Birth To Billions: Zagat Survey

More Than They Could Chew?

Over the next few years, the Zagats turned out a new survey annually, each one boasting more participants and more restaurants. By 1982, they had a stable of approximately 600 voters rating 300 New York restaurants. The survey had a loyal cult following not only among avid restaurant-goers but also in the boardrooms of banks, brokerage houses and corporations. Busy executives eat out a lot and are always looking for elegant eateries at which to wine and dine clients.

While producing the survey was a labor of love for the Zagats, it had become an expensive and time-consuming one. By the third year, they had to hire a data-processing firm to tabulate the results. And they were now giving away more than 5,000 copies a year, which Nina calculated was costing them $1,000 a month-not including the actual dining out.

Once they realized they were spending close to $12,000 a year on their hobby, the Zagats decided to put a price tag on the survey and publish it. "We figured even if we couldn't make money on it, we could defray our costs and take a tax deduction," explains Tim.

What to publish? Using other guidebooks as models, the couple designed the guide to be pocket-sized, easily stuffed into a jacket or purse. The next important issue was how to publish. Should they do it themselves or find an established publisher?

After talking to a number of publishers, the decision was easy: None of the prestigious publishers wanted any part of them. Even Tim's uncle, who owned a publishing company, nixed the idea. "My uncle said his company had printed a guidebook by eminent New York Times food critic Craig Claiborne and it never sold more than 30,000 copies a year," Tim recalls. Publishers felt a guidebook was a poor risk. It lacked national appeal, and there was no guarantee even New Yorkers would buy it.

So the Zagats did it themselves. In 1983, their first year, they sold 7,500 copies of the $8 books and broke even. "We owe that to our surveyors, who bought six to eight books apiece," says Tim. "The deal was, you got one free copy if you voted. We were pleasantly surprised to find they were willing to pay full price [for extra copies], demonstrating an incredible loyalty to the project." The following year, sales more than doubled to 18,000 copies, and in 1985, the Zagats outsold The New York Times' dining guide, selling more than 40,000 books.

How did they do it? Hard work. Over and over, the Zagats loaded their station wagon with books, visiting virtually every bookstore in New York City to persuade owners and managers to test the book on their shelves. "It was quite an experience," Nina recalls. "The book trade is a Catch-22 business."

Explains Tim, "Bookstores tend to stock only books that are well-established and selling well."

But booksellers and publishers alike had to eat their words when the Zagat guide became a hot number. In 1985, New York Magazine did a splashy cover story on the Zagats. Soon after, The New York Times and People magazine featured stories on the couple as well. And suddenly, New York-and the rest of the country-discovered the unpretentious little guidebook.

In 1986, Zagat sales took off like a rocket, soaring to more than 100,000 copies. The Zagats were as surprised as anyone else: "We had only expected to sell 35,000 copies that year," says Nina.

"It was quite an experience," agrees Tim, still awed by the way the business took off. "It wasn't like we planned every step." Indeed, he jokes, if they had sat down to plan the business, "we probably would have become frustrated and quit."

But since the guidebook was fun, pouring all their energy into it was easy. By 1986, the Zagats had discovered what entrepreneurship is all about. "Yes, you have to have a great product and make smart decisions," Tim says, "but more important is doing something you love. That's the only thing that kept us going. That's why we worked so hard at improving the books. When you're not quite sure where it will all wind up, what keeps you going is the pleasure of doing something you enjoy. And the real kicker is when you turn profitable and look at the bottom line, and it's all yours."

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This article was originally published in the August 1996 print edition of Entrepreneur with the headline: Birth To Billions: Zagat Survey.

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