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Tuesday, January 10, 2012

Are Chain Restaurants Threatened by Yelp?

A new study from Harvard suggests that Yelp might play a huge role in bringing down chain restaurants across the country. Yelp offers user reviews of thousands of small restaurants, and gives consumers a point of reference when they make the choice to eat out at a new place.
Chain restaurants have always offered customers reliable and familiar menus in places where smaller restaurants seem foreign. An entrée at Applebees in Texas will be roughly the same as one in Nebraska, and gives customers a degree of comfort in knowing what they are ordering. Yelp however familiarizes customers with local establishments, provides ratings and gives insight into whether these restaurants would be suitable to eat at. Armed with this knowledge, customers may have started to depend of chain restaurants less when travelling through new areas.

Recent bankruptcies at Friendly’s and Chevy’s support this theory, though Friendly’s claims their hardships stem from higher prices in cream. Chain restaurants believe that adding healthier meal items and calorie tracking information may attract health conscious restaurant-goers. Harvard researcher Michael Luca however believes that online consumer reviews might now substitute more traditional forms of reputation.

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