I work at a restaurant and at the start of every shift the manager reads the Yelp reviews of the week. We track our star rating from week to week, or talk about possible solutions for problems in the reviews, and sometimes we even remember specific incidents mentioned in them. We hate reading bad reviews. At the restaurant I work at, everyone is trying his or her best all the time and it is hard to hear that it just was not good enough. But, we use the reviews for our improvement.
Do bad reviews lead to fewer new customers? Of course. Plenty of people read reviews and even more look at star ratings. Why would someone go to a three star restaurant when they can go to a five star one in the same area? Bad reviews hurt business and plenty of times the highlights of the reviews include isolated incidents. For example, someone may write a negative review because they got water spilled on them by accident. That does not mean we pour water on every customer. That is merely an isolated incident. Other times the reviews are unfair, the people ordered something they do not like (but everyone else does), or they had a long wait time (long wait means a lot of people like it, though).
While reviews are often bad, which leads to fewer customers, and hurt feelings on the receiving end, it also absolutley allows people to have a right to speak up online if you do think the restaurant was good.
Recently, a pet sitting service based in Dallas, Texas filed a lawsuit against a couple that left a bad review. The couple had the service walk their dog and feed their fish while they were away. They were met with unexpected, unreasonable, additional charges, and their pets were poorly taken care of. The couple was understandably upset so they took to the internet to air their grievances. The service was astounded at the review. They had said in their contract that customers could not publically criticize them. The company was hoping to win $200,000 to $1 million in the lawsuit. After fighting a court battle, the suit was eventually settled and the couple won.
The couple was right to have won, but the debate should not have occurred in the first place. The pet sitting service has no right to bar them from utilizing their first amendment right to freedom of speech. Getting a bad review is something every service has to deal with. For me, it is in a restaurant. For others it is a nail salon, a theatrical production, a shop, a dog sitting service. No matter for what the review is being left, it is the right of the customer to leave it.