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Yelp Economic Average Shows Promising Signs of Resilience Across the U.S.

Yelp Inc. (NYSE: YELP), the company that connects people with great local businesses, today released third quarter data for the Yelp Economic Average (YEA) report, a benchmark of local economic strength in the U.S. The report has been adapted to reveal the dramatic impact COVID-19 has had on local economies, uncovering the resilience of local businesses across the country. While our September Economic Impact Report and the latest unemployment figures show continued economic uncertainty, our data finds that certain areas of the local economy show promising signs of adaptability.

This press release features multimedia. View the full release here: https://www.businesswire.com/news/home/20201022005382/en/

Yelp Economic Average finds that new restaurant and food businesses are opening at pre-pandemic levels, with the number of new openings increasingly more in line with 2018 and 2019 volumes. (Graphic: Business Wire)

Yelp Economic Average finds that new restaurant and food businesses are opening at pre-pandemic levels, with the number of new openings increasingly more in line with 2018 and 2019 volumes. (Graphic: Business Wire)

YEA finds that new restaurant and food businesses are opening at pre-pandemic levels, with the number of new openings increasingly more in line with 2018 and 2019 volumes. In addition, 210,000 businesses have reopened that were once temporarily closed, with a large increase of reopenings in September 2020. The report also details consumer trends, surfacing outdoor dining as the breakout hit of the summer, along with outdoor-related services businesses and leisure activities. In its third quarter report, YEA reflects data from millions of local businesses and tens of millions of users on Yelp’s platform, measuring U.S. business openings and reopenings, as well as consumer interest trends via search data, page views, reviews and photos.

“Business owners have proven their resilience throughout the course of this pandemic. Many have been able to successfully reopen and keep their doors open by quickly innovating and adapting new operating models to serve their customers,” said Justin Norman, Yelp’s vice president of data science. “Restaurants in particular have been tested in the last six months, but we’re now seeing new restaurant and food business openings align with opening rates from previous years. In what at times seems like a never-ending stream of challenges for business owners, it’s encouraging to uncover these bright spots in the local economy.”

New Restaurant and Food Businesses Continue to Open Amid a Challenging Economy

In April, restaurants endured a large drop in new openings, however in May a rebound had already begun, with a 29% average monthly increase of new restaurant openings from May to July. New restaurant openings have stayed relatively flat in August and September, with approximately 6,600 new restaurants opening each month. There were only 100 fewer new restaurant openings in September of this year, compared to September 2019. New restaurant openings in Q3 2020 are only down 10% compared to Q3 2019.

Compared to Q3 2019, Yelp observed an increase in brand new openings in Q3 2020, nationally, for open air food services including: farmers markets (211 openings) and food trucks (1,734 openings). In addition, pop-up restaurants (100 openings) and seafood markets (84 openings) experienced an increase in openings compared to the same period in 2019, catering to consumers' interests in novel ways to dine and shop for food outside of traditional restaurant experiences. Yelp data also indicates that openings increased for food businesses specializing in celebratory treats that are often enjoyed at home or purchased as gifts, including cupcakes (494 openings), custom cakes (512 openings), and desserts (1,615 openings).

Yelp measures community resilience by comparing the rate of change of new openings in Q3 relative to Q2, removing seasonal impact. Community resilience determines how well states have rallied to open new businesses in Q3 compared to Q2 during the pandemic. States that showed the most resilient third quarter for restaurant and food-related business openings include North Dakota (39 openings), Washington D.C. (108 openings), Rhode Island (69 openings), New Hampshire (103 openings), and Wyoming (34 openings) — all with at least 2X the openings in Q3 compared to the previous quarter. States with the largest total number of new openings in Q3 tend to be larger and heavily populated, including California (3,279 openings), Texas (2,002 openings), Florida (1,542 openings), New York (1,420 openings), and Washington (561 openings).

Business Reopenings Rise Across the Country in Q3

Amid a year of unprecedented challenges for U.S. small businesses, more than 210,000 have reopened after temporary closing (between March 1 and September 30). Yelp analyzed the reopening trends in each state by comparing the change in reopenings month-over-month.

After the initial outbreak of the pandemic, business reopenings began in April when many states began to lift their stay-at-home orders in exchange for more lenient regulations. Nationally, Yelp data shows a sharp spike in business reopenings, month-over-month, of temporarily closed businesses in April and May followed by a decline in business reopenings in June and July – when cases climbed again across the nation.

Case containment responses as a result of the early summer spikes drove renewed momentum of reopenings in August and September. States that experienced a 30% or more increase in reopenings from July to August include: Louisiana (90% increase), Montana (86% increase), South Dakota (55% increase), North Dakota (50% increase), Iowa (34% increase), Indiana (35% increase), and Wisconsin (30% increase). These reopenings continued into September, when North Dakota, Alabama, Idaho, Wyoming, and Oregon experienced more than 3X the number of reopenings in September than in August.

