Zagat Restaurant Videos

It's said that imitation is the sincerest form of flattery. If that's the case then we are extremely flattered to help introduce zagat.com's new video feature. The videos, available for the "hottest restaurants and chefs" in NYC and LA, are produced by LX.TV which was recently sold to NBC for a reported $10 million after being incubated at Apax Partners for nearly two years. Most of the Zagat videos are recycled LX content hosted by LX standbys like the pulchritudinous Sara Gore and the ebullient Cecile Raubenheimer, but the new videos (notably Bobo) pay a striking resemblance to the Savory style, with the focus set squarely on the chef or restaurateur rather than on a host or guest expert.

LX.TV host Sara Gore and a pre-NYDN Restaurant Girl get down to business with Picholine's Terrance Brennan.

The LX deal doesn't come as a surprise, especially given that former Zagat president, Ted Zagat, is pals with with fellow Harvard alum and LX co-founder Joe Varet, who presumably approached the family about a tie up some time ago. More recently, LX.TV featured a Five Minutes with Mo Rocca segment starring Tim and Nina and using a handful of their favorite hangouts around the city as the backdrop (watch the original here or more revealing and humorous uncut version here). Also of note is Zagat's partnership with NBC's The Today Show on its recent Fast Food Chains Survey.

The addition of video is the latest in a flurry of new features added to the site to compel more people to become loyal users of zagat.com. Around two years ago the company started directing significant resources toward the development of its web site. Notable additions include maps, menus, photos, supplemental yellow page listings and "virtual tours."

An apparent lack of growth and mounting pressure on Zagat's subscription-based business model from the myriad of web sites offering free restaurant information, ranging from Google Maps to the thousands of restaurant-oriented blogs and everything in between (like Yelp, Citysearch, Metromix, Boorah, Urbanspoon, little old us, etc.), must have made the Zagats more than a little nervous about the prospects for successfully transitioning their business from print to digital. In that regard the news of the Zagats putting the company up for sale didn't come as much of a surprise either.

Given the success of its founders up to this point in turning their last name into a household word, enjoying A-list celebrity treatment in top restaurants around the world and building a modestly profitable enterprise (the company reportedly generates $8-$10 million in EBITDA on revenues estimated at $25-$50 million) in the world's greatest city it only makes sense to hear that Tim and Nina want to cash out for a well earned retirement after 28 years of hard work.

It remains to be seen whether they'll be able to get their lofty asking price of $200 million. Recent reports indicate that might end up being tricky. In the mean time we'll keep our eyes out for more entertaining restaurant videos featuring lively hosts and charming guest experts.

Comments

[Rob]

Chris you need a reality check. LX.Tv is the company you should have been targeting here but apparently you don't even know your own market...I know you have a PHD (Player Hater Degree) but stop showing your bias.

Zagat clearly bought these videos from LX.tv, the actual company you should be accusing of copying your video style. Oh wait Andrea Strong reported in the NYPost (http://www.nypost.com/seven/10292006/entertainment/food/grills_on_film_food_andrea_strong.htm)
that you and CoreTv (LX Tv's old name) launched barely a month apart. Lx has been producing the same style videos as you for 2 years. Why don't you accuse NBC of copying your format too since they essentially did the same thing as Zagat?

So two companies Savory and LX launched a similar product at the same time. One of these companies was bought by NBC for millions of dollars. Another was not. Why hate on Zagat when LX.tv stole your thunder?

You want to be Tim Zagat. We get it. Let it go. In 30 years you might be if you just focus on your product instead of hating on your blog.

[Chris]

Rob - Thanks for your feedback. To your points...

1) We knew about Code.TV, now LX.TV, when they launched in the summer of 2006. I met with them shortly thereafter, in fact. For the record, we have never considered LX.TV a direct competitor and their recent move into producing TV shows for NBC didn't come as much of a surprise.
2) SavoryNewYork.com launched in beta in Januray 2006 and officially in April 2006, several months before Code.TV.
3) LX's original style was very high gloss (the founders came out MTV), host centric and focused on what was new and hot in and around NYC. As stated in my post, our style from day one has been to allow the chef or restaurateur tell their story directly to the viewer. In the past several months we've seen LX change the style of their restaurant segments to be more reflective of ours.
4) We're really happy for Joe and Morgan that they took an early exit and, presumably, made money for their hard work. They chose a very different route from ours. Because they raised significant capital out of the gate, the sale to NBC seemed to make sense considering what their operating costs (fairly high production costs, ~10 employees, etc.) and revenue growth (probably fair) must have been. Not too shabby, but not a home run either. Our plan from the beginning has been to grow Savory with minimal capital in order to retain control so we could take the time needed to develop a sound and scalable business model. We believe that once you've found a platform that is proven and ready to scale, then you find partners who can provide the needed capital and help grow the business.
5) And, no, I don't want to be Tim Zagat. I do enjoy analyzing his company's business decisions, however, and this blog allows me to do so in a public forum. The inevitable feedback and discussions such as this help us learn, as a company, and hopefully help provide some insight into the goings on of businesses operating in a competitive and rapidly changing marketplace.

[Kathy]

You might also want to take into consideration that Andrea Strong was a regularly featured guest on LX when she wrote that article.

[Dan Entin]

Chris - As a former Zagat employee I'm not at liberty to address most of what you've written in this post (or in the "Thoughts on Zagat" post where you quote my blog). However, I can say that your link to Compete.com to indicate a "lack" of unique visitor growth at ZAGAT.com actually shows a 37.5% increase year-over-year. That doesn't seem like a lack of growth to me, especially for a site that's been online as long as ZAGAT.com.

[Chris McBride]

Dan - Fair enough. 37.5% year over year growth is commendable, but when you compare it to a site like Yelp at 173.3% growth over the same period (and 35x the traffic level) it seems like zagat.com is underperforming relative to its potential.

[Dan Entin]

35x the traffic is just way off. According to ComScore Yelp's March 2008 total pageviews were roughly 3x Zagat's and total visits were roughly 6x. And for all the similarities between Yelp and Zagat they are not exactly direct competitors. Yelp is in the broader local search space and restaurants is a prominent but smaller focus.

[Chris McBride]

Dan - Even if Compete and Alexa are *way* off and ComScore paints an accurate picture, I'd argue that zagat.com has still underperformed, expecially considering the broad range of partnerships and brand advertising used in 2007 to spread the Zagat message. Yelp, and others sites like it, may not be considered direct competitors, but they have succeeded in winning over millions of users who have chosen not to use zagat.com.