Reviewer Showdown 2.0: Zagat versus Yelp

photo courtesy of I'm Not Actually a Geek

photo courtesy of I'm Not Actually a Geek

The Zagat company history is now the stuff of legends: a dinner table conversation in 1979 with Tim and Nina Zagat’s wine-tasting group; the conversation turned to the restaurant reviews in the New York Times. 20 avid eaters seated around the table agree that a friend’s recommendation carries more weight than the opinion of the Times’ critic. And thus, the Zagat Survey was born. An instant success, the hand-typed and mimeographed sheets of legal paper (both Zagats being practicing lawyers at the time) containing the collective opinions of 200 friends from the wine group’s extended circle was soon circulating, free of charge, through the ranks of New York foodies. Charging for the guide, and the subsequent formation of a publishing company, just seemed like a good way for the young couple to get some tax deductions for their dining expenses.

Zagat is now a sprawling, worldwide family of printed and online guides reporting in more than 100 countries, with a vast community of more than 350,000 consumers participating in the most recent surveys. The guides cover a wide range of leisure activities in addition to the dominant dining category, including shopping, golfing, nightlife, and dating, all utilizing the Zagat’s signature 30-point scale.

Upstart Yelp was launched in 2004 by a pair of software engineers from PayPal who chose the name as a contraction of Yellow Pages. A Web 2.0 company from its outset, it was founded as a website offering user reviews, social networking, and local search capabilities. Yelp accepts reviews of any business, place, or professional service throughout the US, the UK, and Canada, as long as a local address can be provided.

Yelp has successfully leveraged its social networking functionality to grow its online community. Its peer feedback mechanism, ‘first to review’ citations, and ‘elite’ status bestowed on its most talented and prolific contributors motivate the creation of reviews. Reviewers can chat directly and in forums, send invitations and recommendations, link reviews to other social media outlets like Facebook, and vote on the useful, funny, or cool quotient of each other’s reviews. Yelp member events are held off-line at local parks, restaurants, and nightclubs, further solidifying the loyalty and sense of community

As the Zagat Survey closes in on its 30th anniversary later this year, the brand remains surprisingly relevant to both diners and the restaurant community. Its slim guidebooks sell at a brisk, annual rate of about 5.5 million volumes, and restaurant owners continue to covet the iconic, maroon window decals for their ability to draw traffic, although increasingly they are sharing space with decals representing the Best of Citysearch, AOL City Guides, and others.

Zagat’s continued reliance on the success of its publishing segment only seems to heighten the inadequacies of its online presence. Hold-overs from the print industry give the website a frozen-in-time quality, such as the practice of setting ratings and web content to coincide with guidebook publication dates, where they remain untouched for an entire year awaiting the next annual print edition.

If you’re not moving forward in today’s challenging business environment, you are, in effect, falling behind. As Zagat appears to cede online supremacy to Yelp, and looks over its shoulder at Urbanspoon, Chowhound, and a host of other contenders, you have to wonder if their moment has already passed.

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