While the average rate of reopenings have slowed overall since April and May, Yelp data shows businesses are continuing to reopen, particularly in September, as business owners adapt to changing local regulations and fluctuating COVID-19 infection rates.

Reopenings Increase Across Financial Services, Education, Active and Beauty Categories in the Third Quarter

Yelp’s September Local Economic Impact Report found that businesses in home, local, professional, and automotive services showed a lower closure rate than restaurant and retail businesses. Now, Yelp’s reopening data supports a resurgence in demand for categories that were previously pushed to temporarily close.

With school back in session, Yelp’s data indicates that preschools, childcare and kids activities experienced high proportions of their reopenings in Q3 relative to their total category openings since March 1, with 55%, 53% and 48%, respectively. People are returning to exercise classes with kickboxing and martial arts experiencing 68% and 46% of their reopenings in Q3. Beauty salons are also making a comeback with 44% of reopenings for sugaring businesses and 43% of reopenings for eyebrow services happening in Q3. Similarly, leisure activities began to reopen at higher rates, including movie theaters, arcades and amusement parks, all with 54% to 53% of their reopenings in the third quarter.

A handful of home and local services businesses experienced a large percentage of their openings in Q3, including locksmiths, home appliance repair and bike maintenance with 60%, 53%, and 47% of total category reopenings in the quarter, respectively. As consumers navigate the effects of the pandemic on their personal finances, many financial service providers experienced a majority of their reopenings in Q3. Banks, financial advisors, tax services, insurance companies and investing firms led the way, all with 68% to 56% of their category reopenings in Q3.

Consumer Interest is Up for Outdoor-based Professional, Local, Auto and Home Services

Throughout the summer, Yelp data showed an increase in customer interest for all things outdoors. In Q3 2020, share of consumer interest surged for businesses that repair and service bicycles (104% increase from a year earlier), boats (75% increase), and RVs (32% increase), while consumers’ general interest in RV parks (59% increase) ramped up throughout the summer for both leisure and socially distanced travel.

As the months heated up, consumers invested in making their outdoor spaces usable. Share of interest in home services for pool and hot tub services, and for landscape architecture, increased by 41% and 35%, respectively.

Outdoor Dining Spikes as Consumers are Eager to Head Back to Restaurants

Outdoor dining was one of the biggest trends of the summer as diners looked for ways to eat out while staying safe. In Q3 2020, the share of U.S. restaurant reviews mentioning ‘outdoor dining’ was more than double the share in Q3 2019. And the share of U.S. restaurant searches using the ‘outdoor seating’ filter on Yelp was up more than 5X compared to the same time last year. Similarly, review mentions for ‘street dining’ increased 5X between Q3 and Q2 2020. To meet this unprecedented consumer demand, restaurant and food-related businesses moved their existing operations to sidewalks and streets, and launched new ventures catering to the demand.

Find Q3 YEA assets and images here, and all of our previous Yelp Economic Average reports and other resources at yelpeconomicaverage.com. For more information and Yelp’s latest company metrics, visit: https://www.yelp-press.com/company/fast-facts/default.aspx

Methodology

Business Openings
Openings are determined by counting new businesses listed on Yelp, which are added by either business owners or Yelp users. New openings in this report are specifically for restaurant and food categories. Openings are adjusted year-over-year, meaning openings in 2020 are relative to the same period of time in 2019 for the same category and geographic location. This adjustment corrects for both seasonality and the baseline level of Yelp coverage in any given category and geography.

Business Reopenings
On each date, starting with March 1, we count U.S. businesses that were temporarily closed and reopened through September 30. A reopening is of a temporary closure, whether by using Yelp’s temporary closure feature or by editing hours, excluding closures due to holidays. Each reopened business is counted at most once, on the date of its most recent reopening.

Openings and reopenings are based on when they're indicated on Yelp, as such, the data may lag slightly from the true opening or reopening date due to a delay in reporting from consumers and business owners.

Resilience
Community resilience compares the rate of business openings per state from Q2 to Q3 in 2020 and adjusts for the natural rate of openings in 2019 to determine how well states have rallied to foster new business during the pandemic.

Mathematically, resilience is calculated as Q3 YoY adjusted openings less Q2 YoY adjusted openings divided by Q2 YoY adjusted openings. YoY adjusted openings are openings this year divided by openings last year (for any given month/quarter etc.).

Consumer Interest By Business Category
We measure consumer interest, in terms of 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. Consumer interest for each category is based on the Q3 year-over-year change in the category’s share of all consumer actions in its root category.

Review Mentions and Search Filters
For the data regarding outdoor dining, we measured the share of total words in U.S. restaurant reviews containing phrases related to outdoor dining. Similarly, for search filters we measure the share of U.S. restaurant searches using filters for takeout, delivery, or outdoor seating.

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.

Contacts:

Yelp Inc.
Julianne Rowe
press@yelp.com

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