Yelp Economic Average Uncovers a Drop in Total Business Closures and a Rise in Permanent Closures During the Second Quarter

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.