Greater than 500,000 new companies opened prior to now yr, in response to Yelp
Kevin Kahovec and Mary Kate McGovern chat at Rizzo’s Bar & Inn in Wrigleyville as coronavirus disease (COVID-19) restrictions are eased in Chicago, Illinois on March 6, 2021.
Eileen T. Meslar | Reuters
More than 500,000 new businesses opened in the U.S. last year as the economy recovered from the depths of the Covid pandemic, according to new data from Yelp.
In its Economic Average Report, published Wednesday and compiled from its service listings, Yelp recorded 516,754 new store openings from April 1, 2020 to March 31, a sharp drop of just 11% year over year. About 28% (146,486) were in the first three months of 2021, a decrease of only 2% compared to the previous year.
“Our data shows that more new businesses opened in the US in the first quarter of 2021 than any other period in the past 12 months. This gives an optimistic outlook that local economies are back on solid foundations after a turbulent year.” Yelp Data Science Vice President Justin Norman told CNBC. “After a challenging year, 2021 got off to an encouraging start for the local economy.”
Yelp data found that more than 69,000 new restaurants and grocery stores opened in the past year. While that’s a 14% year-over-year decrease, it’s still strong as these companies were hit hardest by the coronavirus lockdowns and subsequent virus-reduction measures at the beginning of 2020.
“It seems like the year-over-year increase in store openings reflects the current rush in the real estate market,” said Norman. “People are inspired to take advantage of low rents and create new jobs by investing their personal savings in starting a new business.”
Across the country, there were different reopening rates in different states in the first quarter. However, Yelp data found that every state except North Dakota had more openings in the first quarter than in the fourth quarter of last year. Unsurprisingly, the states with the highest number of store openings were among the states that eased restrictions in March or earlier, such as Michigan, Mississippi, and South Carolina.
The reopening of the store hit summer highs
As of March 1, 2020, nearly 258,200 companies have reopened, with over 50,000 in the first quarter of this year, their highest level since last summer.
Yelp has been publishing economic reports since the pandemic began, resulting in the temporary or permanent closures of hundreds of thousands of businesses across the country. Yelp measures reopened stores by counting U.S. companies that have temporarily closed and reopened through March 31, 2021. Every reopened store is counted on the last day of its reopening.
“Store reopenings also increased across the country, and even rose in the first quarter of 2021,” Norman said.
The types of businesses that reopened heavily in the first quarter mostly reflect sectors hit by the closings, including bars, coffeehouses, and breakfast and brunch spots.
There was a particularly strong increase in reopenings in tax services. “In the first quarter, more banks and tax services reopened to provide personal assistance. This, along with an especially confusing 2020 tax season, explains why we have seen an increase in reopenings for tax professionals and banks,” said Norman.
Again, Yelp data showed that businesses were reopening in certain states due to the easing of Covid restrictions. Some states, including Arkansas, Delaware, and Mississippi, saw over 65% of their total reopenings in the past three months.
Consumers are showing interest in home improvement, fitness and pickleball
In addition to measuring the number of new businesses and business reopenings, Yelp data also shows how consumer interests are changing and how demand for some pre-pandemic activity returned in the first quarter. Yelp measures consumer interest by counting the actions users take on the website to connect with businesses.
The trends in the real estate and home improvement sectors continued to be strong. Yelp data showed that interest in real estate agents rose 90% and waste disposal services rose 100% in the states. In most states, the demand for craftsmen and electricians also increased.
“I think the trend we see as consumers become more interested in home and local services will depend on where you live and how flexible businesses are when employees can work from home,” said Norman.
“Given recent headlines that more than half of all adults in the US have received at least one Covid vaccine, it makes sense that people are still improving their homes,” he added. “Americans are preparing to return to dinner parties, indoor events, and a summer that will hopefully be better than the last.”
Yelp also saw quarterly increases in interest in some unique experiences and businesses. Interest in wineries rose by over 300%. In some states, interest in international grocery stores rose more than 700%. In some states, interest in horse riding increased 2,000%. Pickleball interest rose 200% in Missouri and Kansas.
Yelp data also shows consumer interest in fitness and exercise increased 18% in the first quarter. Compared to December 2020, the interest in nail salons, motorcycle rentals and driving schools increased briefly, but has evened out. Yelp also saw interest in guns and ammo tips in January, followed by an offset in later months of the quarter.