Pokémon Go & Restaurants

Businesses associated with augmented reality apps like Pokémon Go could see a spike in revenue, according to a study by ISB’s Vandith Pamuru.

Augmented reality (AR) apps gained popularity with the 2016 launch of Pokémon Go, which used the technology to overlay virtual creatures called Pokémon on screens. The game garnered interest across generations and locations, becoming one of the most widely played gaming apps, with 20 million daily active users at the time of its release.

The Pokémon Go craze was tangible — Starbucks in the US and McDonald’s in Japan collaborated with the app to place virtual artefacts from the game at their retail locations. This raised the question: What economic benefit do restaurants see when associated with a game like Pokémon Go?

A study by ISB faculty Vandith Pamuru seeks to answer just that — the effect of such an app on local businesses. Pamuru and co-authors investigated whether restaurants associated with Pokémon Go saw an uptick in revenue during the period of the study.

Methodology

The researchers chose Houston, Texas — a city noted for its diversity — as the location of the study. The research capitalised on the natural placement of in-game artefacts at launch, with some restaurants falling within the artefacts' radius while others did not. This design allowed researchers to observe the impact of being associated with Pokémon Go.

The study used online reviews of restaurants to gauge consumer behaviour. The volume of reviews was used as a metric for consumer engagement, while the average star rating measured consumer perception. The researchers analysed data from March through October 2016, capturing changes in restaurant reviews before and after the game’s US launch in July.

Hypotheses

The researchers tested three hypotheses:

• Restaurants associated with Pokémon Go would have higher consumer engagement, measured by the volume of online reviews.
• Associated restaurants would have more positive consumer perception, measured by star ratings.
• Restaurant characteristics, such as affordability, walkability, and server motivation, would moderate the game’s impact on consumer engagement and perception.

The study collected data from more than 3,400 restaurants around Houston. Of these, 327 restaurants had in-game artefacts nearby.

Findings

Restaurants associated with Pokémon Go saw higher consumer engagement, reflected in which was reflected in increased review volumes and more positive consumer perceptions, as evidenced by a higher proportion of 4 and 5-star reviews and fewer 1-star reviews. These results supported the first two hypotheses.

On average, associated restaurants saw a 0.273-star increase and a 5.7% increase in review volume. Based on Michael Luca’s study on how online review stars affect restaurant revenue, Pamuru and his co-authors estimated that these increases could result in a 4.4% rise in restaurant revenue.

The researchers also drew on gratification and reciprocity theories — how individuals actively choose media to fulfil specific needs and desires — arguing that playing Pokémon Go added hedonic value to the experience. Consumers enjoyed the game and transferred their positive feelings to the restaurant environment, boosting both engagement and perceptions.

On the third hypothesis, the study found that factors such as affordability, restaurant popularity, and walkability influenced the quantity of reviews but did not affect the quality or the rate of positive reviews. This suggests that the enjoyment of the Pokémon Go experience itself was more influential in shaping consumer perceptions than any individual restaurant characteristic.

Author: ISB Editorial Team