Here’s what Le Comte de Shotland observed from the “May Day” algorithmic update that Google began phasing in around the first of last month:
I have already seen the impact on a couple of large sites that I monitor, as well as on smaller sites. In the case of the large sites, the traffic has drifted downward, with a couple of extreme drops, and in the case of the smaller sites traffic growth has either flattened or slowed down to barely noticeable.
Matt Cutts addresses the issue, though doesn’t discuss local sites in particular:
Summary: It’s an algorithm change, it’s automated, it affects “long-tail” searches more than “head” searches, and it’s more or less permanent. Cutts says, in effect, beef up your content (and quality) to rank higher if you’re a bland long-tail site.