How do online reviews impact revenue for bars and lounges?

It's clearly important for bars and lounges to claim their listings on as many review sites as possible, but they shouldn't stop there.

Our analysis reveals that, perhaps even more than other industries, bars and lounges should focus as well on engaging with their customers by responding to reviews.

A substantial 75% of bars and lounges in our study hadn't responded to even a single review, which goes to show just how few businesses are taking advantage of this simple practice. Let's see how it impacts revenue for local bars and lounges.

As you can see in the charts above, bars and lounges who don't respond to reviews should start considering doing so.

Bars and lounges who don't respond to any reviews earn 11% less than average, while those who responded on a more frequent basis, up to 25% of the time, earn 37% more than average. As reply rate climbs to more than 25%, revenue dips slightly.

This is likely because bars and lounges with a large number of total reviews may be likely to earn more money than average, but may also be more likely to have a much lower review response percentage.

This becomes clear when you look at revenue by total number of review responses:

Again, the vast majority of bars (75%) don't respond to reviews at all, but bars and lounges that respond to just one review earn 13% more than average. And as you might expect, bars with a higher number of review responses earn more than those with a lower number of responses.

By the time you get to bars with more than 20 review responses, they're earning over $105,000 more each year than average.

It appears that for bars and lounges, a little goes a long way when it comes to engaging customers through online reviews. So local bar owners should consider taking the time to post thoughtful responses to both positive and negative reviews on their online review sites.

Bar owners often stress about their star rating, but as we detailed in the section above, average star rating isn't always the clearest indicator of financial success for local bars and lounges.

On the other hand, our findings suggest that bar owners should perhaps focus more on increasing their number of reviews than almost anything else.

Bars and lounges in our analysis average a combined 156 reviews per business across all review sites. This is nearly twice the number of reviews for the average business across all industries, suggesting bars and lounges may need to gather more reviews than other types of businesses in order to stand out online.

To test our hypothesis, we started by analyzing revenue at bars and lounges whose review counts fall above and below that average 156-review threshold.

As suspected, total number of reviews is indeed extremely important for local bars. Those who have more than the average number of reviews earn a substantial 66% more in annual revenue than the average bar.

Those with fewer than 156 reviews, meanwhile, earn 23% less.

Looking closer at the numbers helps further clarify the relationship between the number of reviews and average revenue for local bars and lounges.

Bars and lounges with fewer than 25 reviews earn a staggering 43% less than average, and bars with up to 75 reviews don't fare much better. It's not until bars get between 76 and 156 reviews that they start to more frequently earn above average revenue.

Then, as you can see, the more reviews a bar or lounge gets, the more money they earn.

Annual revenue at bars, pubs, lounges, night clubs, etc. with more than 300 reviews is a whopping $215,000 more than the average bar and lounge business in our study.

This is clear evidence that when a customer searches online for a place to grab a drink, a large number of reviews outweighs a high star rating.

Once again Google is clearly the most important review site for bars and lounges, as those with an above-average review count here earn 62% more than average.

But still, local bars and lounges should work to get as many reviews on as many sites as possible. Some bar owners worry that pushing for reviews may expose them to getting more bad reviews, but as we'll explain in a section below, bad reviews can actually be a good thing.

It's clearly important to get a steady stream of fresh reviews, but how important is the ratio of positive to negative reviews?

On average, 19% of the reviews posted about a given bar or lounge were negative. This puts bars and lounges right at the average negative review rate across all industries.

Does this mean bars and lounges are more or less affected by a large number of negative reviews? Let's find out.

For the most part, negative review rate appears to have little impact on revenue at bars and lounges.

As with other industries, bars and lounges with a healthy mix of good and bad reviews earn the most on average. The ideal range is a negative review rate between 5% and 35%, with bars whose reviews are 10% to 15% negative averaging the largest increase in revenue at 8%.

Bars and lounges do appear to be more vulnerable to an extremely large percentage of bad reviews than other industries. Those whose reviews were 75% to 100% negative earn 31% less than average.

But, like other industries, bars whose reviews were only 0% to 5% negative earn far less than average.

When customers browse bars or lounges on review sites, they likely expect to see some negative reviews. In fact, many customers actively seek out negative reviews first, and a bar or lounge with little or no negative reviews might appear untested or even a little "too good to be true."

Our takeaway: bars and lounges that focus on getting as many real reviews as possible reap the rewards.

Next we looked at which states' bars and lounges were the best at managing their online presence. We started by analyzing the percentage of bars and lounges in each state that had claimed at least one review site listing.

*Note: There was insufficient data for bars and lounges in the following states: Vermont, Hawaii, Delaware, Rhode Island, New Hampshire, Alaska.

89% of New Jersey's bars and lounges had claimed at least 1 review site listing, which was good for the top spot on our list. Virginia, Florida, New York, and North Carolina also had over 80% of their bars and lounges claim at least 1 review site listing.

On the other end of the spectrum, 67% of the bars and lounges in our analysis from Utah and Mississippi haven't claimed a single listing, putting them at the bottom of the list.

Lastly, we looked at how frequently bars in each state responded to reviews.

Virginia's bars were the most engaged in our list, with 59% of local bars responding to at least one review. Maine was a close second with 50% of bars having responded to at least one review.

South Dakota and Mississippi bars were the least engaged, as not a single one of the bars in our study from either of those states had responded to at least one review.