Merchant Innovation

Yelp Acquires GrubHub Rival For $134M

As reported in VentureBeat on Feb. 10, restaurant locator and media site Yelp announced that it has bought out online food ordering company Eat24. The deal, which was closed on Feb. 9 after approval from both companies' executive directors, was for $75 million in cash and 1.4 million shares of Yelp Class A common stock, for a total value of $134 million.

"Online and mobile food ordering is still in its infancy and restaurant and food searches are extremely popular on Yelp. We believe that the acquisition of Eat24 will allow us to build a better, more seamless ordering experience for consumers that we can grow through 2015 and beyond," Yelp said in a blog post about the merger. Yelp's position on online food ordering mirrors that of European investment company Rocket Internet, which also expanded its food delivery portfolio this month, with possible entry into the U.S. market in the near future.

Eat24 was founded in 2008 in order to expand the online food ordering industry. Currently, it has over 20,000 restaurants in over 1,500 cities as ordering destinations, though it has to compete with fellow online ordering giant GrubHub which has over 250,000 menus available despite the same amount of restaurants using them for ordering and delivery service. GrubHub's buyout of Seemless in 2013 expanded its network, and Eat24 was forced to seek a partnership with Yelp that same year. The Yelp-Eat24 partnership allowed Yelp to have online ordering for its restaurants so that it wouldn't have to be as dependent on advertising for its revenue, while Eat24 expanded its service to better compete with GrubHub. Eat24 also agreed to a partnership with SideCar on Feb. 9, during the merger finalization, which would handle food deliveries in California.

The deal represents "a key vertical" for Yelp, according to chief Jeremy Stoppelman, and will allow Yelp to grow closer with businesses and the large customer base through greater integration with Eat24. This doesn't mean that Yelp will be giving up its advertising strategy for revenue though. In fact, the company reported that its sales team will grow by 40 percent this year during this growth period.

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