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Nearly 16,000 restaurants have permanently closed since the pandemic started, and even more closures are on the horizon

Business Insider logo Business Insider 7/22/2020 ijiang@businessinsider.com (Irene Jiang)
a screenshot of a social media post: 60% of the 26,000 restaurant closures so far have been permanent. Courtesy of Yelp © Courtesy of Yelp 60% of the 26,000 restaurant closures so far have been permanent. Courtesy of Yelp
  • 60% of restaurant closures since March 1 have been permanent, according to a Yelp report released on Wednesday.
  • California has seen the highest number of permanent closures, followed by Texas and New York.
  • A second wave of shutdowns is expected to impact businesses, and pandemic-related business woes aren't going away any time soon — meaning more closures are on the horizon.
  • Visit Business Insider's homepage for more stories.

60% of restaurant closures since March 1 have been permanent, according to a report Yelp released on Wednesday.

Of the roughly 26,000 total restaurants that have closed in the last five months, 16,000 have been permanent, according to the report. The restaurant industry has been the hardest-hit by permanent closures compared to other industries since the start of the pandemic.

California has seen the highest number of permanent closures, accounting for about 14.4% of all restaurants that have gone out of business, followed by Texas at 8.5% and New York at 8.4%, Justin Norman, vice president of data science at Yelp, told Business Insider in an email.

"We anticipate states will roll back or delay reopening plans, which will inevitably impact the future success of businesses, possibly turning even more temporary closures into permanent ones," Norman said in the email. "That said, we are seeing temporary closures reduce, which is a promising signal for many businesses."

But in general, the share of businesses that are closing their doors permanently is continuing to rise.

Los Angeles and New York City have seen the highest total number of businesses permanently close — 5,700 and 4,400 businesses, respectively. However, both cities have a higher-than-average number of businesses overall, so that's not too bad.

States like Hawaii, Nevada, and California, which usually benefit from year-round tourism, have seen the highest closure rates proportional to their total number of businesses.

a screenshot of a cell phone: The percentage of business closures that are permanent rather than temporary has steadily risen. Courtesy of Yelp © Courtesy of Yelp The percentage of business closures that are permanent rather than temporary has steadily risen. Courtesy of Yelp a screenshot of a cell phone: States with large tourism economies have been some of the worst-hit by closures. Courtesy of Yelp © Courtesy of Yelp States with large tourism economies have been some of the worst-hit by closures. Courtesy of Yelp

Although the numbers may seem grim, they're far from some of the catastrophic scenarios predicted earlier on in the pandemic.

At the start of the pandemic, Swiss investment bank UBS predicted that one in five restaurants could permanently close. And in June, a report commissioned by the Independent Restaurant Coalition found that 85% of independent restaurants could permanently close by the end of 2020.

The numbers published in the Yelp report are nowhere near as dire as these projections. However, the pandemic is far from over, and another wave of shutdowns could send more businesses past the point of no return.

"Unfortunately, we do expect closures to continue," Norman said. "The virus isn't going anywhere soon, so businesses will need to be resilient."

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