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Q2 Yelp Economic Average Finds Consumers are Experiencing Inflation at Record Rates and Reporting New Experiences of ‘Shrinkflation’
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Rhea-AI Summary
Yelp Inc. (NYSE: YELP) has released its Q2 2022 data, highlighting a significant rise in inflation-related mentions in consumer reviews, up 28% from Q2 2021. Searches for electric vehicles surged 97% year-over-year as gas prices soared. Despite inflation, consumers still sought higher-priced businesses more frequently than pre-pandemic. The average reservation booking time increased to 3.3 days, reflecting consumers' advanced planning. Overall, Yelp's findings indicate a strong consumer spending trend, though inflationary pressures are evident across various sectors.
Positive
Consumer searches for electric vehicles increased by 97% compared to Q2 2021.
Despite inflation, searches for higher-priced businesses are up 55% compared to Q2 2019.
Negative
Inflationary language mentions in reviews increased by 28% compared to Q2 2021.
Searches for inexpensive businesses ($) increased by 7% from Q1 2022, high-priced searches ($$$$) decreased by 12%.
Amid inflation and rising gas prices, in Q2 consumers seek fewer higher-priced businesses and turn to electric vehicles
In the first half of 2022, consumers are booking reservations further in advance than ever before
SAN FRANCISCO--(BUSINESS WIRE)--
Yelp Inc. (NYSE: YELP), the company that connects people with great local businesses, today released second quarter 2022 data for the Yelp Economic Average (YEA) report, a benchmark of local economic strength in the U.S. The Q2 2022 YEA report reveals consumers are experiencing inflation at record rates, with review mentions of inflationary language up by 28% compared to Q2 2021, and up by 33% compared to the same time period in 2020.
The Q2 Yelp Economic Average finds consumers are experiencing inflation at record rates. (Graphic: Business Wire)
For the first time, Yelp found that consumers are reporting experiences of shrinkflation in reviews published in Q2 2022. In response to rising gas prices, Yelp data in the second quarter also points to a nearly two-fold increase in searches for electric vehicles compared to Q2 2021. While fewer consumers sought out higher-priced businesses than earlier in 2022, according to Yelp data, people are still looking for more expensive businesses compared to pre-pandemic. In the first half of 2022, they’re also waiting longer than ever to get a reservation at restaurants.
“Despite rising inflation, activity on Yelp suggests that consumer spending remains strong as people search for higher-priced businesses more frequently than prior to the pandemic,” said Pria Mudan, data science leader at Yelp. “However, that doesn’t mean consumers and businesses aren’t feeling the pinch of inflation. We saw reviewers use inflation-related language at record levels, particularly in the dining, arts and entertainment and travel categories. And for the first time, reviewers are describing shrinkflation-related experiences where the size or quantity of goods are noticeably smaller, which is most referenced at restaurants serving more affordable fare.”
Consumers Report Inflationary Experiences at Record Rates
While inflation has been rapidly increasing since 2021, consumers have especially experienced inflation at an increasing rate in 2022, as mentions of inflationary language in Yelp reviews are up 7% in Q2 compared to Q1 of this year. When compared to Q2 2021, consumers are experiencing inflation most at more casual restaurants (up 38%) and food businesses (up 36%), followed by arts and entertainment (up 33%), nightlife businesses (up 30%), event services (up 22%), and hotel and travel businesses (up 20%).
However, inflation has not been felt equally across the U.S. In Q2 2022, 47 states (including Washington D.C.) saw an overall increase of inflation mentions in Yelp reviews compared to Q2 2021 – with 35 states seeing more than a 25% increase of inflation mentions. Six of the top 10 states with the highest inflation experiences are in the Northeast, including Massachusetts, New York, Maine, Washington D.C., New Jersey and New Hampshire.
In Q2 2022, the share of all searches on Yelp using the inexpensive “$” filter increased by 7% compared to Q1 2022, while the share of the highest “$$$$” filter had decreased by 12%. While quarter-over-quarter consumers are generally searching for lower-priced businesses, when compared to pre-pandemic levels (Q2 2019), consumers still searched for higher-priced businesses more frequently in the second quarter of this year. Searches on Yelp using the highest “$$$$” filter increased up by 55% in Q2 2022 compared to Q2 2019, whereas the use of the inexpensive “$” filter decreased by 24%. While restaurants, food, and travel and hotel searches reflect a similar trend, auto services searches oppose the trend.
