FINANCIAL TIMES: Google Courts Food-Lovers with Zagat Deal

Date: 08-Sep-2011

By Helen Thomas in New York and April Dembosky in San Francisco

Google has struck a deal to buy Zagat, publisher of the respected restaurant guides based on reviews from food-lovers, as part of its push to combine local content with its search results.

Zagat, which was founded in 1979 by husband-and-wife team Tim and Nina Zagat, started with a guide to New York eateries based on their friends’ opinions.

In 2000, they sold about a third of the company to a group of investors led by private equity group General Atlantic for $31m, and now produce guides based on consumer reviews in 100 cities and in 13 categories including shopping, nightlife, music and golf.

Marissa Mayer, Google’s vice-president of local, maps and location services, said in a blog post that Zagat may have been one of the earliest forms of user-generated content.

“Their iconic pocket-sized guides with paragraphs summarising and ‘snippetting’ sentiment were ‘mobile’ before ‘mobile’ involved electronics,” she said.

Local searches comprises 20 per cent of Google’s overall web searches, Ms Mayer told the Financial Times, with the percentage even higher on mobile.

Mobile search has become increasingly important for Google as people look for nearby restaurants and shops using Google’s Place and Maps applications on their smartphones. Google previously ran reviews and ratings aggregated from other sites along with the search results.

This put the search group on a collision course with companies such as TripAdvisor, which tried to block Google’s use of its content earlier this year. Google also tried to acquire Yelp in 2009 for about $500m, but the deal failed.

Shares in OpenTable, the online reservations service, fell more than 10 cent in Thursday trading, as investors absorbed the new potential threat from the internet company.

While Zagat itself has faced increasing competition from online sites that aggregate customer reviews, Tim Zagat, chief executive, told the FT that technology had helped streamline the company’s famed 30-point rating process by allowing reviewers to register their votes in real time.

Mr Zagat, who will remain as co-chair of the company with his wife, said that they prided themselves on the reliability and accuracy of Zagat’s succinct reviews – an approach he expected Google to continue.

“We are going to work with the people from Google, who we already know well and like a lot, to try to expand what we’re doing in a way that is respected,” said Mr Zagat. “What Google wants and what we want is quality.”

Terms of the deal were not disclosed – although Mr Zagat said that the couple had not talked to other potential buyers after being approached by Ms Mayer. Zagat was advised by Peter J Solomon and Allen and Company.

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