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Wednesday News: Yelp ratings are affecting restaurants; Bruce Willis Apple Suit...

 Looking at 240 fiction book titles reviewed by the New York Times, investigators found that positive reviews, not surprisingly, always increased sales by anywhere from 32 to 52%. For books by established authors, negative reviews, also not surprisingly, led to a 15% decrease in sales. For books by relatively unknown authors, however, negative publicity had the opposite effect, increasing sales by a significant 45%. Follow-up studies affirmed the reason: Even bad reviews drew attention to works that otherwise would have gone unnoted. Moreover, the “negative” impression bad reviews created seemed to diminish over time.

Economists at UC Berkley have published a study in the Economic Journal that suggested Yelp ratings are having a significant impact on restaurants.In previous articles about paid for reviews, there is some intimation that restaurants and other places are buying Yelp reviews and this might be why:

They found that a restaurant with a rating improved by just half a star – on a scale of 1 to 5 – was much more likely to be full at peak dining times. Indeed, an extra half-star rating caused a restaurant’s 7pm bookings to sell out on from 30% to 49% of the evenings it was open for business. The Observer

Jane Litte is the founder of Dear Author, a lawyer, and a lover of pencil skirts. She spends her downtime reading romances and writing about them. Her TBR pile is much larger than the one shown in the picture and not as pretty. You can reach Jane by email at jane @ dearauthor dot com

10 Comments

  1. Kaetrin
    Sep 05, 2012 @ 05:28:39

    It’s a sad sad day when Adelaide Now can’t be trusted as a reliable news source. Oh, wait… Sorry for the bum steer. :)

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  2. romsfuulynn
    Sep 05, 2012 @ 07:36:53

    On the restaurants, (as my statistics professor would write on the board) “correlation is not causation.” Possibly the restaurants have both better ratings and more customers because the food & service are better?

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  3. jane_l
    Sep 05, 2012 @ 08:10:38

    @romsfuulynn: The researchers admit that there is a problem withe cause/effect but said that

    So, two restaurants that have similar average ratings can actually appear to be of very different quality to online viewers. For example, a restaurant with an average rating of 3.74 displays a 3.5-star average rating, while a restaurant with an average rating of 3.76 displays a 4-star average rating.

    This, the economists claim, allows them to make important comparisons between restaurants that have different ratings – for example, 4 stars versus 3.5 stars – but are of nearly identical quality (for example, a 3.76 average versus a 3.74 average). Their conclusion? That half a star makes all the difference.

    The economists write: “Differences in customer flows between such restaurants can therefore be attributed to the ratings themselves rather than differences in the quality of food or service.”

    As with anything, more studies need to be done before any concrete conclusions can be drawn and there isn’t any evidence that the same affect is being extrapolated into other product markets.

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  4. Sunita
    Sep 05, 2012 @ 08:25:21

    I took a look at the Yelp article. They’re not analyzing whether the ratings are accurate (as to quality) but rather whether a star variation that signals a quality difference is effective in driving more/less customers. In the study they separate restaurants with other measures of quality (Zagat, Michelin stars, etc.) from those without and find that Yelp reviews have less effect for restaurants with the additional information.

    There are some issues with the sample. San Francisco has a very high number of Yelp members and participants, but the results aren’t necessarily generalizable to cities and town with different characteristics. They don’t tell us what online reservation system they used. I’m assuming it’s OpenTable, which is (a) not used by all restaurants (which they recognize); and (b) restaurants differ in how many tables they allocate to OpenTable, which the study doesn’t take into account. And they’re aggregating all restaurants into one group, so everything from the corner take-away gyro house to Gary Danko is treated as equivalent.

    They do look hard for evidence of restaurants gaming the system and don’t find any, which is reassuring. And the take-away message is powerful: rounding decisions have a measurable impact on availability. If we saw two restaurants with a 3.24 and a 3.26 rating each, we’d rightly assume that they are more or less the same according to Yelpers. But that’s not what we see. We see 3 and 3.5 stars, which we then treat as a non-trivial quality difference.

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  5. SAO
    Sep 05, 2012 @ 08:31:30

    What a huge incentive to get all your friends to write reviews! Two 4* reviews would bump 20 reviews averaging 3.74*s to 4*s

    Most new restaurants don’t have many reviews, so five reviews by family and friends, solicited with a review me! Review me! rather than pay could make a big difference.

    Obviously, with rewards like these to be had, reviews will be gamed.

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  6. Sunita
    Sep 05, 2012 @ 09:04:25

    Obviously, with rewards like these to be had, reviews will be gamed.

    That’s exactly what the researchers thought (they are economists, after all). They performed a number of different tests on the data to see if they could find evidence of such gaming, and nothing reached statistical significance. However, the tests were performed only on those restaurants that were also in the online reservation database. It’s entirely possible that the ones not in the reservation database behave differently, but we’d want to have a theory for why that would be so.

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  7. Janine
    Sep 05, 2012 @ 15:45:43

    A local sushi place I really liked recently turned me off by putting requests for yelp reviews on all their tables. Any customer who reviews the restaurant on yelp (and/or a couple of other sites) and brings the review in to show the restaurant staff gets a free sushi roll. They did not insist on positive reviews but it’s hard to believe anyone would bring a negative review in to show the manager.

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  8. SAO
    Sep 05, 2012 @ 23:42:30

    @Sunita
    Producing a lot of fake reviews is time consuming and probably visible. But if you are at 3.24 (3*) and you write one 4* review, you bump your rating to 3.26 (3.5*) and it will probably be undetectable.

    I’d bet a restaurant that isn’t a part of an on-line reservation system might:
    1) be smaller, thus get fewer reviews allowing a fake to have more weight in the score
    2) have customers who aren’t as computer literate and less likely to do an on-line review, also allowing fakes to have more weight.

    On the other hand, if a rating sets expectations too high, then there might be a backlash. I was at a hotel in Prague that had been on Trip Advisor as a top rated hotel for the city the year before. It was a great 3.5 star hotel, but when people started expecting the best in the city, it didn’t measure up and they started getting ratings about all the ways it didn’t meet expectations. Of course, in gaming your own ratings, dissing the competition helps.

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  9. Sunita
    Sep 06, 2012 @ 07:41:54

    @Sao: Interestingly, neither one of those conditions is likely to hold for their sample, which is San Francisco restaurants (although I agree it might well be true in other locations). OpenTable is a costly choice for restaurants because of the cut it takes, and restaurants at every part of the spectrum choose to abstain from it. I’m sure more at the small or inexpensive end do, but it’s not exclusively low-end restaurants. And given the population of SF, there are plenty of computer-savvy people who are constantly seeking out new, hole-in-the-wall and family restaurants. We have a favorite dumpling restaurant that doesn’t take reservations and looks like a regular Chinese takeaway from the outside but has a clientele of young IT workers and families. I found it because of Yelp. Because young people eat out so much, fakes may be more likely to be discovered and the ratings adjusted to reflect that.

    The TripAdvisor ratings are a source of endless entertainment to me. I’ve become fairly good at spotting the sock puppet reviews for the hotels in places I frequent.

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  10. ami
    Sep 09, 2012 @ 19:04:19

    @Janine:

    That’s interesting that they do that because under the terms of a Yelp Business Account, you are NOT allowed to do that.

    ReplyReply

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