Local Restaurant Landscape Shifts As Celeb Chef Hotspots, Independents See Reviews Rise
Entrepreneurs are investing in opening businesses throughout the southeast and southwest, buoyed by booming populations and economies,” Yelp data science editor Carl Bialiks
Yelp reviews are pointing to what the local guide’s analyst is calling a “major shift in consumer perceptions” of restaurants as independent eateries and celebrity chef branded hotspots spread beyond cities like New York and Los Angeles.
It will be interesting to see if the #MeToo movement’s exposing of rampant sexual misconduct among star restauranteurs will dim the appeal of famous chefs’ places. But for the most part 2017, Yelp’s Local Economic Outlook points to a trend toward celeb chefs and independently run restaurants that began building five years ago.
The impact of that shift has been felt acutely by QSRs and casual dining.
“Fast-food chain restaurants have seen a notable decrease in average ratings over the last five years, by about one-third of a star, on a scale of 1 to 5 stars — equivalent to a loss of about 16 percent of their average rating,” Yelp’s report notes. “Similarly, fast-casual chain restaurants have experienced a decline in ratings, by about one-tenth of a rating point on average between 2012 and 2017.”
Aside from changing tastes of where to go out and what to review, the shift away from QSRs and casual dining also comes amid the rise of on-demand delivery apps — and it’s worth noting that Yelp sold its food delivery app, Eat24, to rival Grubhub for nearly $300 million in Aug. 2017.
As Bloomin’ Brands, the owner of such casual dining chains as Outback Steakhouse and Carrabba’s Italian Grill, told GeoMarketing last year, on-demand is considered the biggest challenge facing that segment of the food services industry.
Reviews On Review
Restaurants, among other local businesses, have long regarded reviews as a double-edged sword. The last few years have made the phrase “everyone’s a critic” a literal truth thanks to the immediacy of leaving comments across social media.
The role of social media has had an even bigger impact on the way reviews are created, shared, and recorded, as evidenced by the recent rumors of Google possibly selling its Zagat restaurant guide.
Even as Yelp itself has been shifting its business to focus more on the ability to drive transactions between local consumers and shops of all stripes, reviews are a core part of its platform.
“Business owners often wonder if online reviews about their business really matter,” BrightLocal’s Sherry Bonelli wrote on GeoMarketing last year. They do — for a number of reasons. According to BrightLocal, 92 percent of consumers read online reviews. So if that many people are reading online reviews before they select a business, product, or service, then every business owner needs to have a solid strategy for how they can get more online reviews from their customers or clients.”
In its report, Yelp boasts of “142 million rich, local reviews” as of Q3 2017. And as Yelp notes, they can serve as an important guide to what is actually happening to an establishment at the hyperlocal level.
“While chain restaurants across the country encounter increasingly choosy diners, independent fast-food and fast-casual restaurants have seen a continued increase in average ratings, improving by 7 percent in the last five years. Ratings for casual-dining chain restaurants held up better, unchanged on average, though they lagged behind their independent competitors, which gained a quarter of a rating point between 2012 and 2017.
“Historically, chain growth has outpaced the broader restaurant industry growth, but in the past three years we’ve actually seen independents and smaller operators outperform chains,” said Dave Henkes, senior Principal at food industry research firm, Technomic. “It’s clear that consumers are voting with their dollars and are rewarding those restaurants that provide a resonating point of difference in the overall experience.”
Speaking of the shift in dining that is occurring beyond the major cities, Yelp’s report notes that in Q4 2017, Charleston, S.C., topped its list in terms of overall business growth.
Yelp measures local-business success by the rate of change of the business population in each city’s metro area in the fourth quarter of 2017. Cities where openings greatly outnumber closures are ones where business owners have spotted opportunity and found success.
“In recent years, the Charleston region’s economy has been growing much faster than the national average,” Yelp’s report states. “Construction, driven by rapid population growth and a housing boom, is a main driver of this growth. Meanwhile, San Jose, Calif., had the lowest rate of change in number of local businesses, reflecting the tough business climate — sky-high rents and resulting pressure on wages — in and around Silicon Valley.”