(By Shashidhar KJ & Vikas SN)
Online restaurant listing company Zomato has acquired IAC’s Urbanspoon to enter the important US market. The company had earlier forayed into North America by launching in Canada in October last year.
Info Edge, which owns majority stake in Zomato, has informed BSE (pdf) that Zomato acquired Urban Spoon in an all-cash transaction for $52 million. Its worth noting that Zomato had earlier raised $60 million co-led by new investor Vy Capital and existing investor Info Edge with participation from Sequoia Capital in November 2014. Zomato co-founder and CEO Deepinder Goyal said that they have spent the majority of this investment on this acquisition.
Urbanspoon was earlier bought by IAC for an undisclosed amount in 2009, however, few years later, the company had to scale back its operations as it changed its advertising models, which led to job layoffs in 2012 and 2013.
Post acquisition, most of Urbanspoon’s team will be joining Zomato and the company will be integrating its website and mobile apps to Zomato over the next few months. The company also seems to be looking for more people to drive their operations, with the report saying that Zomato currently has 200 job listings across cities in the United States.
While Zomato’s US foray has been on the cards for quite some time, it looks like the company has sped up its plans. Zomato co-founder Pankaj Chaddah had earlier told TechCrunch that they were looking to enter the US markets in the second half of 2015.
Interestingly, during the Info Edge earnings conference call in November, Info Edge founder and vice chairman Sanjeev Bikhchandani had said that media reports about Zomato expanding to the United States in the next few months are incorrect. He had said that Zomato might expand to other markets organically or inorganically but not the United States.
It will be interesting to see how Zomato competes with the market leader Yelp, considering the latter is already dominant in the market. Goyal however told TechCrunch that they will stand out because their model does not rely on user-generated reviews like Yelp and customers will always get fresh information since the listings are updated every three months.
Besides the US foray, Zomato says that this acquisition also establishes the company’s presence in Australia and strengthens its operations in existing markets like UK, Canada, New Zealand, and Ireland. It will now have presence in over 500 cities across 22 countries.
Zomato claims that this will also increase its restaurant coverage to 1 million from the existing 300,000 restaurants and more than double its traffic to 80 million per month from 35 million per month. In comparison, Zomato’s largest competitor Yelp had a monthly average of 139 million unique visitors in Q3 2014.
Over the past year or so, Zomato has also been actively acquiring companies to enter new markets worldwide. These include:
– Italian restaurant discovery service Cibando last month.
– Polish restaurant search service Gastronauci in September
– Czech Republic’s restaurant guide Lunchtime.cz and Slovakia’s restaurant guide Obedovat.sk for a combined amount of $3.25 million in August.
– New Zealand-based restaurant search service MenuMania in July
It has also been quite aggressive with its International rollout, launching its operations in a new market almost every month with the recent ones being Ireland’s Dublin and Lebanon’s Beirut in November and Canada in October. Goyal had then said that they had earmarked $10 million for Canada expansion.
The company has also started focusing on monetization by introducing advertisements on its mobile apps, which currently drives majority traffic for the company. Goyal had recently told Medianama that more than 50% of its 35 million visits come from its mobile application across the globe and they have “seen remarkable traction in the two months they have been serving these app ads”.
Update: Added more information from Info Edge’s BSE disclosure.