Customer reviews travel far in the age of tweets and mobile check-ins. As more foodies come to rely on word-of-mouth reviews, Yelp’s system of ratings can make or break a restaurant.
Economists at the University of California, Berkeley published the results of a study, examining the effects of Yelp’s online ratings in this month’s Economic Journal. The study shows a slight half-star improvement in ratings can increase a restaurant’s business during peak dining hours by 19%.
Berkeley professors Michael Anderson and Jeremy Magruder found that “Yelp ratings affect both customer flows and the probability of booking a reservation.” The researchers compared the digital word-of-mouth reviews on Yelp of 328 San Francisco eateries with the frequency of nightly reservations at each establishment.