Yelp’s ‘Black-Owned Business’ Label Helps White Consumers Buy Black

Minority-owned local businesses performed better and boosted business among white consumers when they revealed their race on digital platforms such as Yelp, a new study has found.

The study was co-authored by Harvard Business School Professor Michael Luca, Abhay Aneja at the University of California-Berkeley, and Oren Resehf of Washington University in St. Louis.

Yelp’s Black-owned business label

They analyzed Yelp’s new “Black-owned business” label feature online.

The label aims to support Black entrepreneurs by increasing the visibility of Black-owned businesses among consumers who rely on Yelp for information.

The label feature allows Yelp users to explicitly search for Black-owned businesses on the platform by applying the new filter or by directly searching for Black-owned companies in the search query.

The initiative to help minority-owned firms was, in part, a response to increased consumer demand for such businesses in the aftermath of the killing of George Floyd.

A Boost to Black-Owned Businesses 

The study “The Benefits of Revealing Race: Evidence From Minority-Owned Businesses” found improvements across the board for Yelp-labeled Black-owned businesses.

On average, restaurants with the label had 25 more Yelp business page views, increased customer engagement, improved firm performance, more calls, more delivery orders, and more in-person visits.

The authors found that the increased demand for Black-owned restaurants tended to occur in the predominantly white, Democratic-leaning districts of the metropolitan areas they examined: San Francisco, Los Angeles, New York, Minneapolis, Atlanta, Chicago, and Houston.

Restaurants that receive the label “Black-owned” also saw an increase in the fraction of reviews that white customers leave, and new customers of their businesses were more likely to be white.

This was based on an analysis of reviewers’ profile photos.

How Tech Companies Can Help Advance Racial Equity

For over ten years, Professor Luca has also been probing technology’s role in creating a more inclusive economy.

His previous work surfaced widespread discrimination on Airbnb, leading Airbnb to take steps to mitigate bias and prompting broader discussion across other companies.

The research found that non-Black hosts charged approximately 12% more than Black hosts for the equivalent rental, highlighting discrimination in online marketplaces.

Luca and his colleagues launched their study after several tech and non-tech firms, including Yelp, Instagram, Wayfair, GoPuff, Instacart, and Target, announced new programs to support Black-owned businesses.

“Technology companies can play a role in working toward racial equity,” said Luca.