The online food portal of India, Zomato seems to have enormous plans for 2015. Deepinder Goel, the CEO of Zomato has sealed the acquisition deal with digital media company InterActive Corp (IAC, Financial) which owns the Seattle-based food portal Urbanspoon.
“Zomato’s significant investment in people and technology will bring Urbanspoon customers, restaurant owners, and food bloggers a number of new capabilities and features. We’re excited to combine our strengths to accelerate growth,” said Keela Robinson, CEO of Urbanspoon. This deal would enable Zomato to enter the giant American market. The $60 million deal is the beginning of Zomato’s confrontation with the leading name of Yelp (YELP, Financial).
An older player
Calling Zomato a new player in the field of acquisition would be wrong. This is the sixth acquisition of the company so far. Last year Zomato acquired five restaurant search players in Italy, Poland, New Zealand, Czech Republic and Slovakia.
These purchases demonstrate Zomato’s hunger to be a leading name in this industry worldwide. Overseas expansion at this rate has boosted the appeal of the company among the investors. In its last funding round the company valued at $660 million. According to Sharad Sharma, founder of iSpirit, “It’s a good business strategy at this stage in lifecycle of Zomato to focus on expansion with investor funding. Zomato’s valuation will go up when it becomes a category leader in key markets.”
Maintaining heavy traffic and revenues
The cofounder of the company Pankaj Chaddah has revealed that this acquisition would double its traffic to more than 80 million visitors. This would make the company the biggest name in the world of restaurant search. The company expects that 60% of its traffic would be from the USA. To deal with such huge traffic, the 50-member team of Urbanspoon will be integrated with Zomato’s global workforce (comprising 900 members) by the end of March.
According to the statistics portal Statista, the restaurants and dining business in the USA grossed a roaring $680 billion last year. Considering this fact, Zomato would have to do well. Boosting revenues would be a key to maintaining a strong performance.
“The brand Zomato would be live across Google play store and Apple store in US from March, when we merge completely with the Urbanspoon brand,” says Chaddah. The company which relies on online advertisements as its major source of revenue would be testing an in-house payment platform for the diners in key-markets. This step would be very fruitful to take care of the rivals like Zagat and OpenTable, who list and also book tables online as well as through mobile applications.
Conclusion
With this new acquisition Zomato would mark its presence in 22 countries, which is still less than its competitor YELP, which successfully operates in 28 countries. Apart from this Zomato is basically focused on the restaurant business whereas Yelp serves a variety of business types.
The key factor of Zomato which distinguishes it from Yelp is that Zomato believes in the discovery of new and different flavors. Every nook and corner of a city has a new flavor to offer, ranging from the tangy spices to romantic sweets. Zomato brings those hidden flavors forward. It would be interesting to watch the giants fighting to conquer the food market.
