Think You Can't Put a Price on a Good Reputation? Let's Negotiate.

Grudgingly, we have to tip our hat to Yelp, the user-driven review site that has figured out a clever way to leverage the Web 2.0 social networking phenomenon. One facet of the business plan for this 15-million-unique-visitors-a-month site: post any and all restaurant reviews, then offer restaurant owners a way, for a fee, to get rid of the negative ones, or at least move them so far down the page that no potential patron is likely to ever read them. Some operators see Yelp as a valuable service that can really bring in new customers; others smell a shakedown.

We’ll be writing more about online reputation management this coming year in Restaurant Hospitality. It’s a topic that gets many operators riled up, thanks to the nonstop stream of anonymous opinions that show up in blogs, on foodie websites and on social media sites like Yelp. The operators’ complaint: When anonymous or pseudonymous posters trash a restaurant online, there’s no viable way to respond. On the Internet, anyone—including competitors posing as disappointed patrons, individuals having personal vendettas against an owner or chef, and nefarious others who simply like to poison the well—can say anything about any restaurant and have it published instantaneously to the world.

It’s a situation that has restaurant owners and operators longing for the days when a bona fide newspaper or magazine critic would sign his or her name to a restaurant review that had been further vetted by editors. Print media restaurant reviews still matter, but much opinion formation about restaurants now depends upon what potential customers find online.

When those information seekers head for the Internet, a lot of them wind up at Yelp. And why not? There are more than four million reviews posted on Yelp. Not all of them are about restaurants, but the restaurant category dominates the site.

There’s no question that a string of positive reviews on Yelp boosts traffic, and the viral nature of social network sites like this one means it will continue to build. Conversely, bad reviews hurt more and, when spread virally, can be devastating.

Last week, Yelp debuted a service called “About This Business,” a free feature that provides a way for restaurant owners and other small businesspeople to describe their operation to potential customers.

“Local businesses are increasingly sophisticated about online reviews but they usually don’t have a way to participate in the dialog or directly influence consumer perceptions, says a Yelp spokesman. “The new ‘About This Business’ feature enables them to offer more relevant information and thus a way to join the conversation on Yelp.”

The new feature is part of a free suite of small business marketing tools that give restaurants the ability to post special offers, message customers who have written reviews, upload photos and update other business information. To find out more about them, you can go to biz.yelp.com.

Sounds like a sweet deal, no? But not everything is free for restaurant owners on Yelp. Restaurant owners in San Francisco—Yelp’s hometown and most robust local site—have used other Internet sites to describe what Yelp tries to sell them. The implications seem scary.

This is what one restaurant owner posted about his sales call from Yelp.

“Here is what I was told you get for $350/month from Charles of Yelp for the Business Owners Account:

1) The ability to remove one bad review every 6 months.
2) The ability to change the viewing order of the reviews.
3) The ability to cross market with similar businesses.”

Another business owner (not a restaurant) told CBS News that “A customer had written a negative review…So, about a week after that Yelp contacted us, and said, ‘We noticed that you had some negative reviews, and we would like to help you with that…if you pay $350 a month.” The owner paid $1,750 for five month’s of Yelp’s service, for which some of her restaurant’s negative reviews were moved to the bottom of the list. “I feel like they are extorting money and preying basically on business owners,” the owner said.

Writes another Internet poster, “I have heard similar stories from many restaurant owners—a rash of poor reviews on Yelp, before a phone call from them offering ‘assistance.’ It seems that they believe they are maintaining some level of integrity by just moving those reviews to the bottom—not erasing them. It’s a disgraceful way to do business and of course it’s unethical as hell. But they may as well go all the way at this point and offer to erase them all together for a few extra bucks, and why not offer to throw in a few dozen positive reviews at an additional fee?”

Yelp officials say there is confusion about its sponsorship offerings to business owners. The company’s Stephanie Ichinose told CBS that “Yelp will not take a negative review and move it somewhere else” and that the $350 fee is solely “to enhance a business’ presence.” The company conjures up the specter of a “rogue salesman” as the one who caused all the trouble.

OK, but be aware that what you get for free with Yelp’s “About This Business” feature is a basic listing. If you opt for it, we’re betting Yelp’s sales department will be contacting you about an “enhanced listing” shortly after you sign up for the freebie. Be sure to monitor your Yelp reviews if you decline the pitch, as some restaurant owners report the onset of a flurry of negative reviews from first time Yelp posters he same day they turn down the paid service. Others note the sudden disappearance or burying of positive reviews when they pass on Yelp’s for-pay offer.

Despite its overwhelming presence on the web and its powerful influence on many restaurants and other businesses, Yelp is still just an Internet startup that has yet to make any money for its investors. It hopes to reach profitability in 2009. We hope its new free feature will patch up its relationship with restaurant owners by then.