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by Meesha Halm

(IDG) -- Can a faceless online reservation system consistently help restaurants run their dining rooms better and improve rapport with hungry customers? Just a couple of years ago, highbrow restaurants would have turned up their noses at the suggestion that they relinquish control of the reservations book to something as vulgar as a machine. These days, though, restaurateurs no longer argue whether online reservation services will take off, only when and which ones.

There are more than 20 companies that offer online restaurant reservation services, all vying for what some estimate as a $2 billion annual business within the next few years. Right now less than 1 percent of restaurant reservations are placed through the Net. No one thinks consumers will ever entirely abandon the telephone. But these companies have grand plans that go beyond simply making reservations.

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"We want to improve every interaction between restaurants and customers," says Paul Lightfoot, CEO of restaurant search and reservation site Foodline.com. "This means providing dining information, preferential reservations, enhancing customer services, putting more butts into seats and eventually monetizing that relationship."

Unlike first-generation Internet reservation services such as SavvyDiner.com and RestaurantRow.com, which operate low-tech concierge programs (they place the call for the customer and take up to 24 hours to confirm the request), today's technology lets customers conveniently make reservation requests directly from their computers. A patron either logs onto a restaurant's Web site to see table availability or goes to a portal site and searches for a restaurant by name, cuisine, neighborhood or desired dining time. A request for a reservation usually gets an almost immediate e-mail response. Some software also allows customers to ask for a table over the telephone or in person.

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Online reservations could be a boon for restaurants ö and some are already reporting favorable results. On the plus side, the services can accept reservations at any time, track their customers' behavior to provide personalized services such as identifying regular customers and their preferences for seating, and use direct-marketing techniques to drive business on slow nights, fill cancellations or offer premium seating.

But the bevy of software companies peddling these services have yet to bring a critical mass of restaurants online. Market leaders OpenTable and Foodline have raised more than $16 million in venture capital, but only 361 restaurants out of the 100,000 in the U.S. have signed up. And the restaurants that are wired only fill a small percentage of their seats online.

"Our biggest obstacle with restaurateurs is technofear," says Andy England, OpenTable's VP of marketing. "Our job is to make it easy to use and demonstrate the value. When they realize that the computer is actually enhancing customer service and lets them add the human touch, they will change their minds."

Companies approach online reservations in a variety of ways. What differentiates them is whether their systems require proprietary hardware and software, the level of control restaurants maintain over the reservation process and how restaurants pay for the service.

OpenTable and Foodline charge for proprietary hardware and software used in the restaurants and also get a per-head transaction surcharge. Reservation and customer information resides on the restaurant's machine. Restaurants use an electronic reservation book, and customers have access to its full inventory (though a block of tables can be set aside for unannounced regulars and celebrities). The restaurants can derive additional value through placement on dining destination sites.

Pure technology plays like xTime are developing Web-based applications that can be accessed by both the consumer and the restaurant via a browser from any platform ö including PCs, PalmPilots, even wireless handheld devices. In this scenario, restaurateurs aren't married to proprietary hardware and, although they can use the Web to replace their paper reservation book, it doesn't require them to do so. Restaurants would pay a flat licensing fee for the services.

Zagat.com and other companies flying under the radar are developing interfaces that look seamless to the customer but would actually act as clearinghouses for multiple reservations sites. Those consumer-based services offer restaurants access to the greatest number of patrons, regardless of which proprietary service they've signed up with. The customer could end up paying a transaction surcharge, a la MovieFone, for this broad access.

"We are totally focused on the customer," says Carolyn Everson, VP of business development at Zagat. "The advantage of working with all the leading systems is that we can provide our customers [with] the ability to make reservations to any one of our restaurants featured in our guide."