More Than Half of Business Closures are Permanent

Mish

A Yelp study finds that 55% of business closures are closed for good.

Yelp reports Increased Consumer Interest in May correlates with more Covid outbreaks and closures in June and July.

Consumer Interest vs Outbreaks

Yelp July  2020 A - consumer interest increased

Business Closures Fluctuate Across the Nation

  • There were 140,000 total businesses closures on Yelp from March 1 to June 15. This increased to more than 147,000 total business closures on June 29 and then dropped again to just more than 132,500 total business closures as of July 10. 
  • In April, there were more than 175,000 business closures indicating that only 24% of businesses that were closed in April have reopened.
  • Even as total closures fall, permanent closures increase with 72,842 businesses permanently closed, out of the 132,580 total closed businesses, an increase of 15,742 permanent closures since June 15. 
  • This also means that the percentage of permanent to temporary business closures is rising, with permanent closures now accounting for 55% of all closed businesses since March 1, an increase of 14% from June when we reported 41% of closures as permanent. 
  • Overall, permanent closures have steadily increased since the peak of the pandemic with minor spikes in March, followed by May and June.

Total Businesses Closures

Yelp July  2020 - Where are most Businessses Closed

States with the largest populations have the most closures. 

Total Business Closures Per 1,000

Yelp July  2020 - Where are most Businessses Closed per 1,000

On a metro level, Las Vegas, NV, is suffering from the highest rate of permanently closed businesses with 861 businesses permanently closed, as the city reacts to a decrease in tourism. Meanwhile, Los Angeles, CA, has the most closures with 11,342 total temporary and permanent business closures.

Restaurants Struggle

Yelp July  2020 - reataurants and retail Closures

Yelp has many additional charts.

Inquiring minds may wish to investigate.

Six Related Articles

  1. Banks Double Loan Loss Reserves ‘Everybody Is Struggling’
  2. Housing Starts and Permits Improve But Not Enough
  3. Cass Transportation Index "Not Good By Any Measure"
  4. China’s Unexpectedly Strong Growth Isn't What it Seems
  5. All Continued Unemployment Claims Top 32 Million Again
  6. Work-From-Home Will Reduce Driving by 270 Billion Miles Per Year

Conclusion

Permanent closures will continue to rise. Many small businesses already on the ropes, will not survive the reopening reversal. 

Don't confuse the stock market with the real economy.

This is a deflationary event. 

For discussion, please see Unprecedented Recession Synchronization and What it Means.

Mish

Comments (53)
No. 1-20
njbr
njbr

One day the price of tulips will be discovered.

Herkie
Herkie

Talk about wishing on a star Mish; look at the graphs I culled from The Daily Shot Editor today:

Note the top charts are all optimistic but the bottom charts say that optimism is going to get hurled into the abyss before the year ends.

People are not in this picture, staffing is abysmal, profits even worse in spite of charging higher prices. Reality has to hit home soon. When it does all those other charts will reflect that reality. When they talk about the new normal this is what it really is, at least 30 million collecting unemployment and another 20 million without even that income. 50 million either with no income or on incomes that are going to stop more or less all at once because the UI binge started all within a matter of weeks, so it will also end within a matter of weeks.

Mr. Purple
Mr. Purple

Well now we know how "Every restaurant is Taco Bell" from Demolition Man.

flubber
flubber

I was at a fairly large BBQ restaurant in Orlando on Saturday to pick up take out for a group of 8. The restaurant was open for sit-down meals. Only about 6 people inside at the dinner hour. I asked the cashier how was business going. She said slow....real slow. Normally this is a very popular restaurant.

I don't know how businesses (either big or small) can continue if they can't operate at a break-even point or above. No doubt there will be an increasing number of firms that will not be able to weather the storm.

tokidoki
tokidoki

Obviously your kitchens will need to move to the Cloud.

If there's Cloud Computing, why can't there be Cloud Cooking?

I mean Travis, that b**tard from Uber is doing it, so anybody can do it right?

Captain Ahab
Captain Ahab

How many small businesses have slashed prices? Saved from their previous good years? Brought in outside investors? How many have innovated new ways of doing business?
Creative destruction is underway.

