Zagat faces dwindling cash, says New York Post

Tim and Nina Zagat were brilliant in 1979 when they launched their eponymous guidebooks. At first, they covered only New York restaurants, but soon expanded to cities around the world and to other categories: hotels, shopping, and the like. It was the best and most efficient way to hear the word-of-mouth of thousands of like-minded foodies; what's more, becoming quoted in the pithy reviews became a competition for some aspiring food critics. It was social media before there was such a thing.

But then came social media and restaurant reviews were an obvious place for would-be internet authorities to begin expounding. First listservs, then forums and blogs became the places for diners to find -- and give -- restaurant reviews. No longer did foodies have to wait for the annual pencil-and-paper Zagat rating form, and months longer for a new edition; they could add a comment to a Citysearch or Yelp review and have thousands of fellow netizens read their brilliant nuggets of culinary wisdom.

Zagat's founders, now in their late sixties, were slow to compete online. It wasn't until 1999 that their company, Zagat Survey, launched its interactive Web site and quickly limited its full reviews only to $25-a-year subscribers. But still, the name had cachet: the phrase "this is like a Zagat guide for ___" was one frequently uttered in venture capital pitches. It was a time when companies weren't sure if content, or features, or mobility, was the name of the game and while Zagat became available on Palm devices, giving rise to the dream that one day, hungry New Yorkers would no longer have to stand on a street corner, cross-referencing top restaurants for the neighborhood, that service soon petered away.

But before "there's an app for that!" came into our common parlance, in early 2008 the Zagat family started shopping its famous brand with private equity firms. The reported $200 million price, about 20 times EBITDA, had already shy buyers running scared (and many critical observers noted the price was equal to an assumed valuation of Yelp; a company that had already shown itself far more nimble on the Web). In June of that year, Zagat Survey was taken off the market.

Now, according to an insider who talked to the New York Post, Zagat is losing its battle to stay relevant. Ironically, it's losing market share to companies that offer content that is slicker, more mobile and savvier than Tim and Nina's original dream: to make informed opinions universally available in a hip, smartly-edited way. Zagat guide sales are down and the number of unique visitors to its site are also falling. In response, the company is cutting costs and laying off staff -- 16 in May of this year, out of about 130 total.

Tim and Nina Zagat predated social media; they were ahead of their time. Now, sadly, time has passed them and their great idea by. Will my dogeared guidebooks, constant companion in the late 1990s, become cultural curiosities? It seems ever more likely.

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