Digitally-savvy diners know the Urbanspoon brand, a website and mobile application that lists information and reviews on restaurants in six countries, including the U.S. and Canada. They are much less likely to have heard of Zomato. But that will soon change.
The New Dehli-based company, which runs its own restaurant-listing service, announced on Monday that it has acquired Urbanspoon from New York City-based media company IAC/InterActiveCorp. Reports pegged the deal at roughly $50-million (U.S.), a number that is "on the right track," said Zomato's founder and chief executive officer Deepinder Goyal, "but I can't say more than that."
While Urbanspoon has strong brand recognition among users, Zomato is planning on phasing it out completely: Website users will be redirected to Zomato.com starting in March, and Urbanspoon app users will start seeing a notice encouraging them to download the Zomato app. Mobile users will be given roughly three months to transition, meaning the Urbanspoon brand will be dissolved by this summer.
"The recognition can come back in some time if people use the product," Mr. Goyal said.
The deal is part of a string of acquisitions Zomato has made in the past six months, gobbling up restaurant search companies in New Zealand, Poland, Czech Republic, Slovakia and Italy.
Urbanspoon will automatically increase Zomato's restaurant listings threefold, from more than 300,000 to more than one million restaurants catalogued on its service. It also gives Zomato a presence in the U.S. and Australia, expanding its presence to 22 countries, and the company expects it will more than double its traffic online and on mobile devices. Zomato opened an office in Toronto in October, and now has roughly 35 employees here.
All of this expansion is an attempt to compete with services such as Yelp and Foursquare. Services such as these court diners who scope out restaurant reviews online, and a growing percentage of the population with smartphones that can search on the fly for hot spots to eat. All of Zomato's revenue comes from selling ads for restaurants on its website and mobile app.
Mr. Goyal is hoping that through its expanded presence, Zomato will be able to sell more of that advertising. Its home market, India, is its largest and most profitable. Five other markets are also currently profitable: the United Arab Emirates, New Zealand, the Philippines, South Africa and Indonesia.
Zomato has raised $113-million in total from backers including Sequoia Capital, Info Edge and Vy Capital to finance its expansion.
"There will be a lot of work that will go into building the new product," Mr. Goyal said. "It will have the best of Zomato and the best of Urbanspoon. We will dig down and figure out what are the most used features of Urbanspoon and the most used features of Zomato."
While both brands do essentially the same thing, they have gone about it in different ways, he said: Urbanspoon aggregates data from across the Web, including restaurant websites, magazine and newspaper reviews, blogs and user reviews. Zomato, which was founded in 2008, hires teams of employees on the ground who ensure that photographs and restaurant information such as hours of operation are all up to date; 95 per cent of its listings include scanned menus. It also has user reviews.
IAC/InterActiveCorp. owns brands including digital information service About.com, matchmaking services Match.com and Tinder, and media properties including The Daily Beast and video streaming site Vimeo. Representatives from the company declined requests for an interview.