Webej
Webej

Business=Cash flow
Stop the flow, and there is no business
Everything else in the economy is in some way a derivative of cash flowing somewhere

anoop
anoop

Always look on the positive side. It means there's 40+% that will remain open! Also think about the opportunity for explosive growth from here on out.

numike
numike

who cares??? The stock market is booming!!

mkestrel
mkestrel

The stock market has an endless amount of liquidity thanks to the FED. It is the only game in town. As Mish points out, it has nothing to do with the real economy.

Casual_Observer
Casual_Observer

Bankruptcy is a business strategy. Ironic it would happen under the bankruptcy king.

ToInfinityandBeyond
ToInfinityandBeyond

Just want to say we all have President Trump to blame for this shit show. If he had really taken this virus seriously at the outset and followed the best scientific advice we would now be in a lot better shape. China and most of Europe is opening up again while the good old US of A is still plumbing the depths of this epidemic. I know the covidiots will claim it is not Trump’s fault but I have a little secret for you. It absolutely is the fault of our federal government and those moronic, sycophant governors who refuse to accept scientific reality. Here we are with what we like to think is the best health care system in the world dealing with a third world style response. Time to throw Trump, Mad Mitch and Graham out in November. Sad to say the best minds we can throw at this problem are Trump, Kudlow, Navarro and a bunch of clueless governors.

jivefive99
jivefive99

Considering that the country is awash in store square-footage way above any other country and people still buy the ruse that "you too can own your own business!!" and the friends and family who lose their investment when over 50% of small businesses fail and all the wasted money on store construction and shelving and start-up costs and never-ending advertising and the libertarian stance that the market should determine whether a business should succeed or not, I really dont see any bad news in this article's title.

KansasDog
KansasDog

I was in 3 retaurants in Kansas over the weekend at locations that are normally busy at the times I went. 2 were dead, 1 was at around 1/4. I dont see them lasting. A couple of the outdoor malls are looking a bit ominous here lately. Walmart is busy everyday at all hours as is home depot. I used to enjoy time off during the weekdays to avoid crowds now there's days I can't differentiate between a weekday and weekend.

ToInfinityandBeyond
ToInfinityandBeyond

I see unemployment claims are on the rise again this morning. Not sure an additional $1T will be enough at this point. Gonna need a bigger wheelbarrow.

JustDaFactsJack
JustDaFactsJack

Looks to me like COVID killed off lots of zombie businesses, particularly in retail, that ordinarily would have taken five or ten years to fail.

It also killed off enormous amounts of money wasted on pointless commutes on crappy transit systems to overpriced offices surrounded by overpriced shops.

Even conservative companies like Siemens see the benefits of telecommuting and remote work on productivity and costs; the old model of a handful of cities having all the high end jobs and rentiers gaining rentiers profits by simple dint of owning real estate in those markets is lost and gone forever.

Americans also see that a large part of our everyday spending was for crap we don't miss and will likely never return to spending money on.

Tony Bennett
Tony Bennett

"More Than Half of Business Closures are Permanent"

...

I'm kind of disappointed.

Neither Mish or the preceding 39 comments ... nary a word on DEBT.

These businesses going out will walk away from hundreds of $billions ($trillion+?) in debt. Many highly profitable businesses - with good cash flow in normal times - have substantial short & long term debt.

As the defaults pile up ----> credit tightens ----> leading to more businesses (and their debts) in trouble.

We're just getting started.

Zardoz
Zardoz

How did we come to this? Here's how:

Tex Forister
Tex Forister

"Banks Double Loan Loss Reserves ‘Everybody Is Struggling’" 19July, and "More Than Half of Business Closures are Permanent" + Monetary debt, individual or governmental, is the very worst self-induced curse upon 'civilized' man. + I'm not "struggling," period. I've had ZERO debt since Feb2003. I retired at the age of 59 in 2006. I use a credit card for the Cash Back benefit which goes to my chosen charity. I pay my credit card bill in Full upon receipt. + I warned whomever I could of what's before us, Social / Economic Chaos, for the past 10 years: eliminate ALL debt, cash out of all 'investments,' hold cash, shrink lifestyle to a minimum, move to a very small town of choice with basic services (grocery, fuel, garage, gun shop). I told all it was impossible to know what would cause the Crash but it was upon us and unstoppable, with the Economic Crash, here / Globally, making the Depression resemble a casual time off from work. I told the ignorant, which is most all, that it was the end of WWII that ended the Depression, knowing no one understood the implication. So, with an American Black man killed by a White cop, and a virus from China now Global, our trip to a living Hell on Earth has just begun. The End is indeed near, for those of us who believe such.


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