Analyzing COVID-19 Restaurant Closures With Yelp Data

The COVID-19 pandemic has taken a toll on independent restaurants. While many large chains are able to wait out the pandemic (with some even booming due to enhanced digital takeout and delivery experiences), local restaurants do not have this luxury. Accordingly, The 13 Fund recently announced they will be focusing their first semi-annual grant on helping local New York City and San Francisco restaurants in need.

I’ve spent the last three years leading machine learning and data science initiatives at analytics startups. During this time, software I’ve created has been used by thousands of companies to provide personalized experiences for billions of users. This has allowed me to see first hand the positive impact of data-driven decision making. I’m interested in helping the 13 Fund so that this same type of data-driven analysis can be used to make smarter philanthropic decisions.

13 Fund cofounders Bilal and Jason conducted research on how to help restaurants through a mix of restaurateur interviews and economic analysis. As an additional data point, I conducted research using data from Yelp to determine how a restaurant’s price, hours of operation, cuisine, and services offered affects their likelihood to survive the pandemic.

Process

I collected data through a combination of the 2020 Yelp dataset, the Yelp COVID-19 addendum, and the Yelp API. Yelp provides data on businesses in metropolitan areas centered on Montreal, Calgary, Toronto, Pittsburgh, Charlotte, Urbana-Champaign, Phoenix, Las Vegas, Madison, and Cleveland. Since the 13 Fund is helping mom and pop restaurants, I filtered the dataset to only include businesses that are categorized as “restaurants”, have less than four locations, and were still open at the end of 2019. The findings below are based on analyzing the restaurants in the dataset that closed between June 10th and November 24th (FULL CODE HERE).

Price

Restaurants priced at $ or $$ are 20% more likely to close during the pandemic, while restaurants priced at $$$ or $$$$ are 20%-100% less likely to close. This surprised me, as I assumed that high priced restaurants are more dependent on in-person dining, which has taken a hit. However, high priced restaurants do have other advantages, such as better “trust and safety” branding, more physical space to place tables 6 ft apart, and a clientele that is less impacted by the economic downturn.

Hours Of Operation

Restaurants open for lunch are closing more frequently than restaurants open for breakfast or dinner. Many lunch spots are reliant on office workers grabbing a bite during their lunch break. Surprisingly, this same trend did not hold true for restaurants open for breakfast, which I assumed would also be reliant on office workers.

Cuisine

Cafes had the highest closing rate, which can probably be explained by the decrease in working professionals grabbing a coffee on their way into the office. Similarly, sandwich shops are frequently populated by office workers on their lunch break, so it’s no surprise they check in at number three.

Services Offered

While it’s self-evident that delivery, takeout, and curbside pickup all help a restaurant stay open during the pandemic, it may come as a surprise that offering gift cards is equally as helpful. With many restaurants failing to qualify for PPP loans or waiting months to receive them, gift cards can act as a quasi-loan that gives restaurants an immediate cash infusion in exchange for future services.

Conclusion

The Yelp dataset provides a quantitative look at how restaurants are faring during the pandemic. These findings will serve as a data point for the 13 Fund to use to determine how to best help local restaurants. Based on this analysis, my conclusion is low cost restaurants that are dependent on lunch patrons are most in need of assistance. The data from Yelp shows that these restaurants have been almost 50% more likely to close compared to other restaurants during the pandemic. With any luck, the 13 Fund grant will help keep restaurants in business and prevent some of my lunch break favorites from closing (RIP The Creamery).