Birth To Billions: Zagat Survey
You're planning to descend upon New Orleans-an eating mecca known for its extraordinary creole cuisine-and don't have the foggiest idea where to eat. Any sophisticated traveler will tell you the simple solution: Pick up a copy of the current Zagat New Orleans Restaurant Survey for a list of the city's best restaurants in all price categories. Within 10 minutes, you'll have a rundown of the best restaurants in town-ranked by food, decor, service, cost and more.
No seasoned traveler would think of boarding a plane without a copy of the Zagat survey for their intended destination. In the space of a decade, the famed restaurant guides, which rate more than 15,000 restaurants in 50 cities across the United States and Canada, have become an institution among discerning restaurant-goers. The $10.95 pocket paperbacks are gobbled up as soon as they roll off the press. Don Rieck, manager of Doubleday Books' posh midtown Manhattan location, says the Zagat New York Restaurant Survey is the bestselling book in the store's history.
The brains behind the Zagat publishing empire are a most unlikely pair. Husband-and-wife team Tim and Nina Zagat (56 and 54, respectively) never expected to get into the restaurant-rating business, much less one day see multimillion-dollar sales figures. How did these two former corporate fast-trackers turn into rising entrepreneurial stars?
Food, Glorious Food
Going into business was the furthest thing from Tim's and Nina's minds back in Yale Law School. They met in 1963, married and, after graduation, were hired by prestigious Wall Street law firms. They spent two years in each firm's respective Paris office before being transferred back to New York in 1970.
Besides their jobs and the accompanying high-powered lifestyle, the Zagats had one powerful passion in common: They loved to eat. We're not talking Twinkies or Chee-tos here; you'd never catch the Zagats in a McDonald's or Burger King. No, their passion is gourmet food, exceptional wines and elegant ambience. They love preparing, consuming and talking about food; above all, they enjoy discovering new cuisine in great restaurants. In Paris, the Zagats whiled away entire evenings at the city's best eateries. They returned to the United States lifelong gourmets.
The Zagats never tire of explaining how their passion for food led them into entrepreneurship. A smile lights up Tim's face when he remembers the eating and drinking orgy during which the idea was born. "Back in New York practicing law, we helped organize a group of friends who met for dinner once a month," he begins. "The dinners took place either in someone's home or at a great restaurant. Wherever they were held, they were blowout events." That means they pulled out all the stops and forgot nasty words like calories and cholesterol. The eating extravaganzas featured incredible food and upwards of 10 different wines.
At one dinner, the conversation turned to one restaurant critic and how unreliable his restaurant selections were. There had to be a better way to rate restaurants, someone insisted. Tim put his two cents in and proposed the group rate restaurants by creating a questionnaire and surveying their friends.
Thus, the Zagat survey was born. The concept was simple, yet brilliant: "A group of people are more likely to be accurate about a restaurant than one person," Tim explains. With the help of friends, he and Nina put together a one-page survey, eliciting restaurant ratings and comments from friends, business associates and acquaintances who judged food, decor, service and cost. "Everyone who participated got a copy of the results," says Nina.
The first survey, which polled 100 friends, colleagues and clients, debuted in 1979. A photocopied list of 75 restaurants and brief comments about each-crammed on a single legal-sized sheet of paper-was mailed to everyone who had participated.
"We were just doing it for fun," Tim says. Little did they know they were laying the foundation for a moneymaking enterprise.
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."
All They Can Eat
The Zagats realized they were at the helm of something big. At the end of 1986, Tim quit his job and made a full-time commitment to the guidebook; Nina continued her law practice until 1990.
For the Zagats, 1986 was a strategic year. Tim hired their first full-time staffer (today, they have 30 full-time employees and more than 60 part-time guide editors in cities throughout the United States). The couple then built on their success by publishing guides for four new cities-Washington, DC; Los Angeles; San Francisco; and Chicago.
"We knew then we had the tiger by the tail," says Tim with a smile. "With robust sales, we didn't need outside financing to foot the cost of expansion. We could finance it ourselves from cash flow."
From then on, the Zagats began adding new cities each year. Their goal is to cover the entire United States with editions for every major city. At the moment, they're working on Las Vegas and considering cities in the Carolinas and Virginia.
By doing everything themselves in the beginning, the Zagats became masters at cost-cutting. They don't need an enormous staff; instead, they hire just two people in every location they cover-a prominent food writer and a public relations person or food expert. The writer handles the editorial side; the PR person recruits surveyors by tapping wine shops, gourmet food stores, and law, accounting and investment banking firms.
Getting surveyors, known as "Zagateers," to painstakingly fill out Zagat questionnaires was surprisingly easy. In virtually every new city, volunteers couldn't wait to share their opinions of local restaurants. Currently, the Zagats boast a volunteer army of 75,000.
The Zagats also expanded into other types of guidebooks, all based on the same survey concept. In 1988, they released guides covering hotels, resorts and spas nationwide; in 1990, they began surveying airlines and car rental companies; in 1992, they published a pair of national guides, America's 1,000 Top Restaurants and America's Best Value Restaurants. More are in the works: "We're working on filling in the gaps in the United States," says Nina.
Though they expanded their restaurant reviews to cover Canada in 1990 and are working on a London edition, the Zagats aren't yet ready to cover the rest of the world. Aside from logistical problems, Tim points out bookkeeping and cultural difficulties. "In Japan, for example, it is considered impolite to say negative things," he explains. "Americans don't think twice about dumping on restaurants they don't like. The Japanese just wouldn't do that."
No matter: For now, the Zagats have plenty to do. They've created an empire that grows bigger every year. They've also become a well-oiled team, with Tim overseeing sales, marketing and editing while Nina handles operational nuts and bolts.
With so many projects going on at once, Nina says, they've created their own checks-and-balances system to prevent errors and stay on track. After 30 years of marriage, they know how to capitalize on each other's strengths. "My tendency is to try to do too much," admits Tim. "Nina saves me from myself. I have a tendency to jump around; she keeps me focused. We respect each other's opinions."
Like all couples in business, the Zagats have their differences. Yet, perhaps due to their legal training, they've mastered the fine art of compromise and have always managed to find a happy middle ground. In the final analysis, it's as simple as this: They sincerely enjoy working together.
What about tapering off to enjoy the fruits of their hard work? That's not in the cards. The Zagats are having too much fun. Aside from the thrill of building a thriving business, there are other perks to savor. After all, how many of us can walk into America's finest restaurants and be wined and dined like dignitaries?
Nina and Tim Zagat
Birth Dates:Nina:August 12, 1942; Tim: May 13, 1940
Residence:New York City
Family:Two children: Ted, 20; John, 18
Business Philosophy:"Stay focused on your core business and love what you do, since it consumes most of your waking hours."
Bob Weinstein is the author of eight books and a frequent contributor to national magazines.
Zagat Survey, 4 Christopher Columbus Cir., 4th Fl., New York, NY 10019, (800) 333-3421.