Source:(Bostonia Public House, 2020)
A restaurant’s doors are the wall between you, a consumer, and the food you wish to consume. Without opening them, the quality of the food or restaurant-going experience is a mystery to you. Some are risk takers - going in blind and hoping to strike gold. But the rest of us? We play it safer. We look to bridge that gap of uncertainty. We look to reviews.
The Problem: A Closed-Up Shop
Restaurant outings are what economists label ‘experience goods’ (Nelson, P.1970), as we can’t assess its quality without using, consuming or…well, experiencing it. This is a form of ‘asymmetric information’, an imbalance of information available between the restaurant as producers and, we, the consumers (Arkelof, G.1970). Whether it's the food quality, service or atmosphere - without giving it a go, we’re in the dark on the enjoyment it may provide us. So how do we shed some light? Ultimately, it comes down to sharing opinions.
Word-of-mouth is the go-to for restaurant recommendations, as a trusted word can save you from disappointment. Someone else evaluates the experience; whether the burger was great, or the drinks were to die for – you have more knowledge, mitigating the information asymmetry. But this can be furthered to a review.
The
Solution: Sending Signals
Source:(Pixar Creative Studios, 2007)
A review encompasses the consumer experience - a purposeful evaluation of a restaurant. Natural progression from word-of-mouth into formalised reviews gifts us handy resources to overcome restaurant mystery. But we aren’t the only ones benefitting from the review system.
The mystery similarly impacted the restaurant, blocking them from reaching customers they wish to serve. See from their perspective: knowing your new menu of delicious food, how do you get others to trust you and try it out? Quite simply, you need to spread the word. And a critic review not only lifts the curtain, but provides a stamp of approval, from professional tastes, of the restaurant’s top quality.
This evokes the Signalling Theory (Spence, M.1973), an exploration of how information required to overcome the asymmetry can be conveyed. A good signal helps customers differentiate between their potential enjoyment of restaurant experiences. A critic evaluation provides that for customers, while creating opportunities for high-quality restaurants to convey their food quality. Restaurants are then incentivised to provide their best, so their efforts are displayed in a critic’s review, drawing in the customers they desired, satisfying our stomachs. Truly a win-win!
The Digital Expansion: Evolution… or Devolution?
Source:@abisguideto from TikTok
Until now, we’ve focused on critic reviews - think Anton Ego of Pixar’s Ratatouille. Traditionally, these are published reviews, often with historic roots, including the likes of the Michelin Guide. Verified statuses helped establish systems of trustworthy signals - successfully helping restaurants and people alike in overcoming asymmetric information (Spence, M.1973).
However, technological revolution meant the likes of TikTok and Youtube have become the new arbiters of trends and taste. A global network grants a channel to the everyday person. Would you rather hear from professional critics, or someone more relatable? Those who answered the latter seem to be the majority.
During a culture-wide movement away from traditional media, critic reviews lost prevalence to consumer reviews (Zhang, Z.et al.2010), with ‘E-word-of-mouth’ now easily accessible. But relatability… comes at a cost.
The Danger:
Blurring the Lines
Source:(Kotinsky, 2022)
Picture this: scrolling TikTok, you find an influencer’s new restaurant experience. They gave a glowing review, and they’re not alone. It’s gone viral - and it’s looking too good to be true. Unfortunately, you realised it was. Your visit saw poor quality, certainly undermining strong reviews. Why did this happen? Economists have a few possibilities.
One potential case is Moral Hazard, where one party takes greater risks after no longer bearing the full consequences of their actions (Marshall, J.M.1976). To put it into perspective: 2020 saw YouTuber Mr Beast launch Mr Beast Burgers, with expansion partner Virtual Dining Concept (VDC), as a virtual burger chain using ghost kitchens. Following initial social media approval, VDC’s quick expansion saw a drastic quality drop - using the insurance of initial positive online reception, as well as the YouTuber’s brand appeal, to justify expansion. Corroborated by Mr Beast’s lawsuit against VDC (2023) - we can see the cracks in social media’s prevalence as a review system. VDC chose to make riskier decisions for their own benefit (increased revenue with expansion), sacrificing quality, using positive social media reception as insurance to bear lesser consequences. Social media and influencer popularity provided an outlet for exploitation, displaying shifts from traditional review systems.
Another case is one we all share: false information online. The internet remains distinct due to lacking verification, granting that air of anonymity. So, reviews have been used for things outside of its original purpose - from reviewing-bombing to undisclosed influencer partnerships. Naturally, beneficial partnerships would likely skew anyone’s review positively - but this encapsulates the distance from a review’s trustworthy signal, lacking truthful evaluation of a restaurant experience. This is indicative of asymmetric information…and we’ve been here before. Here, through the reintroduction of asymmetric information comes ‘adverse selection’. Within context, this would see us return to the dark on the enjoyment a restaurant would provide us, as reviews no longer act as a true signal of quality to differentiate between restaurants (Akerlof, G.1970) – potentially even seeing an amass of lower-quality restaurants, as higher-quality restaurants see less footfall.
The Future: What can be done?
Frankly, reviews online cannot fulfil its original purpose. A signal once provided by critics is blurred with promotion. This space, now riddled with misinformation, instead worsens that restaurant mystery. So, what can you do? Honestly… not much. I could tell you the usual: keep an eye out for ads, cross reference reviews, dig deep for verified sources – and they remain true. But ultimately, my best advice is to go with your gut…literally.
You know you best, so if you stay vigilant, you can’t go too wrong!
References List:
Akerlof, G. (1970) “The Market for Lemons: Quality Uncertainty and the Market Mechanisms”, Quarterly Journal of Economics, 84(3): 488-500
Bostonia Public House (2020) ‘Exterior of Bostonia Public House restaurant’, Boston.com. Available at: https://www.boston.com/food/restaurants/2020/06/08/boston-restaurants-open-outdoor-dining-phase-2/
Marshall, J. M. (1976) “Moral Hazard”, The American Economic Review. 66 (5), 880–890.
(2023) “MrBeast sues to shut down the ghost kitchen-produced MrBeast Burger”, CNN Business, 2 August. Available at https://edition.cnn.com/2023/08/02/business/mrbeast-burger-lawsuit/index.html
Nelson, P. (1970) “Information and Consumer Behaviour”, Journal of Political Economy, 78(2), 311–32
Kotinsky, D. (2022) ‘Global YouTube Star MrBeast Launches First Physical MrBeast Burger Restaurant At American Dream’, Getty Images. Available at: https://www.gettyimages.co.uk/detail/news-photo/nolan-hansen-sapnap-mrbeast-karl-jacobs-and-punz-attend-as-news-photo/1420812677?adppopup=true
Pixar. (2007) “Anton Ego type-writing scene from Ratatouille” [Film still]. Walt Disney Studios.
Spence, M. (1973) “Job Market Signalling”, Quarterly Journal of Economics, 87(3): 355-374.
Zhang, Z. et al. (2010) “The impact of e-word-of-mouth on the online
popularity of restaurants: A comparison of consumer reviews and editor reviews”, International journal of hospitality management. [Online] 29 (4), 694–700.
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