Consumer Reviews and Market Entry: Do consumer reviews contain information that can guide market entry?

On Tuesday February 22, from 12:15 – 13:30 pm, Sergey Turlo (Goethe University, Frankfurt) will be presenting a joint project with Keyvan Dehmamy (Goethe University Frankfurt). Title and abstract of the talk can be found at the bottom of this email.

The talk will be held online using the Big-Blue-Button platform with the following access-information:

Link: https://bbb.uni-frankfurt.de/b/key-iz5-6zr-kp9

Key: 991306

Consumer Reviews and Market Entry: Do consumer reviews contain information that can guide market entry?

Sergey Turlo, Keyvan Dehmamy

The choice of location when entering the foodservice industry, typically characterized by a high firm turnover rate, is accompanied by large setup costs, and has a large impact on the long-term success of the entrant.  In this context, consumer reviews of incumbent restaurants may provide valuable information about the optimal entry location.  In this paper, we explore this issue by studying entry and exit behavior in the restaurant business with consumer reviews from Yelp. Our descriptive results indicate a significant relationship between the survival of new restaurants and the average rating of its competitors at the time of entry. A detailed duration analysis, based on the Cox proportional hazards model, provides further evidence for this relation. In the future, we will investigate the persistence of starting conditions, the role of differentiation strategies, and the value of focusing on specific consumer subgroups for restaurant survival.