After COVID-19 initially battered mom-and-pop businesses in 2020, openings of new businesses rebounded in the second year of the pandemic to near pre-virus levels — just not in big cities like New York and Los Angeles.
According to data from the review crowdsourcing website Yelp (YELP), new business openings notched a 14% jump in 2021 to 521,926, up from 457,236 in year one of the pandemic, even in the face of virus restrictions and economic hurdles such as inflation, supply chain disruptions, and labor shortages. The uptick brings the total amount of new businesses added to local economies last year to just 1% lower than the year prior to the pandemic.
Still, despite growth in new businesses nationally, the largest metro areas in the U.S. saw openings decrease, particularly when the Delta and Omicron variants of COVID-19 surfaced, Yelp indicated in its COVID anniversary report.
While business launches rose in southern cities like Atlanta, Dallas, and Detroit, even as virus mutations emerged, metropolitan cities such as Boston, Seattle, Los Angeles, and New York City saw the largest decreases in new business openings during the Delta and Omicron variant waves.
For many small businesses, virus precautions upended certain common practices — for example, restaurants scrapped paper menus for QR codes. The pandemic boosted other practices such as contactless payment, Yelp's report showed.
Card-free digital transactions, or “tap-to-pay,” sharply accelerated in popularity as businesses and customers sought ways to reduce potential exposure to COVID-19. Apple Pay and Google Pay had slowly been gaining traction before the pandemic but saw a significant rise in use, with Yelp reporting a “tremendous uptick” in consumers opting for no-contact payments.
With the rollout of vaccinations and easing of COVID restrictions, many people have resumed their pre-pandemic habits and have gone back to in-person activities. But a trend that appears here to stay is the popularity of open-air dining and outdoor activities, each of which became commonplace for get-togethers in an effort to reduce virus spread.
Yelp users seeking out businesses with outdoor seating surged 292% in year two of the pandemic compared to pre-COVID searches. Moreover, the number of new businesses adopting outdoor dining as an option has grown consistently every month since the coronavirus emerged in 2020 to reach 25,999 in January 2022.
The popularity of the outdoors extended beyond just dining al fresco, with consumer interest in fresh-air activities including scooter rentals, horseback riding, and tennis remaining higher than pre-pandemic levels.
“The pandemic has undeniably changed consumer needs and business operations for the foreseeable future,” Yelp said. “As things continue to evolve, we expect local businesses to successfully adapt and continue to deliver the goods and services that are vital to so many local economies.”
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Alexandra Semenova is a reporter for Yahoo Finance. Follow her on Twitter @alexandraandnyc
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