A special report from Womply Research

How do online reviews impact revenue for restaurants?

If you've read our full report, you've already got a sense for just how important review sites are for local businesses. But what about restaurants?

Are reviews more (or less) influential on revenue for restaurants than other businesses?

Impact of Reviews on Revenue page masthead graphic. A special report from Womply Research.

To understand the correlation between reviews and revenue for restaurants, Womply's data science team conducted an in-depth analysis of transactions and online review data for more than 30,000 restaurants in every state.

Key findings include

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Restaurants that claim their free listings on 3 or more review sites earn 30% more revenue than the average restaurant

Restaurants that don't reply to any reviews earn 9% less in revenue

5-star rated restaurants actually have below-average sales—the sweet spot is 3.5 to 4.5 stars

Restaurants with more than the average number of reviews bring in 82% more in annual revenue

Restaurants whose total number of reviews are 19-25% negative average 21% more annual revenue than businesses whose reviews are 5-10% negative

Go deeper by reading our analysis for businesses in a different industry.

Claiming free listings

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Restaurants that claim their listing on multiple review sites make more money

Key findings include

Restaurants that claim their free listings on 3 or more review sites earn 30% more revenue than the average restaurant

Restaurants that don't claim their listing on any review sites earn 23% less revenue

22% of restaurants in our analysis haven't claimed any listings

Claiming more than 1 review site listing is more important for restaurants than for the average small business across all industries

The average annual revenue across all restaurants in our study was $386,800. As with all businesses in our study, claiming your profile on more review sites correlated with more annual revenue.

It's particularly important for restaurants to have an active presence on as many review sites as possible. While businesses across all industries earn average revenue after claiming just one listing, restaurants who claim just one listing still earn 8% less than average.

And restaurants who follow the simple practice of claiming their listing on three or more of the major online review sites earn a substantial $124,000 more each year than our baseline average.

As you might expect, Yelp and Google are particularly important for restaurants. Restaurants that don't claim Yelp listing average a 19% decrease compared to the average restaurant, while those who don't claim their Google listing earn 18% less.

Claiming a Google listing is associated with the largest bump in revenue (9%), but no matter how you look at it, restaurants would be well-advised to claim their listing on as many review sites as possible.

Go deeper by reading our analysis for businesses in a different industry.

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Replying to reviews

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People spend more money at restaurants that reply to reviews

Key findings include

69% of restaurants don't respond to any reviews

Restaurants that respond to 1% to 25% of their reviews earn 23% more than average

Restaurants that don't reply to any reviews earn 9% less in revenue

Restaurants that respond to even just one review earn 7% more than average

It's clearly important for restaurants to claim their listings on as many review sites as possible, but a business owner shouldn't just stop there.

Our analysis reveals that as customers search those review sites for a place to eat, one of the things they're looking for is a restaurant that engages with customer reviews.

69% of restaurants in our study haven't responded to a single review. Let's see how responding to reviews impacts revenue for restaurants who do, or don't, take advantage of this simple online practice.

As you can see in the charts above, restaurants that don't respond to any reviews earn less than the average restaurant. But a little can go a long way, as restaurants who responded to even just one review earn 7% more than average.

Restaurants who respond more frequently, up to 25% of the time, earn 23% more than average. Interestingly, however, revenue decreases as review rate climbs above the 25% mark.

This is likely because busy, popular restaurants with a large number of total reviews are more likely to earn more money than the average restaurant, but since they receive so many positive reviews, they are more likely to have a much lower review response percentage.

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

Restaurants that responded to at least 1 review respond to an average of 42 total reviews on average.

Restaurants who respond to just 2 to 10 reviews earn more than the average restaurant. And by the time you reach 100 or more review responses, restaurants earn $241,000 more each year than average.

When it comes to responding to reviews, it's clear that restaurants should focus primarily on giving thoughtful and meaningful responses to both negative and positive reviews.

As we'll expand on in the sections below, getting more reviews is clearly important, but staying engaged with customers in a real and meaningful way can make a clear difference.

Go deeper by reading our analysis for businesses in a different industry.

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Star ratings

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How much does a restaurant's star rating impact revenue?

Key findings include

Restaurants with a rating between 3.5 and 4.5 stars earn more revenue than any other rating

5 star restaurants earn less in revenue than 1 to 2.9 star restaurants

Restaurants with a 4 to 4.5 star rating earn 17% more in annual revenue than the average restaurant

Only 2% of restaurants have lower than a 3-star rating

Now that we've covered the things that a restaurant owner can control when it comes to review sites, let's get into the reviews themselves. Let's start with what many restaurant owners consider the most important part of their online presence—their overall star rating.

The chart below illustrates how much the average star rating matters to restaurant revenue.

