User-generated reviews and the financial performance of restaurants

Restaurant-level review data are extracted from TripAdvisor and matched with firm-level data from the financial reports gathere from the Belfirst database of Bureau Van Dijk. The resulting sample contains data on 2,297 Belgian firms over the periode 2007-2018, for which 134,831 reviews are investigated. The author’s regression model of firm-level profitability is estimated against online review characteristics and various financial control variables, including past profitability. This research model and estimation technique address the endogeneity concerns that typically weaken this kind of study.
While comparable studies on hotels document a positive association between review characteristics and profitability, the authors find no relationship between review rating, volume and variability in the profitability of restaurants.

S. Abdullah, P. Van Cauwenberge, H. Vander Bauwhede, P. O’Connor. User-generated reviews and the financial performance of restaurants, International Journal of Contemporary Hospitality Management. DOI: 10.1108/IJCHM-10-2021-1236

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