By Earlene Greene
- 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%), 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 have 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% 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% 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% over the same period. Additionally, four to five star reviews on Yelp resulted in an average growth rate of 8.8% 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 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.
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