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.
While it’s true that small business, restaurants in particular, are volatile in the best of times, Yelp lays these closures at the feet of the pandemic.
According to Yelp, “As of August 31, 163,735 total U.S. businesses on Yelp have closed since the beginning of the pandemic (observed as March 1), a 23% increase since July 10. In the wake of COVID-19 cases increasing and local restrictions continuing to change in many states we’re seeing both permanent and temporary closures rise across the nation, with 60% of those closed businesses not reopening.”
It’s Good Time to Be a Contractor
Home and professional services, by and large, have fared well through the pandemic thus far. This is consistent with a discussion we had this week at Localogy 20/20 with HomeAdvisor President Craig Smith. He told us that, with some exceptions, demand for home services is way up during the pandemic. What’s driving this? It’s those upper-income consumers who suddenly find themselves working from home. They have cash on hand that isn’t being spent on travel or at restaurants. So they pour it into their houses.
Yelp reports its traffic data supports this observation.
“In fact, the share of consumer interest in home and local services is up 24% between March 1 and August 31, relative to all categories on Yelp, compared to the same time last year,” Yelp said in the report summary.
Similarly, health-related businesses have avoided the worst, even if they are not having the same boomlet as the home services categories. “Health-related businesses, in particular, have been able to maintain a low rate of closures – orthopedists, internal medicine, hospitals, physicians, family doctors and OB/GYNs all have less than three closures out of every thousand businesses,” Yelp reports.
The Dining and Retail Bloodbath Continues
The flip side of this is devastating, of course. Restaurants and retail businesses are taking it on the chin. And their situation may get worse before it gets better. Most health experts believe the coming fall and winter will be challenging. Outdoor dining is one measure that has helped restaurants eke out a living this summer. This will be off the table this winter, at least in the colder parts of the country. What is harder to predict is whether the public health situation will call for a new round of lockdowns. And if so, will there will be the political will to impose them?
As the chart below shows, Yelp has counted 32,109 restaurant closures since March 1, 61% of which are permanent. Retail has also been hit as hard. Beauty, bars, and fitness businesses are struggling as well.