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Can Consumer-Posted Photos Serve as a Leading Indicator of Restaurant Survival? Evidence from Yelp

Author

Listed:
  • Mengxia Zhang

    (Marketing, Western University Ivey Business School, London, Ontario N6A 3K7, Canada)

  • Lan Luo

    (Marketing, University of Southern California, Los Angeles, California 90089)

Abstract

Despite the substantial economic impact of the restaurant industry, large-scale empirical research on restaurant survival has been sparse. We investigate whether consumer-posted photos can serve as a leading indicator of restaurant survival above and beyond reviews, firm characteristics, competitive landscape, and macroconditions. We employ machine learning techniques to extract features from 755,758 photos and 1,121,069 reviews posted on Yelp between 2004 and 2015 for 17,719 U.S. restaurants. We also collect data on restaurant characteristics (e.g., cuisine type, price level) and competitive landscape as well as entry and exit (if applicable) time from each restaurant’s Yelp/Facebook page, own website, or Google search engine. Using a predictive XGBoost algorithm, we find that consumer-posted photos are strong predictors of restaurant survival. Interestingly, the informativeness of photos (e.g., the proportion of food photos) relates more to restaurant survival than do photographic attributes (e.g., composition, brightness). Additionally, photos carry more predictive power for independent, young or mid-aged, and medium-priced restaurants. Assuming that restaurant owners possess no knowledge about future photos and reviews, photos can predict restaurant survival for up to three years, whereas reviews are only predictive for one year. We further employ causal forests to facilitate the interpretation of our predictive results. Among photo content variables, the proportion of food photos has the largest positive association with restaurant survival, followed by proportions of outside and interior photos. Among others, the proportion of photos with helpful votes also positively relates to restaurant survival.

Suggested Citation

  • Mengxia Zhang & Lan Luo, 2023. "Can Consumer-Posted Photos Serve as a Leading Indicator of Restaurant Survival? Evidence from Yelp," Management Science, INFORMS, vol. 69(1), pages 25-50, January.
    • Handle: RePEc:inm:ormnsc:v:69:y:2023:i:1:p:25-50
    DOI: 10.1287/mnsc.2022.4359
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    8. Kübler, Raoul V. & Lobschat, Lara & Welke, Lina & van der Meij, Hugo, 2024. "The effect of review images on review helpfulness: A contingency approach," Journal of Retailing, Elsevier, vol. 100(1), pages 5-23.

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