The sweet spot for restaurants is from 3.5 stars to 4.5 stars, with 4 to 4.5 star businesses earning the highest average revenue.

Restaurants appear to be more sensitive to low ratings than other industries, as ratings below 3.5 stars correlate to larger decreases in revenue than businesses across all industries.

5 star restaurants also average far less revenue than the typical restaurant. This is possibly because most 5-star-average restaurants have fewer reviews, are less established, or may be guilty of black-hat practices like buying fake reviews.

As with most industries, the vast majority of restaurants (93%) have a star rating between 3.5 and 4.9 stars. Which is why star rating appears to be just one of many factors customers take into consideration when browsing places to eat online.

Go deeper by reading our analysis for businesses in a different industry.

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Number of reviews

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How much does the number of reviews matter for restaurants?

Key findings include

Restaurants with more than 233 total reviews earn 56% more in annual revenue than the average restaurant

Restaurants with less than 233 total reviews earn 26% less in revenue than the average restaurant

Restaurants with 1,000 reviews or more earn twice as much in revenue than the average restaurant

An above-average number of reviews on Google and Yelp has the largest positive impact on revenue of all review sites

Restaurant owners often stress about their star rating, but as you can see in the section above, a perfect star rating doesn't necessarily equal big increases in revenue.

Meanwhile, our findings suggest that they should focus much more on increasing the number of reviews than almost anything else.

Restaurants in our analysis averaged 234 reviews on review sites. This is much higher than the 83 average across all businesses, which emphasizes just how important the number of reviews is for restaurants on review sites.

We analyzed the revenue of businesses whose review counts fall above and below that average 234 review threshold.

Restaurants with more than the average 234 reviews earn 56% more in annual revenue than businesses with review counts below the average.

Restaurants with less than the average number, on the other hand, average 26% less.

Because restaurants average such a large number of reviews, we decided to take a much deeper look at the numbers.

Here we see an even more distinct relationship between the number of reviews and an increase in average revenue.

Restaurants start to earn near average revenue amounts as they come closer to the 233 review count range. Average revenue then quickly begins to climb with the total number of reviews.

Restaurants in the 233 to 500 review count range earn 40% over baseline, and when you get to restaurants with 1,000 or more reviews, average revenue is more than double that of the average restaurant.

This is strong evidence suggesting that when a customer searches for a nearby restaurant on online review sites, a large number of reviews may outweigh most other factors.

Once again, Google is the most important when we look at individual review sites. Restaurants with more than the average number of reviews on Google average 18% more than baseline, while those with a below-average number average 32% less.

Local restaurants should still focus on getting as many reviews on as many sites as possible. Even if some of those are negative reviews (which isn't necessarily a bad thing, as we'll explain later in this report), there's little question that customers put more value in a higher number of reviews than they do in a 5-star rating.

Go deeper by reading our analysis for businesses in a different industry.

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Fresh vs stale reviews

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Fresh reviews are crucial for restaurants

Key findings include

The average number of fresh reviews (posted within the past 90 days) per restaurant is 22.8

Restaurants with more than 23 fresh reviews earn 52% more than the average restaurant

Restaurants with a below-average number of fresh reviews earn 26% than the average restaurant

Restaurants with 50 or more fresh reviews earn 81% more in annual revenue than average restaurant

The number of reviews a restaurant has on review sites is clearly important, but how important is the "freshness" of those reviews?

The average total number of fresh reviews per restaurant in our analysis was 23.8. (definied as reviews posted within the past 90 dyas).

To analyze the impact of fresh reveiws on restaurants, we first looked at revenue for restaurants that received more or fewer than 23 reviews in the past 90 days, or if they'd received no new reviews at all.

As you can see, the number of fresh reviews a restaurant receives is extremely important. Whether a restaurant has zero fresh reviews or 1 to 23 fresh reviews makes no real difference, as they both earn over 25% less than the typical restaurant.

Getting more than the average number of new reviews, on the other hand, correlates with a 52% increase in revenue.

Our hypothesis is that consumers put a premium on recent reviews and are more likely to spend money at businesses with more fresh customer feedback.

Breaking this down even further we can see the importance of fresh reviews in even more detail. As you can see, just a handful of fresh reviews aren't quite enough for restaurants, as those with 1 to 10 fresh reviews earn less than those with no new reviews.

But, things change quickly as restaurants start to bring in more fresh reviews, and by the time you get to restaurants who have 75 or more fresh reviews, annual revenue is 83% more than average.

Put another way, 25 new reviews per month correlates with an extra $342,000 each year for local restaurants.

The takeaway is that local restaurants particularly benefit more from a constant flow of legitimate reviews than a perfect star rating. And, a large number of recent reviews clearly hold more weight than glowing reviews from a year ago.

