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Should Groupon Be Taking On -- Or Taking Over -- OpenTable?

YCharts has said for months that Groupon (GRPN) should buy OpenTable (OPEN). We started to think Andrew Mason wasn’t getting the message when Groupon bought Savored, a smaller restaurant reservation system, for undisclosed terms.

Now Groupon has instead launched an application for restaurants, building on an acquisition from four months ago of a company called Breadcrumb. Its point-of-sale system will effectively replace a cash register and allow the user to do some other things, like manage time clicks, according to a TechCrunch story. Couple this with the acquisition of Savored, and it seems clear Groupon’s creating a competitor for OpenTable.

By doing this, Groupon risks making a strategic error. Restaurants already use and are familiar with OpenTable. With its new “Breadbox” system, Groupon wants them instead to use or buy an iPad, which is an expense, plus pay at least $99 a month.

Moreover Groupon is asking restaurant owners to take a risk on a relatively new product that isn’t as widely used as OpenTable. It’s also asking restaurants to take that risk with Groupon, a company that has failed a few investors in the risk-reward department.

GRPN Chart

GRPN data by YCharts

While Mason and his team spend time recreating the wheel, they leave OpenTable on the table, able to be acquired. Plus they’re taking their eye off the wheel: eBay has announced that it is getting into the daily deals business.

Needless to say, Groupon’s news didn’t wow the market.

GRPN Chart

GRPN data by YCharts

From the editors of YCharts.YCharts Pro Investor Service includes professional stock charts, stock ratings and portfolio strategies.

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