Yelp buys Eat24 – What’s next?
2015 is shaping up to be a massive year in the Restaurant software industry as Yelp buys Eat24. This follows on from the Zomato purchase of Urbanspoon, Opentable set to launch in Australia, and the acquisition of Eatnow by Menulog.
The Yelp acquiistion will be interesting. Yelp is a fairly natural channel for online ordering and so it will be interesting to see how those valuations stack up. At $134,000,000 for 20,000 restaurants, that works out at $6,700 per restaurant customer, which is a pretty significant number. The deal included $75,000,000 in cash, with the rest in stock.
It certainly explains the huge number of bus shelter ads in San Francisco last week. I was amazed at what appeared to be every second bus shelter having an Eat24 ad on it. Either they had just been funded or they are looking to pump the numbers in search of an acquisition, and it looks like it is a the second alternative.
The valuation of Eat24 based on the number of customers could come under significant pressure with the introduction of Free Restaurant OnLine Ordering systems, like our #FROLO. FROLO offers Restaurants the ability to take orders on their own website without having to pay commission, without having to share customer contact details and in most cases with a quick time to get paid. All of these things are really important for Restaurants operating in an incredibly competitive area.
Our Beta testing is in full swing with the number of restaurants using the system increasing every week, and one piece of feedback we got from one customer looking to save $2,000 a month was that he will use all of that money to increase marketing. He thinks that with that extra money, he will be able to dominate his local area, and that is exactly what we think Restaurants should do. That extra marketing will make a huge difference in his traffic numbers, revenue and profit. Hooray!
If you are interested in more information about #FROLO, check out the Free Restaurant OnLine Ordering system website, for info about joining the Beta program or waiting list.