As expected, Yelp is focusing a lot of energy — and money — on its products for restaurants in an effort to own the entire process, from booking to post-meal review.
— Kristen Hawley
Yelp’s sale of Eat24 to Grubhub closed last year, and in the company’s fourth quarter earnings call, CEO Jeremy Stoppelman outlined the company’s forthcoming investment in the rest of its restaurant products.
In the last quarter of 2017,
Yelp’s Q4 earnings showed net revenue of $218.2 million, showing 12 percent growth year over year and beating estimates by $3.3 million. After the announcement, Yelp’s share price dropped in aftermarket trading.
Yelp has earmarked $25 million to grow its reservations, Nowait wait list management, and in-restaurant wifi programs. According to Stoppelman, the bulk of the investment will be in sales and marketing.
“There is product work in those areas, for sure,” he said. “But the bulk is for salespeople to take those products to local businesses, aiming for business density in specific geographies where there starts to be a network effect.”
“Restaurants are central to our model and central to our strategy,” added CFO Lanny Baker.
A comprehensive strategy is central to Yelp’s value proposition. Its reservations and wait list products bring people into a restaurant. Once they’re in, they’re encouraged to share experiences on Yelp. And its wifi product allows restaurants to offer free wifi to guests who share their information with the business.
Yelp, obviously, sees this as a positive model with great potential, but it has its critics. As Tock CEO Nick Kokonas told Skift Table last year, “It’s not in Yelp’s interest to do anything other than get you in there, and then let you bitch.”
In the past year, according to Stoppelman, restaurants using one of the three restaurant products have tripled to 14,000. With the increased focus on sales and marketing these restaurant products, Yelp wants to “improve functionality of all three products and weave them into core user experiences.”
Even amid its focus on the in-restaurant experience, delivery is still central to Yelp’s plan for restaurant-industry success. As part of a five-year partnership, all 75,000 restaurants on the Grubhub platform will see the ability to order delivery through Yelp after they’re integrated. Baker said this integration should be completed by mid-year.
Currently, restaurants are responsible for 14 percent of Yelp’s ad revenue and represent 17 percent of its reviewed businesses.