George's Deli has a perfect five-star rating on Yelp.
Restaurant owners often rail against Yelp, but a new study suggests they'd be better off working to improve their star ratings.
As reported this week by the Huffington Post, Harvard Business School's Michael Luca crunched six years of numbers to reach the conclusion that a one-star improvement in a restaurant's Yelp rating can produce a revenue jump of five to nine percent. Luca likens the revenue spike to the five percent increase in revenue associated with A-grade restaurants forced to display their sanitation scores.
The phenomenon is not surprisingly limited to independent restaurants, since Applebee's patrons are as likely to have their opinion shaped by television commercials and previous experience as an anonymous diner's online review.
"I find that there is a shift in revenue share toward independent restaurants and away from chains as Yelp penetrates a market," Luca writes.
But Luca didn't study every market: He based his conclusions on Seattle. For his paper, Luca examined 60,000 Yelp reviews of Seattle restaurants - representing 70 percent of the city's operational restaurants in 2009 - and 2003-2009 revenue reports from the Washington Department of Revenue. So while his findings may not hold in New York City, they're certainly representative of the situation here.
Luca also uncovered statistics that should comfort professional critics, perhaps the only demographic more threatened by Yelp than restaurant owners. According to his research, formally-certified "reviewers who have written a lot of reviews that Yelp has deemed helpful" have twice the influence of reviewers who don't have any credentials.