Price determination in the restaurant industry: the power of consumer opinion versus expert opinion

Abstract

While efforts have been made to compare the effects of expert evaluation versus consumer-based evaluation on price determination within various sectors, there is no comparative evidence in relation to the restaurant industry. This paper fills that gap in the literature by applying hedonic price analysis to 338 Italian Michelin-starred restaurants and investigating, in particular, the role played in price determination by both gastronomic guides and consumer-based online platforms, which are tools largely used for culinary tourism. In contrast to user-based ratings, expressed by the scores available on the online travel platform TripAdvisor, expert evaluations for food, service and setting are proven to exert a strong and positive impact on prices. Results also show that creative cuisine is able to attract higher prices than other cuisine styles, confirming the prominent role of chefs’ ingenuity in generating economic value.