Online Reviews Can Predict the Failure of 7 out of 10 Businesses, Even Months Ahead

By analysing online customer ratings, researchers from RSM have developed an AI model which can predict a restaurant’s likelihood of failure, 70% of the time. Dr Markus Weinmann, Christof Naumzik and Prof. Stefan Feueriegel used almost 65,000 customer ratings from more than 900 restaurants as the input for their data analysis, and developed an AI model to estimate the most likely state that a restaurant is in. They found three states:

1. restaurants that get bad ratings but are still in business,
2. restaurants that get good ratings and are still in business, and
3. restaurants that have very dispersed ratings (ranging from very positive to very negative) and are still in business.