# Zagat Dilemma Founded by Tim and Nina Zagat, the Zagat Survey has collected and published ratings…

Zagat Dilemma

Founded by Tim and Nina Zagat, the Zagat Survey has collected and published ratings of restaurants by diners since 1979. Zagat publishes surveys for restaurants, hotels, and nightlife in 70 major cities. Zagat has come a long way from its roots in the early 1980s, when the food loving Zagats started compiling lists of their favorite restaurants for personal use and to share with their closest friends. But with the rise of the Internet, e-commerce, and mobile technology, Zagat has struggled to find a business model that stayed true to the company’s origins. To generate their first survey, the Zagats polled 200 people, and increased that number over time. Executives, tourists, and New York foodies alike found the list to be indispensable. Spurred by this success, the Zagats decided to publish their survey themselves.

and similar sites abound on the Web nowadays, but Zagat was in a unique position to get there first and establish itself as a market leader, and it failed to do so. For much of 2011, Zagat continued to lag behind Yelp and other free review sites in the battle for eyeballs. Yelp drew much greater traffic than Zagat. com. From January to April 2012, Zagat.com had only 310,000 visitors, while Yelp had 31 million. The Zagat Web site claimed it has more users, but the disparity was still significant. Zagat saw its fortunes change in September 2011, when Google paid \$151 million to buy the company. Although the Zagats had sought \$200 million in 2008, the deal was considered by analysts to be generous. Google was seeking to establish itself in the local search marketspace, and after failing to purchase Yelp for \$500 million in 2009, Zagat was next on their shopping list. In fact, after the Yelp deal fell through, Google and Yelp have become heated rivals, and Yelp has alleged that Google is rigging its search results to favor its own services over those of its competitors.

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