Since day one, Yelp has been dedicated to providing consumers salient information to help them choose the businesses that are right for them. A new study co-authored by Michael Luca of Harvard Business School and Weijia (Daisy) Dai of Lehigh University finds that posting restaurant hygiene scores on Yelp leads to a decrease in purchase intentions for restaurants with low scores. Additionally, the restaurants that received an alert had a lower probability of getting a second alert, suggesting that the actual or perceived impact of losing customers based on the alert caused restaurants to improve their hygiene standards, benefiting their customers and restaurant-goers more generally.
For this paper, “Digitizing Disclosure: The Case of Restaurant Hygiene Scores”, the authors looked at how consumers respond to hygiene scores and hygiene alerts on Yelp pages for restaurants in San Francisco. As a part of our LIVES program (Local Inspector Value Entry Specification), in 2013, Yelp partnered with the San Francisco Department of Public Health to begin displaying hygiene scores on the Yelp pages of restaurants in San Francisco. In 2015, Yelp began displaying hygiene alerts on the Yelp pages of restaurants in San Francisco that received “poor” scores from the SFDPH, a result of citations for several “high risk” violations. These alerts impact about 5% of restaurants in the city.
The main findings from the study are:
- Posting restaurant hygiene scores on Yelp leads to a 12% decrease in purchase intentions for restaurants with poor scores (as characterized by the City) relative to those with higher scores
- Posting a hygiene alert on Yelp pages of restaurants that received a “poor” score from the City results in a further 9% decrease in purchase intentions
- Restaurants that received an alert had a lower probability of getting a second alert. We surmise that the actual or perceived impact of losing customers based on the alert caused restaurants to improve their hygiene standards, benefitting their business and consumers.
Earlier studies around hygiene score disclosure (Jin and Leslie, 2003) took place before online platforms like Yelp existed. These platforms allow researchers to measure first response to disclosure at a more granular level. Online platforms can help supplement traditional disclosure policies in a few ways, allowing policymakers to: deliver information when consumers are making a spending decision; reduce the cost of disclosure by displaying scores online; and more directly and immediately measure response to disclosure.
With the rise of online platforms like Yelp, there are more opportunities to present useful information to consumers when they are at the point of making a spending decision. Displaying hygiene information on business pages is just one more way Yelp can provide a better experience for consumers.