Yelp Reviews: A Thorn In The Side Of Black Business Owners
- Highly rated businesses in majority-Black neighborhoods have slower revenue growth amounting to $1.3B in revenue loss each year
- Businesses in majority-Black neighborhoods receive lower Yelp ratings and fewer reviews
When rating a business on Yelp (YELP +2.62 percent), do you reflect on your experience with the product, service, or something else? A new report reveals that your unconscious bias may be getting in the way of giving an honest review. Businesses in majority-Black neighborhoods receive lower Yelp ratings and fewer reviews. Now the stigma on businesses and homes in Black neighborhoods has a dollar value attached.
Why This Matters: According to the Brookings Institution, highly rated businesses in majority-Black neighborhoods experience slower revenue growth than highly rated businesses in similar neighborhoods. It suggests a 0.2 percent gap between businesses in both neighborhoods, amounting to $1.3 billion in revenue loss each year. This gap jumps to $3.9 billion when comparing highly-rated businesses in both neighborhoods.
Businesses in majority-Black neighborhoods experience a 0.2 percent revenue gap.
The consequence is that poorly-rated establishments grow slowly. More reviews mean faster growth and businesses with at least 50 reviews grew 9.8 percent over the same period. Additionally, four to five-star reviews on Yelp resulted in an average growth rate of 8.8 percent from 2016-2019.
Likewise, homes in majority-Black neighborhoods are devalued. According to Next City, they’re worth $48,000 less than homes in similar neighborhoods. There are 3.2 million owner-occupied homes worth an estimated $609 billion, but worth $156 billion more if not for their devaluation.
Former banker Erica King said, “There was no stigma on shopping in a Black neighborhood. Somehow that changed.” She cited the lack of access to capital for cosmetic improvements and adequate staffing; lack of access to home and commercial loans and the misconception that those businesses are less capable of performing, as reasons behind the change.
Situational Awareness: A distorted bias view of majority-Black neighborhoods devalues businesses and homes while increasing the wealth gap. We started from the bottom and unfortunately, we’re still here. The next time you patronize a business in a majority Black neighborhood, consider leaving an honest Yelp review worthy of their value, blood, sweat, and tears. A thorn in the side of Black business owners when it comes to Yelp reviews is a burden they don’t need to carry.