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Tackling the small and local business market is one of the hardest things a startup can attempt. The market is fragmented, and storeowners are reluctant to embrace new products. 

Here’s one thing that can help: partnering with arguably the most formidable player in the small and local business market. Today, the digital menu company Locu announced a partnership with Yelp, which will integrate Locu-managed menu information to its “Explore the Menu” feature, rolled out last October.

Locu enables small businesses to create and manage menus online using a central dashboard. The key to the product is that it’s a real-time menu editor. If any part of the menu changes – a price, a description of a dish, or even the day’s specials – a restaurant owner need only make the changes once, then it goes live to digital versions of the menu on mobile and across the Web, from OpenTable to Facebook to now Yelp. Changes are also made in a PDF, in case a storeowner wants to create new print versions. It’s a freemium service, and clients can pay $25 a month to get features like business support and additional templates. In all, the company has 15,000 customers for the local product.

The partnership is good for both companies. It’s obviously more of a boon for Locu, but it’s also a sensible strategy for Yelp to add Locu as another data partner. It strengthens the accuracy of the platform, which is a deposit in the bank of users’ goodwill. Because it’s annoying to go to a restaurant craving a specific dish, checking the menu (often through Yelp), going to the place and realizing it’s no longer on the menu. It happens more than business owners would like to admit, and those menu gems are the lifeblood of mom and pops.

It also raises some interesting questions for Yelp. Locu has been testing out a feature that lets customers order takeout directly from the menu itself, with Locu taking one dollar for each order (or $.85 for businesses on the premium plan).

CEO Rene Reinsberg downplays the feature, saying that it is very new and there’s nothing to announce. And clearly an integration with a small company like Locu would not indicate a major change in strategy for a big public company like Yelp (unless, of course, it acquired a company with that IP). But it does bring up the question of Yelp entering the Seamless and GrubHub space as it builds out more integrations with companies that serve small and local business. Reinsberg is quick to point out that’s not the intention of this partnership. But he does offer, “Long term, you should be able to transact from anywhere on the Web.” Mike Ghaffary, Yelp’s vice president of business development, would not comment on that future possibility.

Of course, none of this matters if small business owners don’t embrace Locu, and that’s been the fundamental problem thus far. Several companies have been trying to own the local business market, from loyalty startups like Fivestars and Belly to marketers like InfoGroup or YP. Some of those companies have far greater resources, like YP – short for Yellow Pages — which generated almost $1 billion in digital ad revenue in 2012.

Part of the challenge in luring a small business owner is making the product fit naturally with his existing workflow. For example, when Locu was first founded in 2011, edits to the menu went only to digital versions of the menu, and not directly to PDFs for the printable versions of menus. Storeowners asked for that functionality, and usage rose.

That’s the kind of value-add needed to make a product worthwhile in the local business market. Perhaps helping to keep a Yelp page more up to date is another factor. In that market especially, simple but meaningful utility can go a long way.

[Image courtesy: Charles Haynes]