Dishing Out Another Deal: Zomato Acquires Urbanspoon

Dishing Out Another Deal: Zomato Acquires Urbanspoon

Online restaurant search and discovery services company Zomato is taking on the Yelp challenge as per its official blog. The company has acquired Urbanspoon for an amount which has not been publicly disclosed in an all-cash deal marking the entry of the corporate into US territory.

Big Deal

The deal is said by sources in the media to be within the range of USD 50 to 60 million which amounts to INR 300 to 350 crore. This is the sixth acquisition of the company in six months. Local restaurant search entities in New Zealand, Poland, the Czech Republic, Italy and Slovakia have been snapped up by Zomato prior to its US entry.

With this acquisition, Zomato will mark its presence in a staggering 22 countries now. The coverage of this company will increase to over one million restaurants. A company statement to Business Standard indicated that traffic to Zomato sites will more than double from 35 million visits in a month to 80 million.

Deepinder Goyal, founder and CEO of Zomato, has been quoted as saying, “Our US entry has been on the cards for a while now, and we are delighted to be doing so by welcoming Urbanspoon into Zomato. Urbanspoon has a huge following and is home to legions of people who are as passionate about food as we are. We will soon be integrating the two products to bring the best to our users in the US as well as the rest of the world.”

More than a Mouthful

The teams will work to integrate Urbanspoon with Zomato, which is a gargantuan task. All the traffic of Urbanspoon will move to Zomato.com. App users of Urbanspoon will be able to move to this restaurant discovery’s app as well following the acquisition.

During the previous month, Zomato has acquired Italian search service Cibando and it will invest USD 6 million in Italy over a period of two whole years. 4 other recent acquisitions made by Zomato include MenuMania in New Zealand and Obedovat in Slovakia.

Zomato Has the Backing

Zomato is backed by Sequoia and it has purchased Urbanspoon from IAC. This is the latest in a massive chain of acquisitions. While this deal marks the entrance of Zomato into US territory, it is one of the largest purchases of US based consumer internet firm by an Indian homegrown startup.

Twice is a Charm

This marks the second time Urbanspoon has been acquired for an undisclosed amount. Urbanspoon was founded in 2006 and it was purchased by IAC three years later. IAC brand CityGrid curbed its scale of operations a few years back following a change in advertising models and two rounds of layoffs took place in 2012 and 2013, as the brand attempted to “streamline.” Following the purchase of Urbanspoon, remaining ad listings portals which will remain with CityGrid include CitySearch, Insider Pages, and Felix.

Two Way Tango

US firms such as Facebook, Google and Yahoo are increasingly interested in acquiring Indian startups and e-commerce company Snapdeal is purchasing local businesses in the US. More recently, Tech Mahindra acquired Lightbridge Communications for USD 240 million.

International Focus

New markets Zomato is focusing on other than the US also include Canada and Australia. However, Yelp is not the only competitor on the horizon. Foursquare is another rival in the offing. Zomato’s model is not based on user generated reviews and employees in each city upload menus plus other content about the restaurants, according to its chief Deepinder Goyal. Listings are updated close to every 3 months to enable customers to get fresh information and Zomato currently has 200 job listings across the US for people to add add to its listing within the next three months.

“Because we are physically located in every city, we are able to collect a lot of information no one else has. We currently have listings for 300,000 restaurants across 20 countries, and almost 95 percent have a scanned menu card,” Goyal has been quoted as saying.

Conclusion

With a growing appetite for expansion, Zomato now has physical presence in nearly 22 nations. This restaurant discovery juggernaut is rolling on to new shores in search of fresh avenues for growth and diners are clearly finding its offerings appetising.