Should We Pass A Law To Stop Yelp From Harming Chain Restaurants?

from the the-internet-enables-niches dept

We keep hearing stories about how “the internet is killing music” or “the internet is killing newspapers,” which inevitably seem to suggest that “something must be done,” and often that “something” involves the government getting involved. Of course, if you look at the details, you realize that the internet isn’t killing music or journalism at all. In many ways it’s just changing both and enabling new means of creation, distribution, promotion and sales. But, people like to interpret the struggles of one part of an industry, and pretend that represents the wider industry — and then insist something must be done.

But, of course, one part of an industry becoming obsolete due to technology and market changes is the natural path of disruption, and not a cause for concern. Just to highlight this point, it’s worth pointing to a Washington Post article with the title, How Yelp is killing chain restaurants. It refers to a study (pdf) that looked into the impact of Yelp reviews on restaurants. Among its many findings was that the market share of big chain restaurants appears to have declined.

When you think about it, this is not surprising at all. Part of the reason why chains are successful is because they offer familiarity, which allows potential diners to trust that the food they’ll get at them will be of a certain quality. If you’re unsure where to go, and want to minimize the risk, you are more likely to just hit up a big brand you’re familiar with. But Yelp changes the equation. Now you can get an approximation of trust in a restaurant you’ve never heard of. It’s not perfect, but it certainly decreases the risk, and thus increases the likelihood that you’ll try a smaller alternative. At the same time, there’s little that Yelp is likely to do to increase the attractiveness of a chain restaurant.

Of course, there’s a wider parallel to other industries as well. We’ve heard some fears that the internet creates too many “winner takes all” situations, with a single dominant player, but the reality often seems quite different. It creates the ability to build a multitude of niches, because information decreases the risk of trying someone new or different. So rather than relying on a major record label to spoon-feed you the next big hit, you can find more niche music that you like. Rather than relying on the mainstream press for your news coverage, you can seek out alternative viewpoints. The rise of the internet and the ability to share information means that things are less likely to consolidate into single large players, because the reasons for such large entities often is undermined by more widespread information.

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Companies: yelp

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Comments on “Should We Pass A Law To Stop Yelp From Harming Chain Restaurants?”

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Killercool (profile) says:

Re: who's fault?

It’s like this…
Entrepreneur A’s business has always been subpar. But they never had to deal with any publicity stronger than pure word-of-mouth. They could depend on a small, but significant, stream of first-time customers. Most of these will never return. With a popular service like Yelp, their revenue from first-timers will shrink. That can be directly attributed to Yelp(‘s users?) convincing people they (the restaurant) ain’t worth your time. Of course, the bad reviews were directly caused by bad service, but if Yelp didn’t exist, the customers wouldn’t have anywhere public to complain. So it’s Yelp’s fault.
No, really. It is. Didn’t you read my post? It’s logical. If it’s logical, it must be correct.
Plus, you’re being very mean, trying to suggest that I should spend money trying to please my customers, when ANYONE can tell it’s those dirty pir- *ahem* yuppies making my business fail.

Glenn t says:

Yelp filter


We have recently implemented a system to outsmart yelp from hiding our filtered reviews:

Step 1- first of all, if you?re advertising with yelp, we suggest that you stop doing so and shift that money to optimize your own web site instead

Step 2- Have a graphic designer make a yelp badge that is placed on your web site. It should say ?we have ?? filtered and unfiltered reviews on yelp?.?

Step 3- when a visitor clicks on the badge, it will go to another page ON YOUR OWN WEB SITE (instead of going to yelp?s. (why help them get traffic and rank higher anyways)??

Step 4- On this page have your graphic designer get a screen capture (picture) of all your filtered and unfiltered reviews and have them pasted together onto one page.

Now, all your reviews (filtered or not) will be visible to all your web site visitors.?

5- put a note on the top that says, ?for your convenience we have placed all our filtered and unfiltered reviews on one page to see. If you?d like to go to our live yelp page, click here ?????

