Zagat Survey Aims to Regain Its Online Balance

BACK in the early ’80s, when the Zagat Survey was still just a single sheet of legal-size paper that Nina and Tim Zagat gave to friends and colleagues, they learned that their list of the best restaurants in New York had been reproduced — en masse — inside Citibank.

“I had a friend there who called me and said he’d just gotten one of these things on his desk,” Mr. Zagat recalls. “Printed across the top, it said, ‘To all officers of the bank.’ And when I asked how many officers there were, he told me there were 3,000.”

For the Zagats, this was one of the first signs that their hobby of tabulating restaurant ratings might have wide appeal. In fairly short order, the New York survey, and the narrow maroon books for other major cities that the couple assembled in its wake, became indispensable for gourmands on the go in the late 1980s and throughout the 1990s.

And up until a few years ago, the release of the coming year’s Zagat (pronounced zuh-GAT) ratings was a hotly anticipated event among the status conscious and the merely hungry — with results that would often go viral. When a humble Brooklyn establishment called the Grocery scored an almost perfect Zagat score of 28 — on a zero-to-30 scale — for its food in 2003, for example, it made the front page of this newspaper.

Today, however, “viral” is hardly the first word that pops off of people’s tongues when you ask about Zagat Survey, the company’s official name. They talk about the power of the Zagat brand; that maroon color is now trademarked, for instance. And they give the Zagats credit for having invented, or at least popularized, user-generated content.

But in the next breath, most of them wonder why Zagat hasn’t won on the Web. The review site Yelp, for example, which made its debut in 2004, draws much more traffic.

In early 2008, at a time of high valuations for many emerging Web companies, the Zagats tried and failed to sell their company, to the disappointment of some of the venture capitalists who had invested in Zagat in 2000.

“We’ve now been at it for 10 years, so of course we’d like to have an exit,” says Bill Ford, the C.E.O. of the venture capital firm General Atlantic, which has invested in Zagat. “It’s my belief that the brand has not been fully leveraged.”

Mr. Ford, who was once a Zagat board member, is quick to note that the things that attracted General Atlantic to Zagat in 2000 are still there today. “They had outstanding and differentiated content, and the opportunity to migrate it from offline to online, both on the Web and on mobile,” he says.

Yet that migration has been neither as dexterous nor as profitable as Zagat backers had hoped. Perhaps the biggest reason is that the Zagats have kept their ratings and their reviews behind a pay wall on their Web site.

The cost was high in terms of lost traffic, for just as the Zagats were digging in their heels, Google was rapidly gaining market share among Web users. Google penalizes sites that keep content behind a pay wall. As a result, Zagat listings usually didn’t appear on the first page of a Google search result for specific restaurants. Because of that, fewer people came to Zagat.com, which meant that it didn’t have the opportunity to convert them to paid subscribers.

While online traffic comparisons are never exact, Zagat.com had 570,000 unique domestic Web visitors in September, according to the Nielsen Company, versus 9.4 million for Yelp. The Zagats say they actually have more than 1.2 million unique users worldwide.

None of this means Zagat is in any immediate financial danger. While the Zagats refused to provide much specific financial information for this article, they did say their company is still profitable.

They are also quick to point out that it’s not at all clear that Yelp’s strategy of having dozens of salespeople selling local ads is superior to their approach of asking Web and mobile users to pay for listings. Zagat, meanwhile, still sells its paper books and operates what the couple describe as an extremely profitable unit that creates custom guides for corporate clients.

The digital wheel has also turned in a new direction, with more consumers using smartphones and other mobile devices to find content and services through apps. While Zagat.com has met resistance from desktop computer users when it comes time to whip out their credit cards, mobile customers have shown more willingness to pay for apps.

So now Zagat is racing to prove that it’s worth paying $9.99 a year for its smartphone app — and that it can persuade enough customers to fund its existence for another three decades — even while Yelp and other competitors are offering their apps free.

Even after the failed sale in 2008, the Zagats profess no regrets about their Web strategy. In fact, they think the world is finally catching up to them.

“When I think back on the business model, with our books designed to fit in a pocketbook, there we were at the beginning with all three things that we’re all talking about today,” Ms. Zagat says. “Mobile, social and local. That is in the D.N.A. of Zagat.”

TIM ZAGAT and Nina Safronoff got to know one another in 1963, in a study group they joined as first-year students at Yale Law School.

“I liked her for plenty of reasons, in part because she took such great notes but also because she knew how to cook,” Mr. Zagat says.