Will Yelp Put Restaurant Chains Out of Business?

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Finding great local restaurants can be a challenge. There seem to be a dozen mediocre, even bad restaurants, for every good one. That's why chains have gotten so popular in the last few decades. They may not be as good as some independent local places, but you can rely on them to carry the same food with the same level of quality.

But Yelp is managing to shake things up a bit with thousands of new user reviews appearing every day, the site is pushing more and more people to try new independent restaurants than ever before. In fact, Good Magazine wonders whether the site might finally help local spots beat back the big chains:

"Researcher Michael Luca at Harvard Business School analyzed data from Yelp and the Washington State Department of Revenue to see how the online database affected Seattle restaurants. He found that Yelp had rated 70 percent of all operational restaurants in 2009, while the city’s largest newspaper had only reviewed 5 percent of them."
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"A one-star increase in Yelp rating leads to a 5-9 percent increase in revenue."
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"This effect is driven by independent restaurants; ratings do not affect restaurants with chain affiliation."

If there really is a Yelp effect, it could have a huge impact on the restaurant business in the next few years. Do you use Yelp or another online review site to find quality spots in your area?

[Image courtesy of Dystopo's Flickr stream.]

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November 30, 2011 - 9:48pm
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