Saturday, October 8, 2011

Can Yelp Help Independent Restaurants Drive Chains Out of Business?

http://www.good.is/post/can-yelp-help-independent-restaurants-drive-chains-out-of-business/

"A one-star increase in Yelp rating leads to a 5-9 percent increase in revenue."
That’s a big deal right there. When consumers have information that they trust (especially from multiple users or particularly detailed reviews) it influences decisions.

"This effect is driven by independent restaurants; ratings do not affect restaurants with chain affiliation."
This makes sense: The major advantage of a chain restaurant is the information conveyed by its branding: All McDonalds have Big Macs, and they’re all pretty much the same. But if Yelp makes information about independent restaurants more easily available, it levels the playing field. Interestingly, people don’t appear to be paying much attention to variations between chain restaurants.

"Chain restaurants have declined in market share as Yelp penetration has increased."
The internet saving small business? Maybe. It’s certainly equalizing the information advantage enjoyed by famous brands.



research paper
http://www.hbs.edu/research/pdf/12-016.pdf