Businesses In College Towns Closing At Higher Rates Due To COVID-19

Businesses are closing at a higher rate in college towns, as school administrators are putting restrictions on in-school classes and asking kids to limit extra activities to stay safe.

There are many small cities in the U.S. where local colleges drive economic activity. When students clear out of those college towns, it can have detrimental effects on the local economy.

Yelp data shows that as of August 17, businesses in college towns have a 24% higher permanent closure rate, on average, compared with the permanent closure rate of the respective state, since March 1.

Cities and towns that are home to many of the top universities nationwide have been hit hard. For example, the town that is home to the University of Maryland saw 4.4% of all business permanently close, followed by the University of California, Berkeley at 4.2%. Each of the cities that are home to the University of Oklahoma, Harvard University, Massachusetts Institute of Technology, Texas A&M University, and Brigham Young University had 3.8% of all businesses permanently close.

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Retail stores are not the only businesses affected by at homeschooling. Fewer students in these cities means less use of ride-sharing services such as Uber and Lyft. Restaurants are seeing less foot traffic, as well as nail and hair salons.

Automotive businesses have been impacted by 29%, restaurants by 22% and health and beauty by 19%. These percentages represent permanent business closures, compared with their respective states without colleges and universities.

Overall, college towns saw a 10% greater drop in consumer interest in April, when many students left these towns to return to their home states. Shopping and retail saw a 14% drop in consumer interest, followed by restaurants and active, both of which saw an 11% drop in consumer interest relative to their state.

The recovery, however, looks more promising.

Yelp data shows businesses are currently recovering at a comparable rate.

In August, year-over-year consumer interest in college towns is down to only 5% less than the rate in their states. College towns show clear back-to-school seasonal patterns and, on average, state-adjusted consumer interest in August rose by 6% in comparison to July.

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