How to find a good restaurant? Economists can help

Stay away from the tourists traps, economics tells us. Your best bet are those cozy places away from the bustle.Where to eat? It’s a question you’ve probably pondered when visiting somewhere unfamiliar. Though it’s fun to explore a strange suburb, town or city, when you’re hungry you’d rather minimise the chance of paying exorbitant prices for an unpleasant experience.

It’s a risk. You may end up trudging around only to end back at the same spot 30 minutes later. Settling on the first restaurant you find may therefore be the best option to minimise search costs. In tourist areas, the situation is different. Visitors do not know the quality of each restaurant they encounter, and at best might be repeat customers for a few days. So restaurants can charge higher prices and serve lower quality food without much risk of harming long-term profits.To investigate how customer ignorance influences restaurants price and quality, we used data from Yelp, a major online platform where users rate restaurants.

What we found was exactly what was predicted by economic theory: restaurants in tourist areas have lower ratings than those in non-tourist areas.The map below presents the results for Sydney. You can see the valley of tourist points in the centre of the city generally align with average ratings. There are just a few cases of exceptional ratings near tourist attractions, such as around the Sydney Opera House.

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