Yelp Economic Average Finds New Business Openings in Q1 2021 Hit Highest Level Since the Pandemic Began
Yelp Inc. (NYSE: YELP), the company that connects people with great local businesses, today released first quarter 2021 data for the Yelp Economic Average (YEA) report, a benchmark of local economic strength in the U.S. The Q1 2021 YEA shows strong signals of local economic recovery with more new businesses opening than at any other period over the last 12 months and business reopenings at the highest level since Q2 2020.
This press release features multimedia. View the full release here: https://www.businesswire.com/news/home/20210421005384/en/
Nearly every state in the U.S. saw an increase in new openings in Q1 2021, according to data from the Yelp Economic Average. (Graphic: Business Wire)
YEA found that more than half a million new businesses opened in the U.S. in the last year (April 1, 2020 - March 31, 2021), down by only 11% year-over-year (YoY). New business openings spiked in Q1 2021, with restaurant and food business openings, as well as home, professional, local and auto services openings above Q1 2020 levels. Business reopenings are also rising across the country with reopenings in each month of the first quarter the highest they have been since Q2 2020. Yelp data also finds evidence of the pandemic home buying frenzy through new business openings and consumer interest changes in real estate and home services categories.
“After a challenging year, 2021 is off to an encouraging start for the local economy, with Yelp data signaling a recovery as new business openings and business reopenings soar in the first quarter,” said Justin Norman, Yelp’s vice president of data science. “Yelp data shows a sharp increase of business reopenings in Q1 – with reopenings hitting its highest levels since August 2020. New business openings also spiked between January and March 2021, with new openings for many categories above prior year levels. Along with a downward trend of nationwide COVID-19 cases and an increase in vaccinations, these are all promising signs of rebounding local economies.”
More Than Half a Million New Businesses Open in the Last Year
In the last 12 months, Yelp data reveals there were 516,754 new business openings in the U.S. (April 1, 2020 through March 31, 2021), down by only 11% YoY. Of the newly opened businesses, 69,001 were restaurant and food businesses, down by 14% YoY.
In professional, local, home and auto categories, 272,749 new businesses opened in the last 12 months, up by 2% YoY. Home services openings were 165,006 for the year (up 5% YoY), local services openings were 54,369 (up 3%), professional services openings were 51,839 (up 2%), and auto openings were 34,282 (down 4%).
New Business Openings Spike in Q1 2020, Comparable to Prior Years
Though local businesses are still experiencing continued challenges and capacity restrictions, Yelp data shows that more new businesses opened in the U.S. during the first quarter of 2021 than at any other period over the last 12 months. With 146,486 total business openings in Q1 2021, the level of new openings is comparable to years prior, down by only 2% year-over-year (YoY) and up by 4% from Q1 2019.
During the first quarter, restaurant and food business openings (18,217) were up by 5% from Q1 2020 and down by only 4% from Q1 2019. Professional, local, home and auto sectors also saw a significant number of new business openings (79,332), up by 5% from Q1 2020 and up by 23% from Q1 2019. Of those, home services had the highest number of new openings in Q1 (48,592 up 4%), followed by local services (16,602 up 16%), professional services (14,134 up 2%) and auto services (9,790 up 10%).
Nearly every state in the U.S. saw an increase in new openings in Q1 2021, compared to Q4 2020. States with the largest increase in new openings in Q1 2021 compared to Q4 2020 were Mississippi (979 openings, up 39% quarter-over-quarter), Alabama (1,921 openings, up 35%) and Maine (450 openings, up 32%). The largest counts of openings in the quarter tend to be in larger and more heavily populated states, including California (22,157 openings), Texas (14,860 openings), and Florida (14,793 openings).
Business Reopenings Rise Across the U.S., Reach Highest Level Since Q2 2020
As COVID-19 cases continue a downward trend in most states across the U.S., business reopenings have accelerated. The total reopenings since March 1, 2020 climbed to 258,191 up from 230,209 as of Dec. 31. Reopenings in each month of the first quarter were the highest they have been since August 2020. As heavy restrictions lifted, national reopenings picked up early in the quarter. January saw the highest number of reopenings in the quarter, and while reopenings slowed in each subsequent month of Q1 2021, March reopening levels still remained high.
Due to the wide-ranging nature of COVID-19 responses throughout the nation, the following states experienced over 65% of their reopenings in Q1 2021, since August: Arkansas (302 reopenings), Delaware (140 reopenings), Mississippi (287 reopenings), Maryland (951 reopenings), Tennessee (872 reopenings), and Texas (5,331 reopenings).
Yelp Data Shows Evidence of Pandemic Home Buying Frenzy
Yelp data reveals insight into the recent home buying frenzy, as many businesses related to moving preparations opened within the home and local services sectors in Q1 2021, such as truck rentals (378 openings, up 26% quarter-over-quarter), dumpster rentals (857 openings, up 21%) and junk removal (6,181 openings, up 19%).
Consumer interest changes on Yelp also indicate that people across the U.S. have been focused on their homes – whether buying a new property or improving their current space. Every state in the U.S. saw more than a 90% increase in consumer interest for real estate agents compared to Q1 2020. In preparation to move or declutter, consumer interest for junk removal services was up by more than 100% in every state. Consumers are also taking on larger, more intensive home renovation projects, as consumer interest in architects was up 100% compared to Q1 2020 in every state except Nevada. Consumer interest increased by more than 100% for electricians in every state except for Washington, D.C., and interest in handymen increased by more than 100% in every state except for Michigan, which saw a 68% increase.
Read the full report, as well as previous YEA reports, at yelpeconomicaverage.com. Assets and images from the Q1 2021 YEA report can be found here. For more information and Yelp’s latest company metrics, visit: https://www.yelp-press.com/company/fast-facts/default.aspx
New Business Openings
Openings are determined by counting new businesses listed on Yelp, which are added by either business owners or Yelp users. Openings are adjusted year-over-year, meaning openings are relative to the same period of time in the previous period 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.
On each date, starting with March 1, 2020, we count U.S. businesses that were temporarily closed and reopened through March 31, 2021. 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.
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 Q1 2021 year-over-year change in the category’s share of all consumer actions in its root category.
Baseline levels of interest for changes from Q4 2020 to Q1 2021 were measured between December 1 and December 31, 2020, corresponding to the announcement of FDA approved vaccinations. We now measure consumer interest levels normalized by their average value over the baseline through March 31. As such we measure consumer interest in these categories – relative to the December, “start of official recovery”, baseline level of interest. This is a good general indicator of consumers' path towards reverting to the norm and becoming more active economically and socially.
To measure seasonally adjusted daily consumer interest we start with the biggest U.S. categories by consumer actions. Among those, we select the biggest gainers and biggest decliners in terms of their share of all root category consumer actions since December 1. Then we choose representative ones to show the trend, which we’re charting from December 1, 2020 through March 31, 2021.
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.