Yelp is sitting on a massive store of local business data. That's useful for search quality. Yelp is in the first three results for the majority of businesses in their database. That's useful for search monetization. They also have a direct sales force calling on local SMEs. That's useful for Google Apps. I could go on.
More valuable than all that is the fact that Yelp is the de-facto real-world review site. Its brand is powerful, about as powerful as YouTube's was when Google bought them.
I concur. I live in kansas City and work on computers all day. I've heard of Yelp, but I've never used them or seen them pop up in search results for local business.
