The most-loved restaurants on social media

There are plenty of reasons to pay attention to social media when it comes to your restaurant stocks.

In August, a 20-second video appeared on YouTube and Facebook (ticker: FB) of a person in a fast food uniform wiping a burger bun on a dirty kitchen floor and preparing it to be served to customers at a Checkers Drive-In restaurant.

The video went viral and the company suffered. Managers apologized. The employee was fired. The brief video dominated social media, garnering millions of views.

“All the negative attention damaged the restaurant’s public perception and pulled the brand’s net sentiment down from 58 percent to minus 85 percent during the worst two days of the crisis,” according to the big data social analytics firm NetBase’s Best Practices Guide.

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Conversely, one of the biggest success stories of 2015 thundered through social media when McDonald’s Corp. (MCD) extended its breakfast hours to the entire day. People responded with a 23 percent increase in internet enthusiasm, and the brand reached 5.7 percent growth, its best quarter in four years, which surpassed many expectations.

Yet researchers at the internet research firm LikeFolio say they knew the stock would surge based on the volume of social media accolades. “We knew this was going to be not just a nice bump for the company, like Wall Street expected, but a really, really big deal that Wall Street had not yet anticipated,” says Andy Swan, founder of LikeFolio based in Louisville, Kentucky.

Blogs, online reviews and the number of mentions are found to be “significant leading indicators” of stock market performance, according to a 2013 research article published by Xueming Luo, Jie Zhang and Wenjing Duan titled “Social Media and Firm Equity Value.”

Some restaurants might even live or die by Yelp (YELP) reviews. “There are studies that show how a one-star increase in consumer ratings on Yelp can lead to a 5 to 9 percent increase in revenue in terms of performance,” says Palash Misra, director at the strategy consulting firm, Stax in Boston.

Social media expert Jeremiah Barrett, owner of the digital marketing agency JBC, says he uses Facebook to reach employees of large companies near a chain restaurant’s location.

“I have data showing social media’s direct impact (including a) four-fold increase in loyalty card members, doubling of alcohol sales, with a 1,300-percent return on investment,” Barrett says.

Many firms are now sifting through billions of social media mentions and taking note of which restaurants win the highest social media mentions.

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“Applying these findings to our own work, we have discovered that social media can be a powerful leading indicator by which to assess company performance,” Misra says. “We found this particularly true for brands that cater to millennials.”

Who won the internet popularity contest? NetBase recently released a report examining the top trends and overall performance of 100 leading restaurant brands across social channels from January 2015 through December 2015. It pooled its data from 740 million restaurant-related posts and released a list of the most popular restaurants on social media based on positive or negative net sentiment, passion around the sentiment and subsequent awareness, or impressions.

The brands were rated across three segments — quick service, fast casual and casual dining. The top 15, ranked according to popularity, were Ben & Jerry’s, followed by Wingstop (WING), Applebee’s, Domino’s Pizza (DPZ), Krispy Kreme Doughnuts (KKD), Panera Bread Co. (PNRA), Tim Hortons, Pizza Hut, Jamba Juice (JMBA), Chipotle Mexican Grill (CMG), Olive Garden, Cheesecake Factory (CAKE), Starbucks Corp. (SBUX), KFC and Chili’s Bar & Grill.

Applebee’s is operated by DineEquity (DIN), Tim Hortons is operated by Restaurant Brands International (QSR), Olive Garden is a brand of Darden Restarants (DRI); KFC is owned by Yum Brands (YUM) and Chili’s is a brand of Brinker International (EAT).

What the restaurants did right. Customers had positive things to say about menu choice and the value of their meals, but cleanliness and order accuracy generated the most negative discussions, according to the report.

What drove Ben & Jerry’s positive, 85 percent net sentiment, were posts related to ice cream giveaways. “Its popularity on social media is due to the high satisfaction of their customers, which is heavily attributed to their #FreeConeDay,” the report says.

Menu selection was the key positive attribute for most of the restaurants, followed by value, affordability and food quality.

They’re Lovin’ McDonald’s. If one were to predict stock performance by sheer volume of online conversations, McDonald’s, Starbucks, and Chipotle would top the charts.

But 8 percent of Starbucks’ mentions are about misspelled customer names on cups. It was McDonald’s that saw the largest positive attribute, or 541,000 mentions, around the introduction of all day breakfast, according to the report.

“I think McDonald’s has done a pretty good job, with respect to engaging with their core audience and understanding what their core audience is interested in,” says Paige Leidig, chief marketing officer of NetBase.

When it comes to restaurant stocks, McDonald’s is at the top of LikeFolio’s list and Swan says it is a good time to buy the stock. The positive raves are spiking and the number of people expressing intent to buy its products is at an “all-time high,” he says.

With “McDonald’s or Yum Brands, we’ve seen a correlation,” Swan says. “Eighty percent of the time, we get a sharp movement in social media mentions on these companies, and the stock follows suit within the next three to six months, which is an incredibly high number,” Swan says. “McDonald’s was about an 8 or 9 percent hike in the stock, and when Yum Brands had a bad quarter, we were able to predict that, and it was a about an 18 percent drop.”

How McDonald’s did it. McDonald’s spokeswoman Terri Hickey says customers asked the company through social media to extend breakfast hours instead of abruptly cutting off the pancake supply at 10:30 a.m. to switch to its lunch menu.

And McDonald’s tries to engage customers as quickly as possible, in real time, through social media hubs throughout the world. So when people tweeted, McDonald’s took notes.

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“When we launched all-day breakfast last year, we tweeted every single person that had requested all-day breakfast in the past decade, 12,500 to be exact,” Hickey says. “Our engagement rate soared with over 80 percent of them responding to us. In addition, all-day breakfast trended organically on Twitter for five hours.”

Restaurant Stocks

Stock information correct as of July 11, 2016, 11:30 a.m.

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The Most-Loved Restaurants on Social Media originally appeared on usnews.com