Make the whole page clickable to your live yelp page ?so no-one will think you?re trying to hide something or trying to be dishonest?

Advantages of doing this:?

1- Your visitors will stay on your web site instead of being directed to yelp?s

2- Your ?visitor can?t click on your competitors?

3- No more being a slave to yelp?s algorithm

4- Yelp would not benefit from getting traffic from you and higher rankings on google?

5- This project cost us less than $150 to implement?

Just be sure to shift that $300 per month on yelp advertising and put it into KEYWORDS that people will search for.?

Please pass this along?

FHuminski (profile) says:

The dark side of this, however, is that competitors can and do post bad reviews in order to drive customers away from any given restaurant. Plus, Yelp is allegedly trying to extort money from business owners in exchange for deleting (or at least not highlighting) negative reviews (see – yeah, it’s TechCrunch, so take it with a shaker of salt). Another venue that is having problems with Yelp burying positive reviews is the Pittsburgh Scarehouse (which I learned about from here )

I’m fairly sure that legislation is not the answer, but one wishes that there was some way for people to be held accountable for their actions…

fogbugzd (profile) says:

>>I’m fairly sure that legislation is not the answer, but one wishes that there was some way for people to be held accountable for their actions…

How very, very un-American of you! Do you realize that that if we started holding everyone accountable every Wall Street banker would be unemployed and Washington DC would have to be vacated? Can you just imagine if corporate executives had bonuses that were actually based on performance? The horror!

MrWilson says:

Why don’t these companies just propose a law that states that any company that existed before the world wide web can get whatever it wants if dealing with the internet? Isn’t that what these legacy companies really want? They should just come out and admit it so we can mock them more directly for their failure to realize that times change and they need to adapt.

gorehound (profile) says:

I am not using YELP so never looked there.I will say that the Internet is hurting many local economies as the shoppers are moving to buy online and that is hurting retail small stores.I lost my job of 18 years in July.There are practically no retail jobs in Portland, ME.Really sucks for me at 55 years old.And it sucks for all other folks who did work in Retail Stores or who did try and build a small business.And it does suck for the decreased tax revenues of local government.
The Internet is not cool when it is a giant virtual Mall.I like the older Internet much better and am not liking these times one bit.
And for those who did go to college for 4 years in Computers I have seen a lot of $10 – $12 per hour jobs so I bet it would take many years to pay off an estimated $30 grand to go to a college.Think I will attempt this when I turn 56 in just a few months so I can work another decade or so and then retire with a nice big bill to pay off with my SSI Checks ?
I am so screwed and so are a lot of you who went thru a tech school and are now hitting the pavement trying to find a decent job.

btr1701 (profile) says:

Re: Re:

> I lost my job of 18 years in July. There are
> practically no retail jobs in Portland, ME.
> Really sucks for me at 55 years old.And it
> sucks for all other folks who did work in
> Retail Stores or who did try and build a small
> business.And it does suck for the decreased
> tax revenues of local government.

I sympathize with you and am truly sorry you lost your job, but you’re essentially equivalent to a blacksmith at the turn of the century. Once the Model T came along, it sucked to be a horseshoe maker, too, but we didn’t outlaw cars or hobble the new automobile industry to protect the jobs of the blacksmiths. We didn’t pass laws protecting the steamship industry when planes were invented.

New technologies disrupt old ways of doing things. It’s the way of the world.

S (user link) says:

Re: Re:

This is pointless complaining.

The stores which are more appealing to use than sitting at home will thrive; the internet will kill the rest.

There is something patently unwelcoming about going into a shop and knowing, just knowing, that the kid at the counter resents one’s existence, or that the owner is only going to “let” one browse for so long before trying to rush one out door.

It’s annoying and demeaning to deal with huge passive-aggressive signs saying, “Smile! You’re on camera!” or stores which insist every customer check their bags at the counter.

