Do online consumer reviews affect restaurant demand?

One of the more difficult questions in social media is the degree to which online reviews impact upon the bottom line of businesses; and whether bad online reviews cause declining patronage. Harvard Business School’s Michael Luca says yes, and very much so [PDF]. There is not only an impact, but that impact is causal:

Do online consumer reviews affect restaurant demand? I investigate this question using a novel dataset combining reviews from the website Yelp.com and restaurant data from the Washington State Department of Revenue. Because Yelp prominently displays a restaurant’s rounded average rating, I can identify the causal impact of Yelp ratings on demand with a regression discontinuity framework that exploits Yelp’s rounding thresholds. I present three findings about the impact of consumer reviews on the restaurant industry: (1) a one-star increase in Yelp rating leads to a 5-9 percent increase in revenue, (2) this effect is driven by independent restaurants; ratings do not affect restaurants with chain affiliation, and (3) chain restaurants have declined in market share as Yelp penetration has increased. This suggests that online consumer reviews substitute for more traditional forms of reputation. I then test whether consumers use these reviews in a way that is consistent with standard learning models. I present two additional findings: (4) consumers do not use all available information and are more responsive to quality changes that are more visible and (5) consumers respond more strongly when a rating contains more information. Consumer response to a restaurant’s average rating is affected by the number of reviews and whether the reviewers are certified as “elite” by Yelp, but is unaffected by the size of the reviewers’ Yelp friends network.

It is pretty grim news, if you’ve spent the last hundred or so years building up the strength of a chain restaurant’s brand, only to find that increased reviewing is replacing your hard-earned equity. The recognition that certified reviewers actually do have a greater impact in systems like Yelp raises further questions whether these “elite” users follow the crowd or lead it. Duncan Watts and Matthew J. Salganik have done some great research into this, in which perceived success of cultural products online translates into actual success regardless of content, so it is altogether possible that people who contribute online reviews continually reinforce each others reviews for the good or ill of businesses.

Hat tip to Adam Ozimek from Modeled Behavior for the article.

Talk amongst yourselves

Just for interest’s sake, I extracted the comments table from my blog to see if I could come to any conclusions about the nature of blog commenting. My theory is that comments from non-bloggers have moved elsewhere: to Facebook and Twitter; to the recesses of the web that are difficult to plumb with any accuracy.

Of the past 1220 comments on this blog:

  • 71% of the comments came from other bloggers, excluding myself.
  • There’s been comments from 670 different people
  • I’ve met every single one of the top twenty commenters in person, who account for about a quarter of all the comments.

So these days, while the readership is more diverse than ever, a large proportion of the conversation on this blog is taking place amongst a small group of people who know each other, which reaffirms the old adage about blogs being about community.

My theory about Facebook doesn’t however seem to come to much. Facebook lets you track the number of conversations on your shared items through Facebook Insights. While a huge number of people share or like my words on Facebook, there isn’t any notable conversation about them there, just a steady stream of more likes.

Long tail! Half of the commenters leave but a single comment.

Comments are in decline! Although this doesn’t take into account the frequency with which I post updates to the blog, so is meaningless.

Word cloud of every word in the comments. You people say “just like” quite often. Interpret as you will.

Food Blog Name Generator

So you’ve decided to start a food blog and broadcast your eating life to the world, but you can’t find the perfect moniker under which to write. So here’s a food blog name generator to fill in your blank.

You should name that blog:

Bacon Sous-Chef

Apologies if it comes up with the name of a real food blog, sexual innuendo or Michael Pollan book. That only happens if you wish hard enough. Press reload for more deliciously random food blog names.




Food Blogger Tip: New Melbourne restaurants with no reviews

A short while ago Fitzroyalty thought that I might be up to the challenge of building some sort of site that churned out lists all of the unreviewed restaurants in Melbourne.

I quite clearly wasn’t. I tried a few approaches and none were at all accurate. I couldn’t think of an immediate way to legally make money from it and lost all motivation.

In its stead, here is a bundle of RSS feeds that grabs new restaurants from Urbanspoon that have never been reviewed by a food blogger whom suckles from Urbanspoon’s teat. If you subscribe, it will alert you when a new restaurant in Melbourne is added or an unreviewed restaurant is updated in the Google index, so that you can be first to post your capsule-sized review. It’s not all quality. You’ll get alerts whenever a new McDonalds graces the earth or your local milk bar gets uppity and installs a coffee machine, but you’ll soon realise that almost all of the writing about restaurants in Melbourne happens within a ten kilometre radius.

Melbourne Restaurant Alerts

How influential are Australian food bloggers?

Apart from that mythical beast return on investment, the hottest topic in social media measurement is influence. Does anything that happens on a blog or in Facebook or in 140 characters or less drive people to change their behaviour?

