Why restaurants survive? A perspective of word-of-mouth dispersion

Abstract

Survival represents a fundamental aspect of business development, particularly for small-sized businesses. This study introduces a comprehensive framework for examining the determinants of restaurant survival from the perspective of word-of-mouth dispersion. Utilizing data collected from Yelp, we analyzed a sample of 9606 randomly selected restaurants across 309 cities in the United States from January 2018 to February 2022. Our findings revealed that topic dispersion exhibits a negative relationship with restaurant survival, albeit with a diminishing marginal effect. Conversely, sentiment dispersion demonstrates a positive but decreasing marginal relationship with restaurant survival. We also observed negative moderating effects of review length on the aforementioned relationships. The findings enhance our theoretical comprehension of the survival among small-sized businesses and offer practical recommendations for both restaurant owners and platform managers.