New Business Openings Surpass Pre-pandemic
Levels in Q1 2022
Yelp Inc. (NYSE: YELP), the company that connects people with
great local businesses, today released first quarter 2022 data for
the Yelp Economic Average (YEA) report, a benchmark of local
economic strength in the U.S. The Q1 2022 YEA report reveals
consumers described more inflationary experiences within their
reviews on Yelp in 2022 than ever before. New business growth
surpassed pre-pandemic levels with nightlife, beauty, and hotels
and travel businesses driving new business openings. As gas prices
climbed, review mentions related to electric vehicles increased 67%
year-over-year in Q1 2022.
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Inflation on Yelp reached record high in
the first quarter of 2022.
In Q1, reviewers reporting increasing prices at local businesses
grew rapidly in 2021 and reached a new peak in Q1 of 2022, rising
by 3% from last quarter (Q4 2021), and 29% from Q1 of 2021. Even as
consumer concerns about inflation reached a record high, Yelp data
also revealed an increase in people searching for higher cost
businesses.
“As inflation rises, Yelp users are mentioning higher prices in
their reviews more than ever before,” said Pria Mudan, data science
leader at Yelp. “Still, Yelp data shows consumers continuing to
search for high-priced restaurants as mask mandates and
restrictions lift and restaurants welcome more diners. This pent up
demand is also evident in the surge of new business openings in
nightlife, beauty, and travel and hotels, which all increased from
2021 levels in Q1. Consumer behavior and business activity
suggested favorable economic conditions for local businesses in the
first quarter.”
Concerns About Inflation Reached Record High on Yelp, yet
Consumers Continued to Search for Higher Cost Businesses
According to Yelp data, reviewers have consistently reported
increasing prices at local businesses since 2015, rapidly
increasing in 2021 and reaching a new peak in Q1 of 2022 (up 3%
from Q4 2021, and 29% from Q1 of 2021). Yet, nearly half (43%) of
all restaurant searches using the dollar filter on Yelp in Q1 2022
were looking for higher-priced restaurants with the “$$$” and
“$$$$” designation. Searches for low price point restaurants ($)
decreased by 13% in Q1 2022 (compared to Q1 2019).
New Business Openings Increased Nationally in Q1
In Q1 2022, business openings increased by 5% to 152,859 from
145,189 in Q1 2021. Hotels and travel (3,637) nightlife (2,346) and
beauty (12,744) categories on Yelp had the largest percentage
increases, rising 31%, 23%, and 22% respectively in Q1
year-over-year. Restaurant and food new business openings fell
slightly to 17,690, a 2% decrease from Q1 2021 (18,090), but still
5% above Q1 2020 (pre-pandemic) with 17,301 openings.
Consumers Increasingly Mention Electric Vehicles Amidst Surge
in Gas Prices
Yelp data shows a national increase of 67% in mentions related
to electric vehicle charging in Q1 2022 compared to the same period
in 2021. For some states this increase grows when they are examined
individually, most notably a 352% increase in Maryland and a 107%
increase in New York. EV Charging stations experienced a 27%
increase in business openings in Q1 2022 compared to Q1 2021
Read the full report, as well as previous YEA reports, at
yelpeconomicaverage.com. Assets and images from the Q1 2022 YEA
report can be found here. For more information and Yelp’s latest
company metrics, visit:
https://www.yelp-press.com/company/fast-facts/default.aspx
Methodology
Price Range Filter Usage
There are currently 4 pricing tiers ($, $$, $$$, and $$$$) on
Yelp and the pricing tier of a business is voted on by Yelp users.
Consumers can use the price range filter when searching for
businesses on Yelp. The share of different pricing tiers used by
consumers signals their general willingness to spend.
Review Text Inflation / Disinflation Sentiment Ratio
To observe the sentiment of Yelp consumers over time, we
analyzed review text from 2015 through Q1 2022. Yelp examined
consumers’ experience of inflationary situations, such as rising
prices for goods and services and compared that experience to the
inverse scenario of disinflation, which includes sentiments
indicating stable prices and consistent values. The volume of
review text phrases indicating these are normalized by the number
of times per million the phrases appeared in reviews and are then
used to calculate a ratio of inflationary vs disinflationary
experiences. This ratio was calculated quarterly and deseasonalized
via the index method using the previous 5 years (2015 - 2019). A
ratio above 1.0 indicates overall consumer sentiment of inflation
and below 1.0 indicates disinflation sentiment. This was calculated
on a national basis across all major Yelp categories. Changes in
the ratio are quarter-over-quarter percent changes.
New Business Openings
Openings are determined by counting new businesses listed on
Yelp, which are added by either business representatives or Yelp
users. Openings are adjusted year-over-year, meaning openings are
measured relative to the same time period in the previous period
for the same business categories and geographic locations. This
adjustment corrects for both seasonality and any differences in the
baseline level of Yelp coverage in any given category and
geography.
Consumer Interest
We measure consumer interest by looking at select actions users
take to connect with businesses on Yelp: such as viewing business
pages, or posting photos or reviews.
Changes in consumer interest for each category were measured by
comparing year-over-year data from Q1 2021 and Q1 2022, focusing on
each category’s share of all consumer actions in its root
category.
Electric / Hybrid Review Text Mentions
For the data regarding “electric and hybrid transportation”, we
measured the share of total words in U.S. auto services reviews
containing phrases related to sustainability, including but not
limited to: “electric,“ “hybrid,” “plug in hybrid,” and “EV.”
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.
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version on businesswire.com: https://www.businesswire.com/news/home/20220420005437/en/
Yelp Inc. Nick Spence press@yelp.com
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