It’s beyond annoying to have obtrusive or pushy sales people shoving crap down one’s throat; there’s no adblock equivalent for in-store salesmen.

The places I know of which have remained in business are unsurprising: they’re practical, efficient, competitively priced, and treat their customers like honoured guests, instead of annoying sources of cash.

Just remember, the second I think my money is more important than my patronage, I’m going to go online and buy whatever-it-is for 4% cheaper (shipping included) rather than deal with the kind of entitled fuckup who thinks that just because they own the store that they also own their customers.

napacab (profile) says:

Feeling sorry for the poor big chains

Yes there should be a law so the big chains can continue marginal quality and services. When customer complaints could be isolated they did well…wow it’s really a shame that Yelp makes it possible to share experience bad or good. The solution seems obvious; improve quality, improve service. And if they are too dumb to understand that very fundamental idea then good riddance.

BdgBill (profile) says:

You hit the nail right on the head…

I travel 200 days a year for work. When i first started, I used to seek out small independent restaurants. For every great place I stumbled into, I had about 3 bad or overpriced meals. Eventaully I just decided that a guaranteed mediocre meal at Applebee’s or Chili’s was better than the chance of another really bad meal.

Yelp changed all that. I have tried places that I never would have considered if I had just been driving by. My Yelp experiences have been overwhelmingly positive. I have eaten Thai food in just about every big city in America but the best Tom Yum soup i ever had was at a tiny little place in the unlikely town of Banning California.

So….Yelp has certainly shifted my dollars away from chains and toward local establishments but it has nothing to do with negative reviews of the chains. My opinion of the chain places is based on the many meals I have eaten there.

P3T3R5ON (profile) says:

number of things

The economy is killing resteraunts, chain and specialized. People who used to eat at fancy places are now taking it down a notch to eating at TGIF or Applebee’s. Those who used to eat out are now packing lunches and frequenting their favorite dinner’s not nearly as much.

Yes YELP is helping people decided on what is a good place to eat when people are unfamiliar with it. It is certainly not killing resteraunts… that is unless the establishment wishes to be killed and does poorly, continuously, then people will give bad reviews and business will drop and then no resteraunt.

Good service and food will make a resteraunt, the opposite will not… before yelp, urbanspoon or whatever other tool we all use, resteraunts would die because of bad service and word of mouth.

Anonymous Coward says:

btw, the idea that **yelp** affects the business of **chain restaurants** shows what an incredibly laughable buffoon you and the rest of your internet-obsessed friends are, wow.

just wow.

Cuz y’know, the people that go to chain restaurants are a picky bunch and definitely consult Yelp before taking that exit off the highway or making the choice between Ruby Tuesday or Red Robin.


Killercool (profile) says:

Re: Re:

Yes, because we all know that people who eat at chain restaurants and people who eat at standalone restaurants are TWO COMPLETELY DIFFERENT GROUPS. Overlap does not exist. No one on the planet has ever decided to eat cheaply today, because money is a little tight, and it would ruin their week if they gambled $35 on a joint, and it sucked. Especially since that $35 can no longer be spent eating chain food for a few days, as opposed to a single meal.

Anonymous Coward says:


I have a group of (now former) coworkers that used to eat at Del Taco every Tuesday as our team lunch day. Other days people would bring lunches or eat randomly or whatever. Don’t know why it was Del, just a bunch of young guys, not too picky and it was a “tradition” before most of us worked there. Somewhere along the line we started Yelping and trying a new local place every week and that meant one Del location was out 6-10 customers every Tuesday. Not a huge dent in their business I’m sure, and my story is an anecdote, but that actually happened and it’s no better informed than your (what passed for an) opinion. Additionally, the article linked provides a link to the research paper studying the effect of Yelp on chain restaurants so you can feel free to read it and create some sort of actual counter-argument.

Anonymous Coward says:

Clearly the government MUST get involved.

