also in the delivery game with in-app ordering functionality going up against the likes of Grubhub/Seamless and Uber Eats.)
Reading between those lines, Yelp’s revenue issues have stemmed from an inability to attract and retain advertisers, but functionality like reservations and waitlists (and, similarly, delivery), has added value in providing an actual service that can theoretically demonstrate more quantifiable results for restaurants.
“We used to be reliant on an emotional analysis of our hostess or managers to provide wait times but, with the help of Yelp, our wait time has reduced by almost an hour and a half. Maximizing seating was the key to maximizing revenue,” Diego Perez, former General Manager of Tony's Pizza Napoletana in San Francisco's North Beach, was quoted as saying in the announcement, hammering home the idea of quantifiable results.
But the next part of his statement might be even more telling. “After working with Yelp, I now understand that the company is trying to be transparent and do the right thing and we have created a true partnership,” Perez’s quote continues. Regardless of whether reservations are the future of Yelp or not, the company certainly knows what talking points it needs to hit.