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Online ratings can kill business

Every restaurateur knows good or bad reviews can have a major effect on their business.

In the past these were most likely to be written by expert food critics. But in the age of the internet anyone can post anonymous complaints or compliments online before a wide audience – and new research has shown how crucial these reviews are to a restaurant’s future.

Two economists at the University of California have published their findings on the issue in this month’s edition of the Economic Journal. Their work focused on the impact of positive online ratings on 328 restaurants in the San Francisco area – and collated this information into a star rating system on Yelp.com, a ratings website. Restaurants were given a rating on the site between one and five stars.

The study found that eateries with an improved rating of just half a star sold out their 7pm bookings on up to half of the days they were open, reports The Observer. This increase was found to happen without any changes in prices or food quality – suggesting a strong link to the online reviews. The economists admitted that establishing a causal link was difficult because those that got good write-ups were likely to be popular anyway. However, when a restaurant moved from 3.5 stars to four stars on the website, the likelihood of it selling out during its busiest trading times rose by 20 percent. – Daily Mail

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