Does Michelin effect exist? An empirical study on the effects of Michelin stars

Purpose Receiving Michelin stars is considered an effective marketing tool and a prestigious certification in the restaurant industry. However, the direct effects of Michelin stars on restaurant performance remain unclear. To bridge this gap, this study aims to empirically validate the "Michelin effect" on the consumption values of restaurant patrons before and after receiving Michelin stars. Design/methodology/approach The data, collected from OpenTable, consist of over 160,000 reviews written for 218 restaurants, including 109 Michelin-starred (treatment group) and 109 nonstarred restaurants (control group). The authors measure perceived consumption value using the collected user-generated review data. The authors estimate fixed-effect difference-in-differences regressions to validate the Michelin effect. Findings Michelin stars enhance social, hedonic and service quality values, which are nonfunctional values. However, no significant effects on functional consumption values, such as economic, food quality and ambience quality values, are observed, even though Michelin stars are pure awards for kitchen performance. Practical implications Michelin stars can be an effective marketing tool for fine-dining restaurants because customers consider emotional and nonfunctional benefits such as hedonic and social values, which are more important than functional benefits such as food value. Furthermore, Michelin effects are heterogeneous depending on the number of stars awarded, price range and customers' gastronomic involvement. These offer a strong rationale for monitoring social media, which may help managers better understand their customers and improve their performance. Originality/value This study extends the current literature on the Michelin effect by quantifying consumption values using user-generated review data. To the best of the authors' knowledge, this study offers the first empirical evidence that directly validates the Michelin effect.