The Pandemic Has Caused More Than Half of Stores and Restaurants to Close
The COVID-19 pandemic dealt heavy blows to the retail, hospitality and service sectors of many of the nation’s largest cities, already wiping out 55% of all businesses that have permanently closed because of the contagion as of March 1, according to Yelp, the crowd-sourced review platform.
In all, 132,500 businesses have permanently or temporarily closed, Yelp said in its second-quarter Economic Average report. Temporary business shutdowns are decreasing nationally as some states reopen, but permanent closings are on a sharp upward climb, accounting for nearly 73,000 of all closed businesses.
And that number is expected to rise as new cases of the deadly coronavirus pop up in a number of states throughout the country, including Arizona, Texas and Florida.
Those numbers underscore the economic pain that many states and cities are experiencing after a near nationwide lockdown aimed at curbing the spread of the coronavirus kept consumers at home and businesses closed. Not only do they get whacked by the decreasing dollars going into tax coffers, but tens of thousands of jobs have been lost with no easy fix for the unemployed.
The retail industry, for example, is the largest private employer in the nation, supporting more than one in four jobs that range from management to supply delivery, or 52 million workers, according to the National Retail Federation. The restaurant industry is another major employer and the first job for many Americans. The National Restaurant Association estimates there are 15.6 million jobs in more than 1 million restaurants.
At a peak in mid-April, the total number of business closings that included retail and hospitality as well as fitness centers and spas stood at an astonishing 177,000 nationwide, according to the Yelp report. That number has zig-zagged since, following the reopenings and closings of stores and eating and drinking establishments in certain cities.
By mid-June, businesses that had closed, whether temporarily or permanently, stood at 140,000, climbing to 147,000 by June 29 and falling to 132,500 by July 10. “This rapidly changing number of closures reflects rapidly evolving situations at the local level, as some states with rising cases start to close again, while others continue to reopen,” according to the report.
Not surprisingly, the cities with the highest number of overall closings both temporary and permanent, were among the nation’s largest and most urban: Los Angeles at 11,342; New York with 9,564; San Francisco at 5,048; and Chicago with 4,412.
The restaurant industry ranks as the hardest hit with restaurants such as Blackbird, a 24-year-old pioneer of Chicago’s burgeoning West Loop neighborhood, to the 400 Starbucks going dark across the nation as temporary closings change to permanent status at a staggering rate. The industry, typically a low-margin business, takes the No. 1 spot in permanent shutdowns with 15,770 closings — and counting.
Meanwhile, bars and nightlife, an industry six times smaller than restaurants, have been bombed too, with 2,429 never opening their doors again.
Some 12,454 retail businesses of all shapes and sizes have folded while the beauty industry lost 4,897 and the fitness industry, unable to keep up bill paying with virtual workouts, now has 1,930 closed gyms.
As states and cities mostly slowly rev up the economic engines, some such as California, Texas and Florida have had to slam on the brakes as record numbers of COVID-19 cases have surfaced once the masses leave their homes to eat, drink and shop, and many times, hit the beach.
How this all shakes out is still anybody’s guess, but Yelp sees a correlation between big shifts in consumer interests and an uptick in COVID-19 cases.
“As outbreaks worsened through late June, consumer interest in these categories started to come back down in states like Florida, Texas, South Carolina and Arizona,” the report said. “This emphasizes the strong correlation between the pandemic and consumer behavior.”
In other words, these numbers could get bleaker yet by the time there’s a vaccine, another treatment or, better yet, an end to the pandemic.