Consumers are Booking Reservations Further in Advance Than Ever Before
In Q2, the average time elapsed between booking a reservation on Yelp and the reservation date was 3.3 days – a 14% increase in time compared to Q2 2021 and 40% more than pre-pandemic (Q2 2019). Up-and-coming and growing cities saw the largest increase in the average time between booking a restaurant reservation and the date of the reservation in Q2 compared to pre-pandemic: Birmingham, AL; Jacksonville, FL; Grand Rapids, MI; Lancaster, PA; High Point, NC; Austin, TX and Nashville, TN.
The median wait time for Yelp Waitlist restaurants has also been longer this year. The median wait time for a table in Q2 2022 was 35 minutes; whereas the median wait time in the same period in 2021 and 2020, was 22 and 16 minutes, respectively.
Consumers Turn to Electric Vehicles in Response to Raising Gas Prices
Consumer searches for “electric vehicles'' (EV) were up 97% in Q2 2022 from the year before, and up 175% compared to pre-pandemic Q2 2019. Additionally, searches for specific EV models were up 63% in Q2 2022 compared to Q2 2021, and up 118% from Q2 2019. EV Charging stations also experienced a 23% increase in consumer interest in Q2 2022 compared to Q2 2021.
Review Text Mentions of Inflation
We analyzed review text from 2020 through Q2 2022 to observe how Yelp consumers are referencing inflation in reviews. These inflation references can include phrases mentioning inflation itself or higher or rising prices at businesses. The volume of review text phrases are normalized by the number of times per every million words the phrases appeared in reviews, and is calculated for each Yelp category and on a national and state basis. Changes in mentions are on a year-over-year basis unless otherwise specified. A minimum threshold of review mentions was implemented in nearly all states to uncover the most noteworthy inflation experiences.
Price Range Filter Usage
There are currently four pricing tiers ($, $$, $$$ and $$$$) on Yelp and the pricing tier of a business is voted on by Yelp consumer users (business users cannot alter this information). Consumers can use the price range filter when searching for businesses on Yelp. The share of different pricing tiers used by consumers in Yelp search results signals their general willingness to spend in various price ranges.
Reservation Booking Days in Advance and Wait Times
We used information from Yelp Guest Manager’s reservations and waitlist services to analyze how far in advance consumers are booking reservations and for how long they are waiting before being seated. Reservation booking days in advance are given as monthly averages, and wait times are given as monthly medians.
Electric Vehicle Search Text Mentions
For the data regarding electric vehicle mentions in searches, we measured the share of every million Yelp searches that contained phrases related to electric vehicles or specific models from electric vehicle manufacturers. For “electric vehicle” related searches, we excluded searches that were related to charging stations to better observe interest in the vehicles themselves.
Consumer Interest
We measure consumer interest by looking at select actions users take in connection with businesses on Yelp: such as viewing business pages, or posting photos or reviews.
Changes in consumer interest for each category were measured by comparing year-over-year data from Q2 2019-2022, focusing on each category’s share of all consumer actions in its root category.
About Yelp Inc.
Yelp Inc. (www.yelp.com) connects people with great local businesses. With unmatched local business information, photos and review content, Yelp provides a one-stop local platform for consumers to discover, connect and transact with local businesses of all sizes by making it easy to request a quote, join a waitlist, and make a reservation, appointment or purchase. Yelp was founded in San Francisco in July 2004.
What does the Q2 2022 Yelp report reveal about inflation?
The Q2 2022 Yelp report indicates that mentions of inflation in reviews rose by 28% compared to Q2 2021.
How much have electric vehicle searches increased according to Yelp's Q2 report?
According to Yelp's Q2 2022 report, searches for electric vehicles increased by 97% year-over-year.
What trends did Yelp observe in consumer restaurant reservations in Q2 2022?
Yelp noted that the average time between booking a restaurant reservation and the reservation date increased to 3.3 days, a 14% rise from Q2 2021.
How are consumers reacting to higher prices on Yelp?
While consumers are searching more for higher-priced businesses, there has been a noticeable increase in mentions of inflation and shrinkflation in reviews.
What does Yelp's report say about business search trends in Q2 2022?
The report shows that while searches for higher-priced businesses fell, they remain above pre-pandemic levels, with a 55% increase compared to Q2 2019.
