Subscribe to Inc. magazine
WIRE

Study Reveals Power of Just Half a Star on Yelp

A new study reveals that a minor improvement in a restaurant's Yelp rating can mean big returns.
Advertisement

While it’s no secret that reviews have can boost or bulldoze restaurant sales, two economists at the University of Berkeley have discovered just how essential opinions are to business figures.

A study published in this month’s Economic Journal showed just an extra half a star on a restaurant's overall 5-star rating, which is averaged from individual ratings, can make that restuarant 30 to 49% more likely to sell out its tables for that evening. 

"The findings of this study demonstrate that--although social media sites and forums may not generate the financial returns for which investors yearn--they play an increasingly important role in how consumers judge the quality of goods and services," the researchers wrote in their study.

After studying the daily Yelp ratings and reservation availability of 328 San Francisco restaurants, the researchers concluded that these clientele boosts stemmed solely from positive online feedback. During the sales boosts, none of the restaurants adjusted their menu prices or offerings, showing just how influential Yelp reviews are to a businesse' success.

Of course, this raises the question of whether or not restaurant owners just pump review sites with fake praise.

Yelp’s communal nature allows any user to be a critic, making it easy for any business to write their own reviews or pay others for fake ones. However, the Berkeley economists assure that review fraud isn’t occurring as much as one would think, stating in their article that they put Yelp’s review data through multiple robustness checks.  

"Restaurants do not manipulate ratings in a confounding, discontinuous manner," they wrote.

 

 

 

 

 

 

 

 

Last updated: Sep 4, 2012




Register on Inc.com today to get full access to:
All articles  |  Magazine archives | Livestream events | Comments
EMAIL
PASSWORD
EMAIL
FIRST NAME
LAST NAME
EMAIL
PASSWORD

Or sign up using: