The report finds a correlation between consumer
interest in restaurants, bars and nightlife, and gyms in May and
COVID-19 cases in June
Yelp Inc. (NYSE: YELP), the company that connects people with
great local businesses, today released second quarter data for the
Yelp Economic Average (YEA) report, a benchmark of local economic
strength in the U.S., which has been adapted to reveal the dramatic
impact COVID-19 has had on local economies. YEA uncovers longer
term trends, including a correlation between increased interest in
restaurants, bars and nightlife, and gyms to a spike in COVID-19
cases across hotspot states. The report also shows a declining
trend in total business closures, however, permanent closures now
account for 55% of all closed businesses since March 1, a 14%
increase from June. Additionally, YEA finds slower, but still
consistent changes in consumers getting back to pre-pandemic
activities, as well as sustained interest in supporting Black-owned
businesses.
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The Yelp Economic Average found an
increase in consumer interest in May correlates with COVID-19 hot
spots in June (Graphic: Business Wire)
YEA reflects data from millions of local businesses and tens of
millions of users on Yelp’s platform measuring U.S. business
closures, as well as consumer interest via page views, reviews and
photos. According to researchers, Yelp provides a timely and
accurate measure of a huge swath of the economy that is often
missed by many major indicators.
“As U.S. cities struggle to balance reopening their local
economies and avoid becoming the next COVID-19 hotspot, we’ve seen
U.S. business closure data reflect an unstable economy. Yelp data
found a decrease in total business closures, but the rate of
permanent closures has actually risen 14% between June 15 and July
10,” said Justin Norman, Yelp’s vice president of data science.
“Cities such as San Francisco and Honolulu, which have had some of
the nation’s strictest stay-at-home orders, are now seeing the
highest numbers of closures relative to the number of businesses in
their respective cities.”
Increased Consumer Activity in May Correlates with Increased
COVID-19 Cases in June
In mid-to-late March, Yelp reported a swift and uniform drop in
consumer activity across the nation. In May, some states maintained
lower levels of consumer interest, but many started to see interest
increase back to pre-pandemic levels. In many states, when this
consumer interest increased, an increase in COVID-19 cases was to
follow. YEA found a statistically significant correlation between
an increase of consumer interest in restaurants, bars and
nightlife, and gyms in May and a rise in COVID-19 cases in
June.
Considering states with at least three total cases per 1,000
population, the ten states with the largest increase in COVID-19
cases in June, including Florida, Nevada, South Carolina, Texas and
Georgia, all saw a significant increase (more than 50%) in consumer
interest in restaurants, bars and nightlife, and gyms, in May,
relative to the shutdown level of activity in late March and early
April. In the ten states with the largest decrease in COVID-19
cases in June, including Massachusetts, New York, Connecticut,
Michigan and Maryland, consumer interest in the same activities
remained more flat in May, increasing less than 50% relative to the
shutdown in all ten states.
As outbreaks worsened through late June, consumer interest in
these categories started to decrease in states like Florida, Texas,
South Carolina, and Arizona — emphasizing the strong correlation
between the pandemic and consumer behavior. When there's a major
outbreak, Yelp data suggests it negatively impacts consumer
interest in businesses where social distancing may be harder to
enforce. Alternatively, if COVID-19 cases remain flat or decrease
in a state, consumer behavior and local policies tend to revert
towards the pre-pandemic norm, leaving the state vulnerable to
another outbreak in the near future.
Business Closures Fluctuate Across the Nation
In June, Yelp’s Local Economic Impact report found a decrease in
business closures with 140,000 permanent and temporary closures on
Yelp from March 1 to June 15. This increased to more than 147,000
total business closures on June 29 and then dropped again to just
more than 132,500 total business closures as of July 10. This
rapidly changing number of closures reflects rapidly evolving
situations at the local level, as some states with rising cases
start to close again, while others continue to reopen. In April,
Yelp reported more than 175,000 business closures indicating that
only 24% of businesses that were closed in April have now
reopened.
Even as total closures fall, permanent closures have increased
to 72,842 businesses as of July 10, an increase of 15,742 permanent
closures since June 15. Permanent closures now account for 55% of
all closed businesses since March 1, an increase of 14% from June
when Yelp reported 41% of closures as permanent.
Most states have seen a plateau of temporary closures, while
Arizona, Texas, and Florida have started to see a recent increase
again due to spikes in COVID-19 cases. California, Texas, and New
York have the highest total number of closures (29,351, 11,118 and
8,731, total closed businesses, respectively). On a metro level,
Las Vegas is suffering from the highest rate of permanently closed
businesses with 861 businesses permanently closed, as the city
reacts to a decrease in tourism. Meanwhile, Los Angeles has the
most closures with 11,342 total temporary and permanent business
closures.
Permanent Closures Continue to Increase Across Restaurants,
Retail and Other Industries
While some industries have been able to slowly bounce back with
fewer temporary closures, many are still enduring an increasing
number of permanently closed businesses. The restaurant industry
now reflects the highest total business closures, recently
surpassing retail. As of July 10, there have been 26,160 total
restaurant closures, of which 60% have permanently closed (15,770
permanent closures) — accounting for a 23% increase since June 15.
Meanwhile, bars and nightlife, an industry 6X smaller than
restaurants, have endured an especially high closure rate, with
5,454 total business closures, of which 44% are permanent closures
(2,429).
Many retail businesses shifted their operating models and
started offering curbside pickup and online ordering, unfortunately
those measures aren’t always enough to sustain their businesses
long term. Shopping and retail businesses have endured 26,119 total
business closures, of which 48% are permanent (12,454 permanent
closures). The data shows 1,544 retail businesses have reopened
since June 15, however an even higher number have been forced to
shut their doors permanently, accounting for a 29% increase in
permanent retail closures in the last month. Both the beauty and
fitness industries follow a similar trend as the retail industry
with a decrease in temporary closures and an increase in permanent
closures.
While many businesses are struggling right now, there are a few
that have been able to withstand the economic downturn.
Professional services such as lawyers and accountants are seeing
fewer closures. Online services like web design and graphic design
are also doing well during the pandemic as many businesses have
shifted to remote work. Health services such as physicians,
counseling and mental health services, and health coaches are also
closing at lower rates – all critical resources during this time.
Education businesses have also had success weathering the storm,
including private tutors, as people look for resources to learn new
skills and parents seek resources to supplement distance
learning.
Consumer Interest Steadily Returns to Pre-Pandemic
Activities
Consumer interest has continued to shift since May, but less
rapidly than we saw in March and April. Interest for
alcohol-related experiences has increased since June 1, relative to
other food activities, with a rise in consumer interest for
wineries (up 51%), cideries (up 39%), breweries (up 24%) and
distilleries (up 19%). Meanwhile, grocery related businesses are on
the decline as people spend less time at home. This includes beer,
wine and spirit stores (down 21%), community supported agriculture
(down 23%), and organic stores (down 11%).
Within restaurants, German cuisine, live and raw food, French
cuisine and steakhouses have all seen an increase in consumer
interest since June 1, relative to other restaurant categories, up
35%, 36%, 21% and 20%, respectively. As people head back into
restaurants, fast casual and common delivery foods continue to
decline at a slow rate, including fast food (down 19%),
cheesesteaks (down 8%), chicken wings (down 15%) and pizza (down
7%).
As the weather gets warmer people are turning to public markets
(up 73%) to do their shopping, as well as flea markets (up 28%) and
outlet stores (up 13%). Formal wear (up 46%) and bridal shops (up
26%) continue to slowly increase as people feel more comfortable
gathering for celebrations. Meanwhile, previous retail categories
that gained traction, including hunting and fishing supplies, and
outdoor gear, are starting to decline in consumer interest, down
40% and 29%. Yelp data also shows people heading back indoors for
activities like axe throwing (up 51%), escape games (up 45%), and
boxing (up 13%), while some people continue to flock to outdoor
activities, like ziplining (up 44%), ATV rentals (up 37%), and
amusement parks (up 6%).
We also see the impact of rising COVID-19 cases on health and
wellness categories on Yelp, with a recent spike in interest for
urgent care (up 42%) and emergency rooms (up 21%), since June 1,
while interest declined in skilled nursing (down 22%) and
retirement homes (down 14%).
Support for Black-Owned Businesses Remains High
People’s interest in supporting the Black community by spending
at Black-owned businesses continues to remain high. From May 25 to
July 10, there has been a 7,043% year-over-year increase in
searches for Black-owned businesses on Yelp — in total, 2,500,000
searches. Washington D.C. and Maryland both had more than 1% of all
searches on Yelp for “Black-owned” since May 25th, a 39% increase
in Maryland and a 24% increase in Washington D.C.
year-over-year.
While searches for Black-owned restaurants have remained
particularly popular (up 2,508%), most recently, people have also
been searching for more specific Black-owned businesses. Searches
for Black-owned boutiques have increased by 331% compared to the
same time last year, while searches for Black-owned bakeries and
ice cream shops has grown by 56%. Searches for Black doctors rose
by 183% and Black-owned coffee shops has increased by 161%.
Black-owned bookstores have seen a particularly high increase in
consumer interest, with searches up 1,437% year-over-year, as
people look to find resources from Black authors, possibly to
better educate themselves on anti-Black racism, police brutality
and other social justice issues that have plagued the Black
community.
See all of our Yelp Economic Average reports and other resources
at yelpeconomicaverage.com. Yelp is regularly updating its Local
Economic Impact Report to outline how local economies continue to
fare in these uncertain times.
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and Yelp’s latest company metrics, visit:
https://www.yelp-press.com/company/fast-facts/default.aspx
Methodology
Business Closures
On each date, starting with March 1, we count U.S. businesses
that were open on March 1 and were closed on that day. Closure can
be permanent or temporary, and is signaled by a business owner
marking the business as closed, including by changing its hours or
through a COVID-19 banner on its Yelp page. Closure counts are
likely an estimate of the businesses most impacted, with many
others not counted because they remain open with curtailed hours
and staffing, or because they have not yet updated their Yelp
business pages to reflect closures. Additionally, we only count
closures that have been vetted by our User Ops team or have been
updated directly by a business owner. Closures are counted by
state, metro area, and category; some businesses are in more than
one category. One-day closures that appear to be unrelated to the
pandemic, such as for Easter, are not counted. Businesses can also
set automatic reopening dates on Yelp, which are counted as
reopenings unless the business updates their information.
Consumer Interest Correlations with COVID-19 Cases
Consumer Interest: We start by measuring consumer
interest in terms of actions users take on Yelp, split by business
category and state. We adjust for seasonality by measuring the year
over year change in interest for each state and category. Baseline
levels of interest during the initial “shutdown” were measured
between March 25 and April 15, corresponding to the time where most
locations had their minimum level of consumer interest. We now
measure consumer interest levels normalized by their average value
over the baseline.
COVID-19 Cases: We gathered COVID-19 data provided by the
New York Times. We only consider states with at least 3 total cases
per 1000 people over the course of the pandemic, allowing us to
measure a robust relative change in new cases (this eliminates
Alaska, Hawaii, Maine, Montana, Oregon, West Virginia, Wyoming).
This ensures enough cases to make the percent change in new cases a
consistent and fair metric, but we note that our findings generally
still hold if all states are included as well.
Correlations: For several categories (including
restaurants, bars, nightlife, and gyms) we observe a statistically
significant correlation between a state’s normalized consumer
interest in the last week of May and the state’s relative increase
in new COVID-19 cases between the first and last weeks of June. We
combine the interest in these categories into a single consumer
interest measure. Of note, correlation and causation are not
equivalent, and we are not claiming that most COVID-19 cases are
happening due to visiting restaurants or gyms. Increasing consumer
interest in these categories – relative to the “shutdown” level of
interest – is a good general indicator of consumer behavior
reverting to the norm and a state being more active economically
and socially. This general reversion towards pre-pandemic consumer
behavior in the month of May could very plausibly result in a spike
in COVID-19 cases in June, and this signal is clear from our
data.
Consumer Interest By Business Category
We measure daily consumer interest, in terms of seasonally
adjusted daily U.S. counts of a few of the many actions people take
to connect with businesses on Yelp: viewing business pages or
posting photos or reviews. We start with the biggest U.S.
categories by consumer actions. Among those, we select the biggest
gainers and biggest decliners in terms of their share of all root
category consumer actions since June 1. Then we choose
representative ones to show the trend, which we’re charting from
June 1 through July 10.
Consumer searches for Black-Owned Businesses
We count the number of searches with words “Black owned” (and
related words, like “Black-owned” or “Black business”) between May
25 and July 10th in 2019 and 2020. Additionally, we count the
frequency of searches for particular types of Black owned business
over the same time period.
About Yelp Inc.
Yelp Inc. (www.yelp.com) connects people with great local
businesses. With unmatched local business information, photos and
review content, Yelp provides a one-stop local platform for
consumers to discover, connect and transact with local businesses
of all sizes by making it easy to request a quote, join a waitlist,
and make a reservation, appointment or purchase. Yelp was founded
in San Francisco in July 2004. Since then, Yelp has taken root in
major metros in more than 30 countries.
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Yelp Inc. Julianne Rowe jrowe@yelp.com
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