Owning a restaurant means being at the mercy of your clientele – their opinions drive your reputation, and your reputation drives sales. With review websites such as Yelp and Google Reviews emerging as major players in the customer review industry, maintaining an upstanding reputation has become a task unto itself. Yet, it's still an extremely important one.
There's an old adage that most restaurants fail within their first year of operation. While studies have largely disproved this theory – it turns out restaurant turnover rates align with regular business failure trends – owning a restaurant or service business means having to account for how you are perceived by your customers. This goes beyond standard marketing. Restaurants and service-based businesses differ from other types of business because of their direct connection to the consumer. Market forces don't just drive behavior; things like ambiance, decor or how a person's day is going can directly affect a restaurant review. No matter what your overall Yelp or Google Reviews score is, other customers will likely trust it.
"It's human nature," said David Rekhson, founder of DineAmic Restaurant Group in Chicago, "you probably want to see what other people are saying about something that will give it an indication of what it'll be."
Rekhson's ideas aren't far off. In a digital age where smartphones mean instant access to reviews and information about restaurants and businesses, customers can get a feel for a place without even walking through the door. According to BrightLocal's 2017 Consumer Review Survey, 97 percent of customers read online reviews for local businesses, with 85 percent trusting online reviews as much as personal recommendations. Online reviews matter. If you're a business owner who isn't managing online reviews or hasn't even checked to see if your website is listed, you are missing out on a major avenue to direct customers to your business.
How reviews affect business
While customers trust online reviews, studies have proven that reviews can directly affect a restaurant's success. In 2016, Michael Luca, a professor at the Harvard Business School, updated his study on how Yelp reviews affect a business. Yelp has a five-star rating system, with the opportunity for customers to provide half stars and leave comments about their experience. Luca found that a one-star increase in a Yelp rating resulted in a 5- to 9-percent increase in revenue.
People not only trust reviews, but reviews have a direct, financial impact on a restaurant or service-based business. A survey from the small business organization Manta found that 86 percent of respondents said that positive online reviews led to an increase in sales. These findings align with individual business owners as well.
"We have a good amount of people who come in and tell us they read the reviews and came to us because of them," said Maika Taylor, owner of Beauty Zone in Park City, Utah.
The value of reviews extends beyond service-based or restaurant-type businesses. Brittnee Platte is the business manager of Escapedom, an escape room in Los Angeles, and said that her company has benefited from reviews on sites such as Yelp and TripAdvisor.
"Ten to 20 percent of our business comes from Yelp," Platte said in an email. "Customers who are interested in escape rooms in their area are definitely [going to] look at reviews … I don't think reviews mean as much to bigger businesses. They matter much more for newer or smaller businesses."
This aligns with Luca's findings, as the bump in revenue doesn't apply to chain restaurants. Instead, it only applied to "independent restaurants." As a small business owner, handling reviews – especially the negative ones – is an extremely important part of maintaining a high rating and a good reputation.
Ken McGarrie, the director of operations of DineAmic Group, oversees review management for the nine different restaurants that are part of DineAmic. McGarrie emphasized that a restaurant or small business owner should approach reviews with a positive outlook.
"As long as people are reaching out, either positively or negatively, it's still a passion," he said. "They have strong opinions, and those opinions have value. The biggest fear is not in a positive or negative review, it's no review."
With this outlook, McGarrie and Rekhson have incorporated review management into each of the group's nine locations. This not only promotes the different brands but allows for discussion about how to improve.
"We would always welcome the discourse in whatever form, because in doing so, it allows us the ability to make those improvements," McGarrie said.
How to manage online reviews
It's important to be aware of online reviews, but there are certain steps you can take to manage them. In addition to approaching each review with a genuine, positive outlook, remember that, as a business owner, the best way to better your business is to take criticism constructively and work to understand other points of view on your business.
"Listening is kind of the reason that a lot of people end up writing into us," Tyler Kaune, guest relations director for LM Restaurants, said. "I'm able to actually listen to them and hear what they're actually complaining about. I almost always invite people back and send them a gift card and a handwritten note ... I ask them to reach out to me either by phone or email after their next experience and tell me about it."
Reach out to reviewers
The best thing you can do as a business owner is to reach out to reviewers, regardless of whether the review is positive or negative. This will allow you to start a discussion about your business. It also presents your business as one that is actively engaged – people love having their voices heard. You can enable positive and constructive feedback by establishing an engaged reputation. Rekhson highlighted the importance of these types of practices.
"We monitor everything very closely. We read every review. What we do basically every week when we get together with our management, we'll read reviews in all forms," Rekhson said. "We're looking to make people happy, and the more we can gain feedback from them, the better chance we have of doing it."
One way DineAmic does this is by messaging reviewers on websites like Yelp. This feature allows business owners to engage with their customers on a more personal level. "The majority of the time, people will respect that we're reaching out truly for the sole fact that we want to figure out where we went wrong and what we can do to improve our business," McGarrie said.
Pay attention to reviews with specific details
The best reviews to try and improve upon are the ones with specific details. Reviews that are clear and specific give you a good launch point to start a discussion and get better feedback. Rekhson said that this strategy is particularly helpful when dealing with negative reviews.
"The real value for us is when people are specific," he said. "You'll hear the tone where it's like, 'Oh, I didn't like this, I didn't like that.' The more people can give us constructive information, the better we can actually use it as a tool to improve."
Dealing with negative reviews
When it comes to handling negative reviews, you should see the challenge as an opportunity to better your business and turn an angry customer into a happy one. Look for reviews that echo specific problems, then ask the customer if he or she would be willing to return to decide if the problem has been fixed. This presents your business as one that is actively engaged, focused on the customer and open to improving. The leaders from DineAmic talked about how handling negative reviews are an opportunity for growth.
"[Reviews] allow us to continue the conversation with our guests outside the four walls of our restaurant," McGarrie said. "Whether that is a positive experience or a challenging one, being able to continue the discourse is always positive and a way for us to continually improve … You reach out with the best of intentions and the ability to truly listen to what they say."
Third-party websites and programs
You can also use third-party review sites or services. Kaune said that his company uses Womply, a service that sends reviews of LM Restaurant's separate locations and brands directly to Kaune's inbox.
"It allows me to respond to them (the reviews) directly from the platform," he said. "We have 22 restaurants that we respond to reviews for. It would just be a huge pain to log into all those things … We respond to all of our reviews. We thank our positive reviews, and on our negative reviews, we ask people to reach out to us via email."
Regardless of how you do it, managing online reviews can directly affect your overall score and thus your reputation and overall sales. Kaune said that LM's ratings have remained steady since the company started monitoring and managing online reviews in October of 2016.
"If you consider [that] every store has a Facebook, Yelp, Google and TripAdvisor [page], we've been able to increase our scores on, I think, like 22 of the sites and we stay even on a lot of the others," he said. "It's very rare that our score decreases."
Bottom line
Online reviews are a vital aspect of restaurant and service-based businesses. When handling negative reviews, approach each one as an opportunity and do your best to meet a customer's expectations. Not everyone can be pleased. Online reviews are a great way to increase your business's online presence while trying to drive sales.