Yelp buys food-ordering service Eat24 for $134 million
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Yelp

Yelp plans to expand its product portfolio beyond consumer reviews into one of the hottest sectors of the online economy.

Local business networking website, Yelp Inc announced Tuesday the acquisition of leading online app-based food-ordering company, Eat24 for $134 million. The company plans to expand its product portfolio beyond consumer reviews into one of the hottest sectors of the online economy.

The San Bruno, Calif. food delivery service has nearly 20,000 restaurants on its platform in about 1,500 cities, and was already a Yelp partner. Yelp plans to develop Eat24’s offering panel from 20,000 to 1 million, through which consumers will have a considerable list of 1 million different US restaurants to order food from.

In a press release issued on Tuesday, the CEO of Yelp Inc., Jeremy Stoppelman, said: "As more food ordering transactions move online, further integrating Eat24 will enhance our user experience with an easy-to-use product and service that allows our large consumer audience to transact directly with businesses."

Mobile has made food searches and online ordering extremely popular on Yelp. The company believes the acquisition of Eat24 will enable it to develop a better, more smooth ordering experience for consumers that it can grow beyond 2015.

The buyout of Eat24 for US$134 million puts Yelp in direct competition with well known operators such as market leader GrubHub Inc, whose shares have increased about 50 percent ever since the company went public in April.

Speaking at the Goldman Sachs' Technology and Internet Conference Tuesday, Stoppelman said users are more engaged when they begin searches on the Yelp app, in comparison with those starting on a search engine such as Google or Bing. Consumers tend to view more pages when starting from the app. Yelp says approximately 65 percent of searches are done on mobile devices, and more than 50 percent of ad impressions are served on mobile.

Yelp also continues to evaluate the site's speed, instilling resources to enhance site search and transactions. The vision means extending Yelp's focus on reviews to one that supports transactions. Stoppelman said users can expect features shortly in the future that will allow consumers to dive into the transaction.

"We view this transaction as a logical acquisition to help Yelp move deeper down the funnel to close the loop, similar to the SeatMe transaction in July 2013," wrote RBC Capital Markets Mark Mahaney in a research note. "Eat24 is also a known asset to Yelp, as it was already integrated into the Yelp platform, providing us with assurance of deeper due diligence and a clearer path to full integration. Yelp has similar partnerships with other food ordering/delivery services, such as Delivery.com."

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