Developing: India’s Zomato in talks to acquire Kenya’s EatOut

Popular restaurant discovery service Zomato is said to be in talks to acquire Kenya’s EatOut, a local restaurant guide and booking engine which was launched by Mikul Shah in 2010.

Though EatOut denies any such talks, of interest to Zomato is EatOut’s restaurant guide and booking engine.

EatOut regional presence

EatOut claims to have sat over 500,000 diners at various restaurants in the region and its estimated USD 10M in revenue generated for its restaurant partners since its launch. EatOut plans expansion routes to Rwanda, Tanzania, Uganda, Mauritius, Egypt, Ethiopia, and Zimbabwe are in line with Zomato’s hunger for world domination.

The Africa Media Ventures Fund ($200k for 7.9 % stake) backed firm also has ambitious to build a world class dining culture in Africa and be the most comprehensive online restaurant guide and user reviews portal also runs Nairobi Restaurant Week, Taste andYummy magazine and is working on drink and beverage delivery platform.

EatOut this week signed a deal with Uber and Twitter for its Nairobi Restaurant Week and the firm has too launched a loyalty card for restaurants for users to get offers, earn points on every dinner and drink and pay less next time.

Dubbed as the Yummy card, the first restaurant discount card gives users 10% off food to free beer samples to 50% off food for tables of 2 on Tuesdays at a number of restaurants in Nairobi.

Zomato, which is steadily overtaking Yelp, and expanding by the day since it launch in India already has operations in South Africa-Durban, Cape Town and Jozi and Kenya and Nigeria might be its next frontier after South Africa.With EatOut, an already established restaurant search engine, Zomato doesn’t have to reinvent the wheel especially after it acquired San Francisco’s UrbanSpoon in an estimated all cash $50 million deal.

UbarnSpoon was not Zomato’s first acquisition.

In the recent past, Zomato has acquired MenuMania in New Zealand, Lunchtime in the Czech Republic, Obedovat in Slovakia, and Gastronauci in Poland and recently Cibando in Italy. Though the firm never made any acquisitions in South Africa, our sources say the firm now has the funds to acquire and grow faster to fulfil its global mission than launch a competitive service which might not pick up. And it has money.

Money

Founded in India in 2008 as FoodieBay, Zomato is not broke. The firm has raised around $113 million putting its valuation to around $660 million. Just recently  Zomato closed a fresh round of funding of $60 million led jointly by Info Edge (India) Limited and Vy Capital, with participation from Sequoia Capital.

The $60m was to accelerate its global expansion and new product development.

Zomato had earlier raised USD 53 million from Info Edge (India) Limited and Sequoia Capital over multiple rounds of funding.

Business model

EatOut’s business model also fits into Zomato’s well. Zomato’s Restaurant banner advertising (web and mobile and apps) accounts to 75% of its revenue plus it offers event advertising and ticket sales and consulting services. Closer home, if the EatOut deal goes through, Zoato will have events such as Nairobi Restaurant Week, a print magazine, an online magazine and a loyalty programme. Zomato said it had an operating revenue of about 6 million in 13/14 trading year.

Inspiration

EatOut, as a restaurant guide is hot cake for Zomato which also believes in restaurant discovery and need to serve the public to improve their dining experiences. Both Eatout and Zomato want to be the best platform restaurant owners to advertise as they are highly targeted advertising platforms than say on Facebook or Google ads.

It makes sense for anyone who logs online searching for the best restaurant and food globally to turn to Zomato and EatOut anytime than calling a friend.  The two save users time and increase the convenient for restaurateurs as they allow them to book for their dinners online and even review the restaurants and share with their friends just like Tripadvisor does for travelers.

 

Data

With everyday data colelction, use of social media and the growing signups and foodie events, it won’t be long before EatOut knows Nairobi’s favourite food and even eating time or day, this data will become a very lucrative source of income for its consultacy arm as restaurant owners run to know what sells and what time. Zomato also collects data from the cafes, bars and restaurants it serves and all this is cash but at the moment we will have to wait if the deal goes through or it doesn’t!