Online reviewers love independents, ignore chains

Online reviewers love independents, ignore chains

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Justifiably, restaurant operators have come to be wary about online reviews. But maybe they’re overreacting to the occasional anonymous slam. A new study from online reputation monitoring firm Reputology finds that most reviews are positive and that reviewers’ fascination with independent restaurants may actually be causing problems for chain operators.

Reputology [4] is a startup, the brainchild of M.I.T. grads Jack Yu and Nori Yoshida. The company monitored more than 1,500 reviews for 350 business locations to compile its data set for this study.

Top-line results show that the average restaurant gets one new review per week. The majority of reviews (64 percent) are favorable, i.e., awarding the restaurant four or five stars. Fifteen percent are neutral (three stars), 11 percent are lukewarm (two stars) and 10 percent negative (one star).

Other key findings: The majority of reviews (53 percent) are generated by Yelp. TripAdvisor accounts for 28 percent, Foursquare for 10 percent and Google + Local for seven percent.

Looking deeper, Reputology found that independent restaurants get nearly double the number of online reviews that chain restaurants do. It’s not that reviewers don’t necessarily like chains; on average they rated them only slightly lower—just 0.16 stars lower—than independents. It’s just that they seem to find them less interesting, and hence comment on them less frequently.

Does this discrepancy really matter? Reputology argues it does. The issue is that “the difference in sheer review volume is problematic for restaurant chains because the algorithms on directories favor businesses with more reviews (assuming the ratings are similar) and more diners are going online to find a place to eat.”

Which is to say, as more potential diners turn to online sites to select their restaurants, they aren’t going to see much about chains.

In a comment posted on Reputology’s blog, contributor Mark Moreno offers an interesting take on the results. “No doubt that this kind of information will spark many discussions in the corporate offices of many chains,” he writes. “Chains really do not seem to be benefiting from the community building that is so critical to online branding. Independent restaurants that almost obsessively focus on each and every guest will benefit from online reviews.”

So finally, there’s an area in which independents have the advantage in their battle with chain restaurants. But how meaningful is it? Yu points to a Harvard study showing that each star in a five-star rating system is equivalent to between a five and a nine percent boost in sales. He also cites a BusinessWeek study that found some 70 percent of consumers consult a review before making a purchase.

Put those two numbers together and the implications are indeed scary for chains. But it appears that if independents cultivate online reviews, then monitor and manage them as well as possible, it could make a significant difference in the restaurants’ success.