The COVID19 Anniversary Economic Impact
The Yelp Economic Average showed as of August 31, 163,735 total U.S. businesses on Yelp have closed since the beginning of the pandemic (observed as March 1), a 23% increase since July 10. In the wake of COVID-19 cases increasing and local restrictions continuing to change in many states we’re seeing both permanent and temporary closures rise across the nation, with 60% of those closed businesses not reopening (97,966 permanently closed).
Nearly Half a Million New Businesses Opened
Though small businesses faced an incredibly challenging year, Yelp data indicates there were nearly half a million new business openings (487,577 total) in the U.S. during the first year of the pandemic, March 11, 2020 through March 1, 2021 – down by only 14% year-over-year (YoY). Of the newly opened businesses, 76,051 were restaurant and food businesses, down by 18% YoY. With people spending more time at home and in their cars (as many people opted for road trips instead of air travel) 286,879 new professional, local, home and auto businesses opened – on par with the year prior, down by only 1% YoY.
In the restaurant and food categories, food delivery services (up 128%), chicken shops (up 23%), desserts (up 17%) and food trucks (up 12%) saw the largest increases in new business openings, compared to the prior year. Notaries (up 52%), landscaping (up 42%), auto detailing (up 37%) and contractors (up 5%) saw the largest increases in the professional, local, home and auto services categories.
Businesses Adapted and Many Reopened
As local regulations continued to change throughout the last year, businesses had to adapt – many by temporarily closing and reopening again. Between March 11, 2020 and March 1, 2021, 260,852 businesses reopened in the U.S. Of all reopenings, 85,446 were restaurant and food businesses and 36,199 were professional, local, home, and auto services businesses.
People Explored New Outdoor Activities and Sought Answers from Psychic Mediums
Consumer interest in drive-in movies (up 329%) and outdoor movies (up 99%) spiked as Americans looked for socially distanced activities, along with skate parks (up 75%), disc golf (up 73%), racetracks (up 71%) and horseback riding (up 41%). The average review mentions per million for “glamping” increased 53% (see Yelp’s top glamping destinations).
Americans also found themselves seeking answers from professionals like psychic mediums and psychics (up 74%), mystics (up 71%), psychic astrologists (up 69%) and astrologers (up 63%).
People Adjusted to Spending More Time at Home
As our lives and routines changed drastically, consumer interest for fitness equipment during the first year of the pandemic increased 175% and searches for restaurant takeout increased by 185%. However, contrary to what one might expect with shutdowns and stay-at-home orders across the country, consumer interest in waxing only decreased 6% during the first year of the pandemic, indicating that many were eager to get back to their waxing appointments once those services resumed.
Our data showed that the “Zoom Face” phenomenon may not be overblown: The average review mentions per million for the cosmetic procedure known as ‘lip flips’ increased 120% during the same timeframe.
With more time than ever in our homes, average review mentions per million for home offices and bathroom remodels and renovations increased 75% and 80%, respectively.
Resilient Businesses Operating in an Unpredictable Economy
Some business sectors have been able to weather the COVID-19 storm particularly well. In general, professional services and solo proprietors as a whole have been able to maintain a relatively low fraction of closures since March 1. This group includes lawyers, real estate agents, architects, and accountants – all with only two to three out of every thousand businesses closed, as of August 31. Health related businesses in particular have been able to maintain a low rate of closures – orthopedists, internal medicine, hospitals, physicians, family doctors and OB/GYNs all have less than three closures out of every thousand businesses.
Yelp’s closure data also shows that demand for home, local and automotive services has remained robust with a far lower rate of closures compared to restaurants and retail. Towing companies, plumbers and contractors in particular have maintained a low rate of closures, with only six to seven out of every thousand businesses closed. In fact, the share of consumer interest in home and local services is up 24% between March 1 and August 31, relative to all categories on Yelp, compared to the same time last year.
Restaurants Remain Hardest Hit, Permanent and Temporary Closures Increase
The restaurant industry continues to be among the most impacted with an increasing number of closures – totalling 32,109 closures as of August 31, with 19,590 of these business closures indicated to be permanent (61%). Breakfast and brunch restaurants, burger joints, sandwich shops, dessert places and Mexican restaurants are among the types of restaurants with the highest rate of business closures. Foods that work well for delivery and takeout have been able to keep their closure rates lower than others, including pizza places, delis, food trucks, bakeries and coffee shops.
Meanwhile, bars and nightlife, an industry 6X smaller than restaurants, has endured an especially high closure rate, with an increasing percentage of closures being permanent. As of the end of August there were 6,451 total business closures, of which 3,499 were permanently closed (54%). The share of permanent closures within bars and nightlife have increased by 10% since our Economic Average Report in July.
Retail and shopping follows closely behind restaurants with 30,374 total business closures, 17,503 of which are permanent (58%). Similar to bars and nightlife, the share of permanent closures increased by 10% since July. Both men and women’s clothing, as well as home decor, have the highest rate of business closures.
The beauty industry has seen a 22% increase in closures since July, totalling 16,585 closures. Of all closed businesses in the beauty industry 7,002 won’t reopen (42%), a significant 43% increase since July when we reported that 4,897 of all closures in the beauty industry were permanent. Similarly the fitness industry has endured a 23% increase in closures since July, with 6,024 total closures, 2,616 of which are permanently closed.
Larger States and Metros See a Greater COVID-19 Impact on Local Businesses
Even as the pandemic spreads nationally, geographically Yelp data shows business closure rates vary across the country. Bigger states and metros with higher rents and more stringent local restrictions for small businesses throughout the last six months have felt a greater toll. So have businesses more closely linked to physical locations that require crowds of consumers to attain profitability. Meanwhile, smaller cities and solo operations that can do their work one-on-one or virtually have proven better positioned to stay in business.
For the states with widespread business closures, the economic struggle appears to be closely coupled with unemployment rates. Hawaii, California, and Nevada have the highest rate of total closures and permanent closures – they’re also the three states with the highest unemployment rates, and among the biggest states for tourism. Meanwhile, West Virginia and the Dakotas have the lowest closure rates.
The states with the most closures are home to the hardest-hit metros: Las Vegas in Nevada, Honolulu in Hawaii, and several of the largest California urban areas all are among the metro areas with the highest total closure and permanent closure rates (San Diego, San Francisco, San Jose, Los Angeles and others), with roughly 20 businesses per thousand temporarily or permanently closing their doors since March 1. Larger metros with far fewer closures tend to be in the East, including Pittsburgh, Philadelphia, and Baltimore, all with closure rates below 10 per thousand.
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