Commentary

Got The Munchies? Yelp Is On The Way With Acquisition of Eat24

The food order-and-delivery fight intensified on both the home and at-work fronts yesterday with the review-site Yelp buying Eat24, which serves about 20,000 restaurants in 1,500 cities nationwide, for $134 million.

“For those of you who haven't used the service, its mission is to keep you from having to cook, shop or wear pants,” Yelp co-founder and CEO Jeremy Stoppelman posted on the company’s blog. … As a Yelp Platform partner, they've been a valuable driver of our growth in the restaurant category while continuing to build an impressive business of their own.” 

The acquisition “puts Yelp in direct competition with established operators such as market leader GrubHub, whose shares have risen about 50% since the company went public in April,” write Reuters’ Subrat Patnaik and Sai Sachin R, pointing out that the latter has itself only taken orders until now but bought two delivery services last week. 

“The move is a departure for Yelp, which has long been a platform for online reviews across many industries, including home services and retail stores,” observes Mike Isaac in the New York Times. “Yelp’s main business has been selling advertising bought by local businesses against those reviews without concentrating on one particular category.”

Yelp is based in San Francisco; Eat24 in San Bruno, Calif.

“If you're looking at a restaurant, you want to be able to book that restaurant,” Yelp’s Stoppelman said in an interview at the Goldman Sachs Technology and Internet Conference in San Francisco, reports Jeremy C. Owens in the San Jose Mercury News. “Stopping short of that and calling or going to another property is an option, but if we can integrate that into the native Yelp experience, it makes the site that much better.”

And potentially more lucrative.

“The thinking is that this acquisition should help Yelp in two areas, writes Ingrid Lunden on TechCrunch. “First of all, it will give the company more contact points with restaurants. And second of all, it will help the company shore up its core listings business with another revenue stream.”

GrubHub announced last week that it was buying Boston-based delivery service DiningIn and Viejo, Calif.-based Restaurants on the Run, which specializes in large corporate deliveries, for a combined $74 million, as Nancy Luna reported in the Orange County Register.

Restaurants on the Run, founded in 1993, “has a built-in delivery system for chains such as El Torito, BJ’s Restaurants, California Pizza Kitchen and Capriotti’s,” Luna writes. “Individuals can make small orders, but some restaurants … require a $20 minimum order on top of delivery fees.

DiningIn “was launched out of a South End apartment in 1988,” Rebecca Strong reports on BostInno.com. “GrubHub has been partnering with DiningIn since 2008 in an effort to add more restaurant delivery choices to its website.”

GrubHub CEO Matthew Maloney tells SFGate’s Antonia Massa that it’s just another day at the office, as far as he’s (not) concerned. 

“It’s just business as usual for us. Eat24 has been around and have had a business partnership with Yelp for years, so I’m questioning why they pulled the trigger on acquisition when the benefits of working together already existed.”

Other competitors loom for both of the expanding entities. 

“Last August, payments company Square bought Caviar, a high-end, app-based food delivery service,” reports Davey Alba on Wired.com. “And that same month, ride-hailing startup Uber tested a fast food delivery service called UberFRESH, which aimed to deliver meals from local restaurants to customers in under 10 minutes.” 

The NYT’s Isaac points to San Francisco-based Postmates, which says it “is transforming the way local goods move around a city by enabling anyone to get any product delivered in under one hour.” It is, at present, available in major cities in 10 states and Washington, D.C.

Amazon and Google have experimented with on-demand delivery services, and Uber, the ride-hailing start-up, has signaled its own ambitions of becoming a way to deliver anything to anyone,” Isaac writes.

Eat24 broke a commercial during the Super Bowl with Snoop Dogg narrating and Gilbert Gottfried acting out the frustrations of a “hangry” man.

“Do you yell at household appliances? Have you ever cried over egg rolls? Do you smell ham and pineapple even though there's no pizza around? If you said yes to any of these questions, you're Hangry (Hungry + Angry). You need Eat24, the app that tells hunger to shut up,” reads the YouTube copy for the :30 spot.

The munchies have gone mainstream.

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