The restaurant industry has a heartbeat after years on life support
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The restaurant industry is showing signs of life after a brutal stretch brought on by the COVID-19 pandemic, per new Yelp data shared with Axios.
Why it matters: Restaurants are more than just a place to grab a meal — they're a gathering spot for families and communities, a vital employer across the socioeconomic spectrum, and a key swath of the cultural fabric that makes cities unique.
What's happening: Nearly 53,800 restaurants opened their doors last year, up 10% from 2022, based on new Yelp listings.
- Another way of looking at that figure: It's up 2% from 2019, meaning there's been a slight increase in openings compared to pre-pandemic times.
- All told, there were 16.1 new restaurants in 2023 in the U.S. for every 100,000 people.
- New business listings overall were up 20% in 2023 compared to 2022, and up 40% compared to 2019.
By the numbers: Some of the fastest-growing restaurant categories include dessert shops (up 66% in 2023 compared to 2022), creperies (+63%) and hot pot joints (+53%).
- A few other intriguing data points: African restaurants are up 65% when compared with 2019 levels, while Peruvian restaurants increased 28%.
Zoom in: There was a particularly notable upswing in openings out west last year, with 25.5 new restaurants for every 100,000 people in Oregon, 23.9 in Nevada and 22.3 in California.
- New York (22.1) and Florida (21) also made strong showings.
- But Hawai'i takes top honors among states, with 35.4 new restaurants for every 100,000 residents — likely a reflection of a tourism bounce-back.
- Washington, D.C., meanwhile, topped the list overall, with 42.0 for every 100,000 residents.
What they're saying: "The restaurant industry has proven to be resilient throughout the pandemic, with the industry seeing higher restaurant openings in 2023 than pre-pandemic levels for the first time," says Clifford Cate, vice president and general manager, restaurants at Yelp.
- "Even through economic challenges, restaurant owners continue to delight their diners, staying responsive to shifts in consumer preferences, like the increasing demand for earlier reservation times and higher-end experiences."
Yes, but: In a poll conducted last fall by Washington, D.C.'s restaurant association, 75% of the nearly 300 establishments surveyed reported being less profitable than pre-pandemic, down by an average of 34%, Axios D.C.'s Anna Spiegel reports.
- Nearly all raised prices, but they say inflation and labor costs are outpacing them.
- Meanwhile, in a National Restaurant Association survey of over 940 D.C.-area residents, more than half reported dining out less often due to increased prices.
Reality check: It's one thing to open a restaurant. It's another to keep it open through the first week, the first month, the first year.
- Many existing establishments are struggling with high food, rent and labor costs; startups will face those same headwinds.
- And given the bloodbath that was the pandemic, it's likely that the upstarts haven't yet made up for all the losses over the last few years (though it's tough to know exactly how many restaurants closed due to COVID).
The bottom line: Obviously, pandemic-era restaurant closures were gut-wrenching for owners, patrons and communities.
- But if this new Yelp data is any indication, maybe COVID-19's impact on the restaurant business was something like a wildfire, clearing out space for new growth in a changed environment.
