2021 Annual Yelp Economic Average Report

For more on the methodology for this report, click here.

In Q4 the labor shortage and supply constraints persisted, the new Omicron variant led to a surge in COVID cases, and US inflation hit a 39-year high. Against this backdrop, businesses of all sizes are continuing to find ways to serve consumers amidst economic uncertainty, with a majority of small business owners remaining optimistic about the future of their business.

Consumers and business owners alike are still navigating the complexities of everyday life in the pandemic – all while inflation drives up the price of goods and services, presenting another hurdle for the economic recovery. In fact, consumers described more inflationary experiences within their reviews on Yelp in 2021 than ever before. Last year also brought an increase in new business growth with nightlife, beauty, and hotels and travel businesses making a comeback. While in Q4, increases in consumer interest across several categories signaled a return to gathering and traveling.

Concerns About Inflation Reached a Record High on Yelp in Q4, yet Consumers Continued to Search for Higher Priced Businesses

Inflation is a growing concern for business owners across the country. Higher prices for business essentials, including supplies and labor, means higher operating costs for businesses at a time when many are still trying to recoup losses from shutdowns. In November, small businesses saying they raised their prices rose to the highest level since 1978 according to the National Federation of Independent Business.

To illustrate how consumers perceive the impact of inflation during their interactions with local businesses, Yelp analyzed review text for specific mentions of various terms related to inflationary experiences such as “higher prices,” “used to be cheaper,” and “more expensive” vs disinflationary experiences such as “consistent value,” “stable prices,” and “reasonably priced” from 2015 to 2021 to see how consumers’ sentiment has changed over time.

As the U.S. government reports changes in the inflation rate, we see those trends reflected in review sentiment on Yelp. According to Yelp data, reviewers have consistently reported increasing prices at local businesses since 2015. At the onset of the pandemic, this sentiment decreased suddenly in Q2 2020, but quickly rebounded to near pre-pandemic levels by the following quarter in Q3 2020. By 2021, consumer reviews indicated a surge of increased prices of goods and services, reaching a five year peak in Q4 2021, a 29% increase from Q4 2020 and a 49% increase from the 5 year low in Q2 2020.

Inflation Sentiment on Yelp Reaches a Record High in Q4

Mentions of inflationary vs. disinflationary terms in Yelp reviews since 2015

While consumers may be aware of increasing prices, like the rising costs of dining out, it hasn’t necessarily impacted their spending habits. Yelp data shows an increase in searches for higher priced businesses in 2021 when compared to pre-pandemic searches (2019). Searches have increased for businesses designated “$$$$” (the highest price point on Yelp) by 56%, and “$$$” by 31% in 2021. Simultaneously, searches for “$” and “$$” businesses have decreased 24% and 8%, respectively, during the same time period.

Consumers Continue to Seek Out Higher Priced Businesses

Percent of Searches for Businesses Marked As





Even as concerns about the impact of inflation grow, consumer spending across the economy remains strong.

New Business Openings Increase Nationally in 2021

Businesses in all sectors have proven their resilience in 2021 – the Transportation Security Administration reported near pre-pandemic levels of holiday travel in Q4, and more cities, including Washington D.C. and Chicago, are implementing vaccine mandates for indoor dining and entertainment to make it safer for bars and restaurants to continue operating. Yelp data supports this trend and points to a resurgence in some of the categories hit hardest by the pandemic, including beauty, travel and nightlife.

In 2021, business openings increased by 8% to 559,715 up from 517,231 in 2020. Nightlife (9,344 new businesses), hotels and travel (12,396), beauty (42,540) and local services (60,069) categories on Yelp had the largest percentage increases year-over-year, rising 26%, 23%, 14% and 15% respectively in 2021. Restaurant and food new business openings (74,616) also increased 10% from 2020 (67,611). Overall new business growth was near pre-pandemic levels decreasing only 1% in 2021 compared to 2019.

More Than 550K New Businesses Opened in 2021

Business openings by month on Yelp, January 2018 – December 2021

This growth trend was also seen throughout Q4 2021, with increases in nightlife (up 30%), beauty (13%), and hotels and travel (22%) all above Q4 2020 levels – and nearing a return to pre-pandemic levels (2019). Overall, new business openings in Q4 2021 (121,943) were in line with Q4 2020 (122,773), decreasing by less than 1%.

New Business Openings Increased in Nearly Every State in 2021; Southern States Lead the US in New Business Growth

As a wave of entrepreneurship spread across the country, Yelp data shows a year-over-year increase in new business openings in 2021 in every state except Maine, Massachusetts, New Hampshire, New Mexico, North Dakota, Oregon, and Washington. States in the South saw some of the largest percentage increases for new business growth including: Mississippi (27% increase), Alabama (22%), Georgia (19%), and Louisiana (16%).

