Grapevine

Study finds that even positive third-party ratings can have negative effects

There's history, glitz, and glamor surrounding the awarding of Michelin stars to restaurants, but new research shows there can be a downside to achieving even the highest industry rankings. In a study published in Strategic Management Journal, Daniel B. Sands of University College London found that restaurants that received a Michelin star were more likely to close in subsequent years.

The study helps to explain how third-party evaluators' reviews, ratings, and rankings can help or hurt the creation and capture of value, and underscores the importance of solidifying key relationships and resources.

Michelin stars have been awarded for almost 100 years, and the first Michelin guide to America—covering only New York City—was published in 2005.

With that exciting entrance into the U.S. market, it would be reasonable to assume that a Michelin star would lead to greater customer interest and opportunity. But Sands wondered: Does getting such an accolade actually lead to a greater ability for firms to capture value, or is that ability limited?

To explore the question, Sands gathered data on which restaurants in New York were "at risk" of receiving a Michelin star. To develop a baseline sample of such restaurants, Sands compiled a list of all newly opened restaurants from 2000 to 2014 that received a New York Times starred review, which provided a set of subjects that received a favorable professional critic evaluation during their first year of operation. He then tracked which restaurants received a Michelin star and which restaurants remained open through 2019.