New Yelp Data Highlights Resilience of Restaurant Sector

In September, we wrote about the toll the pandemic has taken on the restaurant space. This was according to data collected by Yelp as part of its ongoing Local Economic Impact report. Here is what we said then:

Yelp released its September Local Economic Impact Report today and the findings were pretty grim. The big headline from this report is Yelp’s estimate that 60% of the business closures resulting from the pandemic are now permanent. Let that sink in. Nearly 100,000 businesses (97,966 to be precise) have permanently closed their doors during the crisis.

Yelp’s new report shows that regrowth is occurring in the restaurant space. Not unlike what happens in a forest after a devastating fire. Fortunately, industries typically bounce back faster than forests do.

Keeping Pace with 2019

Here is the bottom line from Yelp’s Q3 report. After the bottom fell out in April, new restaurant openings rebounded, beginning in May. New formations saw a 29% average monthly increase from May to July.

New restaurant openings remained flat through August and September. About 6,600 new restaurants opening each month during that span. Notably, only 100 fewer new restaurants opened in September 2020 vs September 2019. Overall, new restaurant openings were down 10% compared to Q3 2019. Still, that’s an impressive figure considering what the industry has experienced this year. And the risks involved in opening a restaurant in this environment.

“Opening a restaurant is no easy feat under normal economic circumstances,” Yelp writes in the latest report. “Yet it’s happening during the pandemic at a higher rate than one might expect.”

Yelp reports that many newly formed restaurants are “pandemic-optimized”. For example, the new restaurants tend to highlight features that include large patios, spaced out tables, order ahead menus, and efficient service cuisine.

And many of the new businesses have an exclusively outdoor angle. From the report.

“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 from 2019, catering to consumers’ interests in novel ways to dine and shop for food outside of traditional restaurant experiences.”


Overall, a Gradual Return to Normal

Given its focus on dining, the lead from Yelp’s data inevitably centers on the health of restaurants. Yet Yelp is measuring the overall health of small business during the pandemic. And the news here is also positive. The biggest takeaway is that businesses forced into hibernation earlier in the year began emerging in Q3.

For example, consumers are returning to exercise classes. These had either been shut down or deemed unsafe by consumers. Another example is beauty salons. According to Yelp, 44% of sugaring businesses have re-opened. Not quite sure what “sugaring” is, but I am sure that’s great news to those who do. Eyebrow services also emerged from hibernation, with a 43% reopening rate during the quarter.

“Similarly, leisure activities began to reopen at higher rates,” Yelp reports. “Including movie theaters, arcades, and amusement parks, all with 54% to 53% of their reopenings in the third quarter.”



Escaping to the Outdoors

Yelp has also noted some consumer trends that seem to reflect the pandemic “new normal”. One of these was a big jump in outdoor activities. Of course, that’s to be expected during the summer. But the fact is, getting outdoorsy is a pretty safe activity in a pandemic. This clearly played a role in the jump.

“We also see the impact of people eager to vacation, even if it’s close to home,” the Yelp report said. “Among the top-gaining categories, many were outdoors-focused, such as farms and jet-ski rentals. The natural ability to enjoy these activities while safely social distancing was a major appeal this summer.”


The Yelp data offers a glimmer of hope for small businesses that have had about as tough a year as imaginable. But we’ve learned a few hard lessons this year. One of them is that this thing isn’t over until it’s over. If indoor dining is severely curtailed over the winter, many restaurants that have hung on by a thread thus far may finally succumb. Meanwhile, it’s worth celebrating the resilience of small businesses.

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