U.S. business openings reach an all-time high in 2022, driven by new home and local services businesses

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Amid another turbulent year, local businesses demonstrated their ability to persevere through labor shortages, high inflation, supply chain challenges, and more. In 2022, business openings reached an all-time high, with new business growth in 86% of states exceeding pre-pandemic (2019) levels – particularly in the South, which saw the greatest growth. This rapid growth was largely driven by new home and local services businesses, while new restaurants, shopping and nightlife business openings fell behind pre-pandemic levels. Yelp data also uncovers that U.S. states and metros in densely populated areas saw the highest number of new businesses in 2022.

Strong National New Business Growth Demonstrates Resilience of Local Economies

In 2022, national new business openings were up 12% compared to 2019 – 637,590 new businesses opened across the U.S. in 2022, compared to 566,836 new businesses in 2019. Nationally, every quarter in 2022 saw an increase in year-over-year business openings compared to 2019, with the largest increase in Q3 2022 (+15%). This year-over-year growth was driven by new businesses in home services (+40%), local services (+30%), hotels & travel (+28%), auto services (+25%) and beauty services (+17%).

New business openings surpass pre-pandemic levels in nearly every US state – particularly in the South, which saw the greatest growth

In 2022, the country demonstrated strong signs of growth as every U.S. state, and Washington D.C., saw more new business openings compared to 2021. When compared to pre-pandemic levels, 86% of states had more new business openings in 2022, with the South showing the greatest growth. The top five states with the highest percentage growth in new businesses, compared to 2019, were Mississippi (+62%), Alabama (+54%), South Carolina (+48%), Louisiana (+37%) and Georgia (+37%). New home and local services businesses drove significant growth in these top states, with the largest increases in Mississippi for both categories – home services (+126%) and local services (+116%). Even the states that did not surpass pre-pandemic levels were only below by a small margin, including New Hampshire (-5%), Oregon (-4%), California (-4%), Colorado (-3%) and New York (-3%).

Home and local services businesses largely account for new business openings, while hotels & travel businesses experienced the highest growth in top metros

The top five states with the most new business openings are some of the most population dense states in the U.S., including California, Texas, Florida, New York, and Georgia. Major metros in these states drove the highest number of new openings in 2022 – Los Angeles, CA; New York, NY; Miami, FL; Dallas, TX; Houston, TX; Atlanta, GA; Chicago, IL, and San Francisco, CA. At the top of the list, Los Angeles and New York both saw increases in business openings for every category that Yelp analyzed, compared to 2021. In the same time period, Yelp data shows that hotels & travel, beauty, and nightlife businesses had the highest percent increase in business openings across top metros. In fact, hotels & travel ranked in the top three categories of the top eight metros with the highest year-over-year new business growth in 2022, as San Francisco and Los Angeles saw the largest increases.

Compared to pre-pandemic levels, the hotels & travel category saw a significant percent change in seven out of the eight top metros, illustrating how demand for travel has helped local economies bounce back. Yelp data also shows increases in new business openings across home and local services in nearly each of the top eight metros, compared to 2019.

While San Francisco hasn't recovered to pre-pandemic levels, with business openings still remaining 5% below 2019 levels, the city showed signs of improvement with a 5% increase in 2022 business openings when compared to 2021.

All in all, it’s promising to see significant business growth in 2022 as the country shows strong signs of recovery from the pandemic. Yelp will continue to track how the pandemic has reshaped local economies, changed communities across the country with new business openings, and shifted millions of employees to remote work. Stay tuned for a special report from Yelp on how remote work has transformed local economies.

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