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News  1, Jul 2013

Restaurant review sites come under fire in Australia

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Restaurant reviewsThe restaurant industry in Australia has urged the consumer watchdog to investigate ratings used by restaurant review sites.

One of the most effective marketing is word of mouth marketing. A subset of that includes customer reviews and testimonials. Companies have long leveraged on reviews and testimonials as user generated content to get new users and customers. Sites such as TripAdvisor, RottenTomatoes, or Yelp thrive on reviews, making them leaders in their own verticals.

In Australia, restaurant review sites seems to be getting into trouble. According to the Sunday Morning Herald, the restaurant industry has urged the consumer watchdog to investigate popular review websites which they claim use faulty ratings systems too often abused by customers and competitors.

Startups, corporates, telcos and traditional media all in the food game

Let’s take a look at the various restaurant review sites in Australia. There is Eatability, which has grown since 2003 into a small company with 12 staff. The resturant review site now hosts more than 235,000 restaurant reviews and 37,000 restaurant listings. Back in July 2012, the company was acquired by Optus for A$6 million dollars (approximately US$5.5 million).

It is interesting to also note that in May 2012, SingTel Group acquired Singapore based restaurant review site HungryGoWhere at S$12 million (around US$9.5 million). At the point of HungryGoWhere’s acquisition, it had over 100,000 restaurant reviews and over 15,000 restaurant listings, less than half the numbers of Eatability. Optus is a wholly owned subsidiary of SingTel.

Other than Eatability, there is also Dimmi, a restaurant review and reservation site. Dimmi currently has over 30 staff, and recently raised an undisclosed amount of funding from the venture capital arm of telco giant Telstra. Dimmi claims to have over 2500 restaurant listings with 250,000 reviews, more than double the amount of reviews by its users. It also claims to have seated more than three million diners at restaurants in Australia, and recently partnered with global trip review site TipAdvisor. The partnership will see TripAdvisor offering its travellers real time access to Dimmi restaurant bookings.

Global restaurant review sites such as Zagat, Urbanspoon and Yelp is also in the game. With presence originating from the US, these restaurant review sites took their experiences and learnings and expanded to Australia in the past few years.

Traditional media such as FairFax and degroots also have their own restaurant review sites. FairFax Media owns several publications and websites such as The Sunday Morning Herald, RSVP (Australian online dating site), Stayz, MyCareer, Australian Property Monitors and several other websites. deGroots on the other hand, also operates Best Gift Certificates, Best Venues of Australia, Best Hotels & Resorts of Australia and a few others.

Issues with restaurant review sites

With so many restaurant review sites, it is hardly surprising that there are concerns over fake reviews and “unfair” algorithms which might be bias towards restaurants who paid more money to restaurant review sites in order to boost their visibility. The Sunday Morning Herald said that the restaurant industry claims that review sites used faulty ratings systems and it is often abused by customers and competitors.

They have also identified a few solid issues behind these restaurant review sites:

  1. There’s no context to see who is doing the review – no accountability
  2. Websites have also refused to remove damaging comments ”because they say they don’t own the data, they just publish what other people give them”.
  3. Negative reviews posted by disgruntled former employees and competitors unfairly burdened owners

The restaurant industry has therefore urged the consumer watchdog to launch an investigation, which might potentially affect companies such as Eatability, Dimmi, Zagat, Urbanspoon, Yelp, FairFax and deGroots.

So while there are a lot of activities in the food space here in Singapore, war is happening in the restaurant review sites in Australia right now. While there are concerns about unaccountability of user generated reviews, it is not a new issue but it is a serious one. Flooding review sites with fake reviews has long been around and it will be hard to stop.

What would be interesting is to see whether or not restaurant review sites in Australia will respond to The industry body’s call for an investigation into their ratings methods of websites.

Image Credits: SFGate

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Jacky Yap

Jacky Yap

Having spent one year abroad in Shanghai under the NUS Overseas College Programme, Jacky has an avid interest in entrepreneurship and web based startups. Jacky used to run N-House, Singapore's first entrepreneurial themed residence in NUS, and was also part of the organizing team for Startup Weekend Singapore 2012. You can reach him at jacky [at] e27 [dot] co

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