More than 175,000 business firms across the United States, most of them small businesses, have closed shop since March 1 alone due to the unimaginable consumer demand destruction caused by COVID-19. Among firms that stopped doing business were 48,000 stores, 30,000 restaurants , and 24,000 spas and other beauty businesses. And the awful numbers keep rising.
Business closure rates across the country skyrocketed 200% or more in metros and states across the U.S, said the Yelp Economic Average (YEA) report. YEA is a benchmark of local economic strength in the U.S. issued by social networking and business reviews website Yelp Inc. YEA also revealed consumer interest in local businesses plummeted by 50% or more in many categories -- all in a span of only two weeks.
One of the hardest-hit categories was bars and other nightlife businesses, whose patronage plunged by 81% between March 10 to 21, according to YEA. Salons and other beauty businesses saw consumer interest drop 77%, hotels, and other travel businesses were down 75% while restaurants were down 52%."
More than 175,000 businesses have been marked as shutting down (temporarily or permanently) on Yelp. The Los Angeles metro area saw the largest number of closed businesses. The next worst hit was New York and Chicago.
On the other hand, Seattle and San Francisco have the highest rate of business closure as a share of all businesses among major metros. Philadelphia and Miami have the lowest rate of business closures among major metros.
YEA found the rate of nationwide closures turned sharply for the worst during the second and third weeks of March as social distancing warnings gave way to shelter-in-place orders and other government measures to curb the pandemic. YEA said closure rates increased by two to four times on or around March 16, and have since remained at that new and a higher rate.
"In 15 days, the economy transformed as much as it had in our prior 15 years of operation, combined," said Carl Bialik, Yelp's data science editor. "This quarter has been unlike any other as businesses suddenly closed nationwide, consumer interest plummeted, businesses overhauled their business models, and workers and consumers changed lifelong habits overnight.
Bialik also said consumer activity turned steeply downwards across the board just as businesses began closing nationwide. He pointed out the exact date and rate of a steep decline in searches varied by state, depending in part on what people were instructed by elected officials.
Before the pandemic, there were 63,615 bars and nightclubs in the U.S. said market research firm IBISWorld. The National Restaurant Association counted more than one million eateries in the U.S., employing 15.6 million people before the pandemic. The restaurant industry had projected $899 billion in sales for 2020.
On the flip side, YEA said some businesses saw a surge in consumer interest. The fortunate ones include fitness and exercise equipment, community-supported agriculture, and guns and ammo.
