SAN FRANCISCO–(BUSINESS WIRE)–Yelp Inc. (NYSE: YELP), the company that connects people with great local businesses, today announced the second edition of the Yelp Local Economic Outlook, a program to rank U.S. metro areas by the pace of local-business population growth to reveal the health of urban economies around the country.

In an effort to look more closely at the health of the restaurant industry, Yelp also analyzed review ratings, an indicator of consumer sentiment, for independent and chain restaurants in the 50 cities included in the Outlook. Findings of Yelp’s restaurant industry analysis point to a major shift in consumer perception of restaurants. Largely fueled by celebrity chef-owner obsession in popular media and increased consumer confidence in non-chain restaurants because of review platforms like Yelp, there has been a tremendous rise in independent restaurants over the last five years.

Alternatively, fast-food chain restaurants have seen a notable decrease in average ratings over the last five years, by about one-third of a star, on a scale of 1 to 5 stars — equivalent to a loss of about 16 percent of their average rating. Fast-casual chain restaurants have also experienced a decline in ratings, by about one-tenth of a rating point on average between 2012 and 2017.

While chain restaurants across the country encounter increasingly choosy diners, independent fast-food and fast-casual restaurants have seen a continued increase in average ratings, improving by 7 percent in the last five years. Ratings for casual-dining chain restaurants held up better, unchanged on average, though they lagged behind their independent competitors, which gained a quarter of a rating point between 2012 and 2017.

With 142 million rich, local reviews as of Q3 2017, Yelp is putting its massive data stores to work identifying the parts of the country and types of business with the highest rate of growth. The Yelp data science team is continually working to identify the best measure of local economic health. For this quarter, Yelp highlights the rate of change in the number of businesses in a city, neighborhood, or business category as a way to equally weight business closures — a sign of economic challenges — and business openings, a sign of business investment and dynamism.

“Entrepreneurs are investing in opening businesses throughout the southeast and southwest, buoyed by booming populations and economies,” Yelp data science editor Carl Bialik said. “The engine of local economies is local business, and a growing business population is a strong sign of economic health.”

In the fourth quarter of 2017, Charleston, S.C., topped the list in business growth. In recent years, the Charleston region’s economy has been growing much faster than the national average. Construction, driven by rapid population growth and a housing boom, is a main driver of this growth. Meanwhile, San Jose, Calif., had the lowest rate of change in number of local businesses, reflecting the tough business climate — sky-high rents and resulting pressure on wages — in and around Silicon Valley.

Yelp’s goal in publishing this Outlook is to help policymakers, researchers and business owners better understanding local economies in which they operate. Yelp’s full Local Economic Outlook report can be downloaded at www.yelpblog.com/2018/02/yelps-local-economic-outlook-american-diners-show-increasing-taste-for-independent-restaurants-nationwide

Ranking 50 Cities in America for Economic Opportunity

Current Rank City Year-Over-Year Change in Rank

Charleston, SC Phoenix, AZ Salt Lake City, UT Orlando, FL Honolulu, HI Houston, TX Nashville, TN Austin, TX Omaha, NE Atlanta, GA Tulsa, OK Richmond, VA Louisville, KY Dallas, TX Portland, ME Miami, FL Denver, CO Seattle, WA Tampa, FL Tucson, AZ Columbus, OH Sacramento, CA Memphis, TN Los Angeles, CA Charlotte, NC Jacksonville, FL Albuquerque, NM Hartford, CT Las Vegas, NV Buffalo, NY Rochester, NY Pittsburgh, PA Washington, DC Cleveland, OH New Orleans, LA Providence, RI Cincinnati, OH New York, NY Boston, MA Minneapolis, MN Milwaukee, WI Saint Louis, MO Madison, WI San Diego, CA San Francisco, CA Philadelphia, PA Chicago, IL Baltimore, MD Portland, OR San Jose, CA

Methodology

On the Yelp data science team, we’re continually working to identify the best measure of local economic health. For this quarter, we’re using the rate of change in the number of businesses in a city, neighborhood or business category as a way to equally weight business closures — a sign of economic challenges — and business openings, a sign of business investment and dynamism. This method places a greater weight on business openings than the scoring used for the inaugural LEO rankings released in October. While the change makes the rankings we’re releasing today not directly comparable with the October list, we think it is a marked improvement because of the importance of business openings as a signal of economic health. We’ll continue to study and refine this measure in the quarters to come as we release further updates on local business health.

About Yelp Inc.

Yelp Inc. (NYSE: YELP) connects people with great local businesses. Yelp was founded in San Francisco in July 2004. Since then, Yelp communities have taken root in major metros across 32 countries. By the end of Q3 2017, Yelpers had written approximately 142 million rich, local reviews, making Yelp the leading local guide for real word-of-mouth on everything from boutiques and mechanics to restaurants and dentists. Approximately 30 million unique devices* accessed Yelp via the Yelp app, approximately 74 million unique visitors visited Yelp via mobile web** and approximately 84 million unique visitors visited Yelp via desktop*** on a monthly average basis during the Q3 2017. For more information, please visit http://www.yelp.com or send an email to [email protected].

* Calculated as the number of unique devices accessing the app on a monthly average basis over a given three-month period, according to internal Yelp logs.

** Calculated as the number of “users,” as measured by Google Analytics, accessing Yelp via mobile website on a monthly average basis over a given three-month period.

*** Calculated as the number of “users,” as measured by Google Analytics, accessing Yelp via desktop computer on an average monthly basis over a given three-month period.