Business Openings Grew in Nearly Every State in 2021

Change in New Business Openings for All Categories on Yelp, 2021 vs. 2020



In Q4 2021 Hawaii (44%), Indiana (14%) and South Carolina (8%) had the largest increase in new business openings compared to Q4 2020. Texas (6%), California (4%), and Georgia (4%) also experienced an increase in new business openings during the same period.

Consumer Interest Changes Signal a Return to Travel and Events

In Q4 2021 the holiday season arrived with more people returning to in-person gatherings than we’ve seen since 2019. Yelp data shows an increase in consumer interest for activities that point to a desire to blend pre-pandemic norms with our current reality. Consumer interest – measured by counting a few of the many actions people take to connect with businesses on Yelp: viewing business pages, and posting photos or reviews – demonstrates how people are engaging with local businesses, in turn providing insight on consumer trends that impact the local economic recovery.

As people continue to navigate shifting pandemic restrictions, Yelp data shows that consumers are opting for private events, driving increased interest in categories related to event services. In Q4 2021, consumer interest on Yelp increased for game truck rentals (up 89%), balloon services (42%), DJs (110%), photo booth rentals (144%), silent disco (284%) and personal chefs (11%), when compared to Q4 2020 levels.

Despite growing concerns surrounding the Omicron variant, air travel over the Thanksgiving holiday week set a pandemic record and Yelp data revealed Americans’ growing appetite for travel. In Q4, consumer interest in several travel categories bounced back from 2020 levels, including luggage storage ( up 101%), airport shuttles (66%), travel agents (39%), bus tours (33%), and food tours (21%).

Consumer Interest in Travel and Events Rebound from 2020 Lows

Select categories with percent increases in consumer interest, Q4 2021 vs. Q4 2020

Consumers Continue to Order-In Even as More Return to Dining Out

Restaurant and food businesses continue to face challenges posed by the ongoing pandemic, inflation and labor shortage. Yelp data points to a continued high-demand for food delivery services with consumer interest in Q4 2021 7% higher than 2020, and 107% higher than pre-pandemic levels (2019). For those that ventured out, we saw a rise in consumer interest in dining options previously upended by social distancing guidelines, including dinner theater (97%), hot pot (55%), buffets (31%) and conveyor belt sushi (55%) – all increasing from Q4 2020 levels.

Consumers now have more options than ever for how they will dine, increasing the opportunity for local food and restaurant businesses to serve their customers.

Communal Dining Options Have Regained Popularity

Select categories with percent increases in consumer interest, Q4 2021 vs. Q4 2020

Overall, 2021 underscored how the pandemic, coupled with supply chain and labor constraints, and pent-up demand, complicate the economic recovery. Business openings inched closer to pre-pandemic levels and vaccinations have played a key role in allowing many to return to in-person activities that were restricted just a year ago. As things continue to evolve, we will provide the latest updates on the state of local businesses in our upcoming economic insights reports.

— Jessica Mouras, Will Langston, and Jenny Kao contributed to this report.

If you'd like additional detail on how the economy is shifting, please contact us at press@yelp.com or join our mailing list to receive an email when new reports are released.

Interested in learning how Yelp data can assist you in developing market insights for your business? Yelp Knowledge can help, learn more here.


Price Range Filter Usage

There are currently 4 pricing tiers ($, $$, $$$, and $$$$) on Yelp and the pricing tier of a business is voted on by Yelp users. Consumers can use the price range filter when searching for businesses on Yelp. The share of different pricing tiers used by consumers signals their general willingness to spend.

Review Text Inflation / Disinflation Sentiment Ratio

To observe the sentiment of Yelp consumers over time, we analyzed review text from 2015 through 2021. Yelp examined consumers’ experience of inflationary situations, such as rising prices for goods and services and compared that experience to the inverse scenario of disinflation, which includes sentiments indicating stable prices and consistent values. The ratio is calculated as the volume of review text phrases indicating consumer sentiment of inflation vs consumer sentiment of disinflation, normalized by the number of times per million the groups of phrases appeared in reviews. This ratio was calculated quarterly and deseasonalized via the index method using the previous 5 years (2015 - 2019). A ratio above 1.0 indicates overall consumer sentiment of inflation and below 1.0 indicates disinflation sentiment. This was calculated on a national basis across all major Yelp categories. Changes in the ratio are quarter-over-quarter percent changes.

New Business Openings

Openings are determined by counting new businesses listed on Yelp, which are added by either business representatives or Yelp users. Openings are adjusted year-over-year, meaning openings are measured relative to the same time period in the previous period for the same business categories and geographic locations. This adjustment corrects for both seasonality and any differences in the baseline level of Yelp coverage in any given category and geography.

Consumer Interest

We measure consumer interest by looking at select actions users take to connect with businesses on Yelp: such as viewing business pages, or posting photos or reviews.

Changes in consumer interest for each category were measured by comparing year-over-year data from Q4 2021 and Q4 2020, focusing on each category’s share of all consumer actions in its root category.

Downloadable static graphics can be found here.

See Yelp's previous Coronavirus Economic Impact Reports from March and April 2020 at our Data Science Medium, Locally Optimal.