Yelp for more sales

Restaurateurs spit at the mention of Yelp, but a new Harvard study suggests the outraged should quit grumbling and work toward a better review from the service’s civilian critics. An upgrade of just one star can deliver as much as a 9 percent bump in sales, according to the findings. Unless you’re part of a chain.

Then, suggests Harvard Business School professor Michael Luca, your restaurant could hire Thomas Keller to work the grill and the place still wouldn’t see increased traffic from the Yelp raves. Ingrained perceptions of the chain trump what Yelp’s citizen-reviewers have to say about one of its units, Luca concluded.

Ironically, he noted how Yelp can provide powerful marketing for free—unless the costly ad campaign of a chain has already instilled another impression in the dining public’s mind. He suggested the service’s power as a modern-day word-of-mouth tool might eventually weaken one of the reasons a location affiliates itself with a chain. “Evidence suggests that this pattern is already emerging,” wrote Luca.

His findings were based on review of Yelp postings about restaurants in Seattle, WA, between 2003 and 2009. Luca then compared the ratings by civilian reviewers with sales figures for the restaurants, as provided by the Washington State Department of Revenue.

More of his findings are available here


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