I mean, Darden restaurants is Too Big to Fail. Just think of all the Seafood Chefs that will be out of work when Red Lobster falls to small, locally owned and locally sourced restaurants owned by money grubbing entrepreneurs run them out of business with their Yelp cult members.

I propose filtering done by the Ministry of Truth, who should have an unlimited budget and be lead by the Legacy Industry Czar. Just because the world changes, why should an industry change to meet the changing landscape?

Steve R. (profile) says:

There Ought to be A Law

While each article may deal with a specific issue, I think that Mike may have overlooked a bigger issue -> consumer activism.

Companies routinely form “associations”, hire lobbyists, and employee public relation firms to promote a glowing images and to entice consumers to buy.

The problem of course, is that when the consumer gets ripped-off, how do they fight back? The internet provides one such opportunity.

Unfortunately, as noted by various TechDirt posts, companies seek to squash bad publicity. Companies even seem to believe that it would be appropriate for them to “buy” such laws from our politicians.

Given that mentality, so much for the free-market and freedom of speech.

DannyB (profile) says:

Consumer Reports should be outlawed!

Consumer Reports has the ability to print a bad review about a product that causes people to stop buying it.

This is bad for two reasons — unrelated to the evil Internet.

First I would point out how this is bad for the economy. If people don’t buy that bad product, then they won’t soon be buying another better product to replace it.

In times past vendors of shoddy products could depend on uninformed people buying their product. In fact, an entire business model could be created around selling shoddy products to uninformed people. Consumer Reports undermines this and is thus guilty of Felony Interference With a Business Model.

Anonymous Coward says:

As far as the “winner-take-all” issue, it seems clear that it depends on what business you are in. If you sell something that can also be offered by a competitor in a centralized distant location, then you might be in real trouble. If you sell physical goods that can be sent by mail with ease, AND they are goods that most people can wait 3 days to get, you are in the wrong business. I rarely buy anything from a local business unless I need it fast – the last time I did, it was for a presentation. I needed a remote ASAP – it was $8 on Amazon, and $50 at office depot. I don’t even like Amazon that much, but at those prices, COME ON! That is why I have limited my transactional business model and focus on services that most organizations need locally and also services they need FAST.

A. Lewis says:

They are also destroying small businesses everywhere and some psychos are using the site to make comments about the owners and their whereabouts. It’s sick and is NOT free speech. This site needs to either edit or be taken down. My entire life savings has been taken away b/c of some hate minded locals who make up crap and post it AND demands that I not only post my personal photo and allow them to verify my phone number, but these idiots get to remain anonymous??? WTF?

Jeremy MacDonald (user link) says:


Check this out –! – we found it and it’s fantastic – it will instantly fix your Yelp review stress like it did ours. We got our own reviews site that also ACCEPTS reviews too.
We did it all in a few minutes and never have to care again about Yelp ot any other review sites affecting our business.

Just go to and read the one page there and you’ll understand in a few minutes.

We think it’s fabulous!

Good luck all!

Shadi says:

Have you seen the pictures on Yelp’s listing on Yelp? Just saw a few, pictures of employees you can tell they were hand picked, I don’t think normal good people would want to work for Yelp! There is one picture of this “Yelps Rules” wrote in the sands! This alone shows the mind set of these inhuman people! They believe they have they are ruling our lives! They are aware of destroying lives and they are proud of it! Hoe creepy is that!

People in over seas pull down dictators by putting their lives on the line, why can’t we have an organized demonstration to bring light and attention to this?

Shadi says:

Have you seen the pictures on Yelp’s listing on Yelp? Just saw a few, pictures of employees you can tell they were hand picked, I don’t think normal good people would want to work for Yelp! There is one picture of this “Yelps Rules” wrote in the sands! This alone shows the mind set of these inhuman people! They believe they have they are ruling our lives! They are aware of destroying lives and they are proud of it! Hoe creepy is that!

People in over seas pull down dictators by putting their lives on the line, why can’t we have an organized demonstration to bring light and attention to this?

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