London Restaurant owners have a love-hate relationship with TripAdvisor. When a good review’s posted it helps to boost takings while bad reviews can see potential customers look elsewhere. Competitive marketplaces such as the London restaurant scene can make a good TripAdvisor ranking a necessity.
In the iPhone age where a rating and review can be posted in seconds, the visibility of ratings has never been prominent. But just how important are TripAdvisor ratings to a restaurants turnover?
Two economists at the University of California, Professors Michael Anderson and Jeremy Magruder published research in the Economic Journal an attempt to correlate the relationship between online ratings and restaurant customers purchasing decisions. The pair focused on the effects of positive online ratings on 300 San Francisco restaurants on Yelp.com, a popular US ratings site (similar to TripAdvisor).
They found that a restaurant with a higher rating of just half a star (on the same as TripAdvisor of 1 to 5), was 30 to 49 percent more likely to sell out its covers during peak hours. Most importantly to restaurant owners, the study found that the increase in restaurant customers happened without any change in prices or the quality of food and service. Confirming the power online reviews hold at bringing in new customers. Walking around London during a weekday lunch hour there are often some restaurants fully booked whilst similar restaurants are eerily quiet.
The study was able to compare similar restaurants with different star ratings based on how the system works. A restaurant with an average rating of 3.74 would receive a 3.5 star average rating, while a restaurant with an average rating of 3.76 would get a 4 star rating. This allowed the research to make comparisons between restaurants that have different perceived star ratings. For example a 4 stars restaurant versus a 3.5 star restaurant, but are of nearly identical quality (for example, a 3.76 average versus a 3.74 average). The study found that half a star increment made all the difference to the restaurants turnover and how full the restaurant was.