Predicting restaurant survival: A picture can provide the answer
New research finds photos can predict survival better than reviews
Institute for Operations Research and the Management Sciences
New INFORMS journal Management Science Study Key Takeaways:
- We find that photos can help forecast restaurant survival above and beyond reviews and other known factors.
- The informativeness of photos seems to play a bigger role than the aesthetics of photos.
- Photo content (e.g., food, outside, interior) and helpful votes on the photos are both positively related to restaurant survival.
- Findings regarding consumer-posted photos can provide foresight to managers and investors in terms of survival likelihood for up to three years.
BALTIMORE, MD, July 6, 2022 – A picture is worth a thousand… to restaurant owners and investors it could be worth their livelihood. New research in the INFORMS journal Management Science finds that consumer-posted photos can serve as a strong leading indicator of restaurant survival above and beyond reviews, company, competition and macro factors.
“The informativeness of photos we find to be more valuable than the aesthetics of photos, and photo content (e.g., food, outside, interior) and helpful votes on the photos are both positively related to restaurant survival,” says Mengxia Zhang of Western University.
The study, “Can Consumer-Posted Photos Serve as a Leading Indicator of Restaurant Survival? Evidence from Yelp,” conducted by Zhang and Lan Luo of the University of Southern California, used analytics tools to examine features from more than 755,000 photos and more than 1.1 million reviews posted on Yelp between 2004 and 2015 for nearly 18,000 U.S. restaurants.
“Our models can significantly increase survival prediction accuracy for better-informed capital investment/lease decisions on restaurants. Online platforms can also utilize our method for premium business intelligence. Furthermore, our findings regarding consumer-posted photos can provide foresight to managers and investors in terms of survival likelihood for up to three years,” says Luo, an associate professor of marketing at the Marshall School of Business at USC.
About INFORMS and Management Science
Management Science is a premier peer-reviewed scholarly journal focused on research using quantitative approaches to study all aspects of management in companies and organizations. It is published by INFORMS, the leading international association for operations research and analytics professionals. More information is available at www.informs.org or @informs.
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