Q2 Yelp Economic Average Finds Consumers are Experiencing Inflation at Record Rates and Reporting New Experiences of ‘Shrinkflation’
-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
Yelp Inc. , the company that connects people with great local businesses, 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.
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.”
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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.
Consumer Searches for Higher Priced Businesses Fell, Yet Remain Above Pre-pandemic Levels
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.
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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.