Go deeper by reading our analysis for businesses in a different industry.

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Impact of negative reviews

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Customers expect to see negative reviews of restaurants

Key findings include

20% of the reviews the average restaurant receives are negative

Restaurants whose total number of reviews are 15-20% negative earn 24% more in annual revenue than businesses whose reviews are 5-10% negative

Restaurants whose total number of reviews are 0-5% negative earn 42% less than the average restaurant

Restaurants whose total number of reviews are 25-35% negative still earn more than the average restaurant

It's clearly important to get a steady stream of fresh reviews, but how important is the mix of positive vs. negative reviews? Let's find out.

On average, 20% of reviews posted on a given restaurant in our analysis were negative, which matches the average negative review rate across all industries.

So are restaurants more or less sensitive to a large number of negative reviews? Let's take a look at revenue at restaurants based on what percentage of their reviews are negative.

These findings show that while quantity of reviews is important, when it comes to quality it's all about authenticity.

Restaurants whose total number of reviews are 15-20% negative average 24% more in annual revenue than restaurants whose reviews are 5-10% negative!

In other words, restaurants with a higher ratio of bad reviews actually make more money, to a point. The optimal ratio of negative reviews is 10-25%.

When customers browse restaurant listings on review sites, they may expect to see a certain amount of bad reviews. A restaurant profile with little to no negative reviews might appear untested or even suspiciously guilty of buying fake reviews.

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

Go deeper by reading our analysis for businesses in a different industry.

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Kindest and harshest states for reviews

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Where in the U.S. are consumers kindest (and harshest) to restaurants in reviews?

Next we analyzed online reviews at a state-by-state level to see which parts of the country are kindest (and harshest) in their reviews of local restaurants.

rank state positive review rate
FL TX NM AZ AK CA NV UT CO OR WA ID HI OK MT WY ND SD NE KS MN IA MO AR LA MS AL GA SC IL WI MI IN OH TN KY NC WV VA PA NY ME VT NH RI CT NJ DE MD MA DC

Montana and Maine come in at the top of the list with average positive review ratios of 83.7%. Southern restaurants are close behind, with Mississippi, Arkansas, Alabama, and Missouri restaurants all averaging positive review ratios in the 83% range as well.

The truth is that Americans in every state are generally favorable in their reviews of local restaurants. Even Maryland, which came in at the bottom of the list, still averaged 76.5% favorable reviews. This suggests that people are more likely to post positive reviews than one might expect.

Go deeper by reading our analysis for businesses in a different industry.

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States best at managing online presence

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Where in the U.S. are restaurants the best at managing their online presence?

Finally, we looked at which states were home to restaurants that were the best at managing their online presence. First we looked at the percentage of restaurants in each state that had claimed at least one review site listing.

rank state claimed at least one listing
FL TX NM AZ AK CA NV UT CO OR WA ID HI OK MT WY ND SD NE KS MN IA MO AR LA MS AL GA SC IL WI MI IN OH TN KY NC WV VA PA NY ME VT NH RI CT NJ DE MD MA DC

89% of Rhode Island restaurants have claimed at least 1 business listing, which is good for the top spot nationwide. Massachusetts, Connecticut, and New Jersey all tied for second at 86% of restaurants with at least one review site claimed.

On the other end of the spectrum, over 30% of restaurants in Idaho, Arkansas, Alabama, Mississippi, Wyoming, West Virginia, Kansas, and Kentucky haven't claimed their listing on any review sites.

rank state responded to at least one review
FL TX NM AZ AK CA NV UT CO OR WA ID HI OK MT WY ND SD NE KS MN IA MO AR LA MS AL GA SC IL WI MI IN OH TN KY NC WV VA PA NY ME VT NH RI CT NJ DE MD MA DC

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

Nevada restaurants are the most engaged with their reviewers, averaging a response rate of 6.1% per restaurant.

North Dakota restaurants come in at the bottom of the list, with restaurants on average responding to only 1.4% of reviews.

Go deeper by reading our analysis for businesses in a different industry.

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Conclusion

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Conclusion

Online reviews are a proxy for word of mouth in the digital age. Local restaurants that recognize and respond to how consumers use the internet to find, evaluate, and choose where to spend perform better financially than those that don't.

Specifically, local restaurants show the best revenue performance when they:

  • Claim all their free business listings on relevant review sites
  • Are highly responsive to customer feedback posted on review sites
  • Get and maintain a star rating between 3.5 and 4.5 on key review sites
  • Receive a steady flow of authentic reviews from real customers
  • Have an authentic review profile, comprised of about 15-30% negative reviews

Go deeper by reading our analysis for businesses in a different industry.

Read More

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