It intuitively makes sense that a poor score on Yelp is bad for business. But just how much can a restaurant’s business improve if its rating on the consumer review site goes up?
A new Harvard Business School study by Michael Luca, which set out to ascertain whether “online consumer reviews affect restaurant demand,” determined that a restaurant that boosts its Yelp score by one full star can see revenues increase 5 to 9 percent.
In other words, Yelp ratings can indeed have a big effect on a business’s bottom line.
Luca’s research was based on government data that tracked all revenues reported by Seattle restaurants between 2003 and 2009, as well as Seattle restaurant reviews on Yelp, which launched on the west coast in 2005.