I’m banking my current career on it – so I have a small vested interest in saying that it does. While it is easy to make the argument that the totality of social media consumption causes behaviour changes if only due to the volume in which it is consumed, it is currently impossible to judge the influence of any single tweet or blog post with accuracy. There are a few tools out there that claim to be able to do this but they’re extremely easy to game.

Just to separate out food blogs, at a rough guess, there are less than 30,000 people in Australia who actively read a food blog. By actively read, I mean read the homepages and news feeds, revisit a blog at least once a month – rather than visit them as the result of a Google search. Around a thousand of these people are the food bloggers themselves. There are a small handful of Australian blogs with more than 30,000 Australian readers but those visits are certainly not all active readers.

30,000 is just my educated guess: I came to that number by pouring every blog in my list of Australian food blogs into Google Ad Planner, which lets you see an estimate of the traffic to most websites on earth, and looking at the reach figures that were spat out the other side. Ad planner is not accurate: it tends not to measure blogs with less than 15,000 unique visitors a month, which is almost every Australian food blog.

Active readers are important because they’re the people most likely to be influenced (to some degree) by everything that a blogger writes. Everyone else does not see everything. This is of the utmost importance if you happen to be in public relations and prone to throwing out freebies to bloggers. If the blogger does not have an active readership, you may as well give your free meal ticket to a dog because even if the blogger in question writes a ten thousand word dissertation on the power of awesome contained in your generic stock cubes, if their post doesn’t rank in Google then nobody will read it.

Almost 80% of my readers come via search, thanks to me ranking well for a few very generic words in Google. It’s not to say that they’re a worthless audience (and if I started running ads again, I can use them to take cash from indiscriminate and international advertisers) but they are an audience that is very unlikely to convert into an active reader. They arrive, service whatever question that they need to answer or laugh at some of my deep-fried stupidity, then bounce off into the wider Internet. Traffic from restaurant aggregator Urbanspoon or Tastespotting behaves in a similar fashion: a once-off visit that makes the most cursory scan of the photos and then leaves.

Most often the question that the Urbanspoon/restaurant searcher is looking to answer is “What is the restaurant’s phone number or address?” because restaurants tend to have appalling websites where this vital information is not readily apparent. I AB tested this on my Dosa Hut post after getting a number of phone calls to my personal mobile phone asking for Indian street food.

Put the address at the top of the page instead of the bottom and average time spent on that page drops by around 30 seconds. In either case, none of these visitors have ever returned to my blog and read another post. A handful returned to the Dosa Hut post, possibly to get the phone number again. It would only be possible for me to influence these people’s behaviour if I had something extremely negative to say about Dosa Hut. At the point that they’re visiting my website, they have already decided to contact the restaurant. It’s altogether possible that they have already been there.

Influence in blogging relies on attracting an audience who is in a state of mind to be influenced, not one that is looking for confirmatory advice or whose intent is already set. It’s not to say that influencing that thirty thousand is not important as they’re the people who influence others food choices, have higher incomes and spend more than your average person on eating out. It does however suggest that Australian food blogs are a bad fit as a vehicle for most mass market food products.

Food Blogger Tips: Google Recipe Search

This only applies if you write recipes online and care about how many people visit your site. Otherwise, move along.

About a fortnight ago, Google released Recipe View in the US and Japan, a new way to trawl through their index for food preparation. When searching for a recipe online, most people type one or more of the component ingredients then hit the search button, which ends up with poor results. Most people who type “turkey” into the maw of Google don’t want to know what or where turkey is, just how to appropriately deep fry one. For example, the spike in searches for turkey on Thanksgiving isn’t the result of a seasonal interest in Byzantine vacations.

So to rectify this parlous state of affairs, they released Recipe View.

The practice of displaying rich snippets of information in Google search results has been around for about two years, so it was only a matter of time before it came to recipes and food blogging. The problem at the moment is that most of the results for Google Recipe View are trash: they’re stacked with the big recipe sites that scraped a good deal of their early content from the old Usenet archives because smaller sites (and most food blogs) don’t use the hRecipe format unless they’re run by an interminable data nerd.

What to do about it.

If you do write recipes and you use Blogspot, it might be a good time to consider your options. If you happen to use , I recommend the freshly-released Recipe SEO plugin or the older, and slightly less user-friendly hRecipe plugin. They’re both simple to use to appropriately format your content. With any luck (and the impending global rollout of Recipe View), you’ll pick up a few readers who would otherwise miss you.

Melbourne Restaurant Name Generator

Not sure what to name that new cafe or restaurant that you’ve lovingly crafted from rotting couches in a Melbourne laneway? Can’t find an fitting piece of pornocracy or Italian horror film to print on your disposable coffee cups?

All you need to do is combine an honorific of some kind with the name of a character on Mad Men, or parts of a spaghetti Western with a radio call sign. Or do all four at once and then follow whatever food trend is hot right now.

I think you should name it:

Press reload for more random free advice.

There is a one in nine hundred chance that you’ll get the exact name of a real restaurant. Sorry.