Which US cities have the most independent restaurants?

One of the chief advantages of cities is the range of consumption choices they afford to their residents. In general, larger cities offer more choices than smaller ones.

One of the things that makes a city special and distinctive is its food and culture.  Too much of our modern life is indistinguishably the same from place to place. one McDonalds or Starbucks or Applebees offers, by design, virtually exactly the same experience as every other.  Whether it’s in Tacoma or Tucson or Tupelo or Tampa, a chain is a chain is a chain is a chain.  (That’s the essence of the business model:  to give customers a predictable, consistent experience).  One of the things that makes a place special is its own local cuisines and locally owned restaurants, which are unlike those you find anywhere else. These distinctive differences are economically important: as Jane Jacobs once wrote:

“The greatest asset a city can have is something that is different from every other place.”

We love our independent restaurants

The Internet has enabled and encouraged us to share our opinions about all kinds of businesses (and other experiences), and that provides a stronger statistical means of measuring consumer sentiment about chains and independent businesses. Yelp’s database of millions of restaurant reviews nationally shows that consumers rate independent restaurants more highly than chains, and the gap has been growing.

The divergence in ratings between independent and chain restuarants, by market, from Yelp.

Over the past five years, aggregate ratings for ratings for chain restaurants (the blue line on the chart) have have fallen, while ratings for independent restaurants (the red line) have risen.  There’s no market in the nation where independent restaurants don’t command higher ratings, on average, than their chain counterparts. Yelp quotes industry expert Dave Henkes, Senior Principal at food industry research firm, Technomic:

“Consumers are embracing local in all aspects of their lives, and this includes the restaurants they visit,” Henkes, said. “Consumers tell us that smaller, independent restaurants are more authentic, offer better and more unique menu items, align more closely to consumer needs, and provide better value than their chain counterparts.”

But in addition to sheer numbers, the quality of choices matters as well. When it comes to dining, roughly a quarter of the restaurants in most large US metro areas are chain restaurants, according to data compiled by Yelp.

Metros with the most independents

But the market share of chain restaurants varies widely across US metro areas. Chain restaurants are about three times more prevalent in Louisville Kentucky (where they make up more than 35 percent of all restaurants, according to Yelp) than they are in New York, where only about 13 percent of all restaurants are part of chains.

In general, big cities and cities in the Northeast and West Coast tend to have the highest fraction of independent restaurants.  The top ten ranked cities include New York, Boston, Providence and Buffalo, and San Francisco, Seattle and Portland. Conversely, cities in the heartland and the sunbelt tend to have a higher fraction of chain restaurants, according to the Yelp data. The top ten for chain market share includes Orlando, Dallas, Nashville, and Cincinnati.

Fewer chains, more choices

One indicator we’ve long looked at for understanding a city’s culinary standing is the number of restaurants per capita. Again, there’s wide variation across cities: New York has about 22 restaurants per 10,000 population; at the other end of the spectrum, Phoenix, Tucson and Memphis have only about 14 restaurants per 10,000 population.

These two indicators–independent market share and restaurants per capita–are related. Places that tend to have a higher fraction of independent restaurants tend to have more restaurants per capita. We’ve illustrated the relationship here. The vertical axis shows the number of restaurants per capita (estimated from Census business patterns data) and the horizontal axis shows the share of chain restaurants in each metro area. (We’ve reversed the values in the horizontal axis so that as you move from left to right, the share of chains is decreasing and the share of independent restaurants is increasing). Each dot corresponds to the values for a single metro area.

In general, this chart shows that as the independent restaurant share increases, (the chain percentage decreases) the number of restaurants per capita increases.  In the upper right hand corner of our chart we find cities with lots of restaurants relative to their population and a very high share of independents (New York, San Francisco, Portland, Seattle, Providence).  In the bottom left, we find places with relatively few restaurants per capita, and much higher fractions of chain restaurants (Cincinnati, Louisville, Memphis, Phoenix).  There are a couple of interesting outliers:  Milwaukee has lots of independents, but fewer restaurants per capita than one would expect; while Nashville is the opposite: more restaurants per capita but relatively fewer independent restaurants than one would expect.  For the most part though, the regression line plotted on the chart does a pretty good job of illustrating the strong connection between the number of restaurants in a metro area and the share than are independents.

Its unclear what the nature of the causal relationship is here: It could be that food-oriented metro areas have both more restaurants and therefore more opportunities for independent restaurants. The diversity of tastes in a New York, for example, supports more restaurants per capita and that in turn, creates more space for independents. It could also be that independent restaurants are generally smaller than chains, and so metros with more independents have more restaurants.

Our data on chain and independent restaurants were graciously provided by Yelp’s Carl Bialik. They provided data for most, but not all large metropolitan areas; data for a handful of large metros, including Detroit, Indianapolis, Kansas City and Oklahoma City are not part of our sample.

We really like the clever “Eat Local” image available on t-shirts from begoodmonster.com.  City Observatory is not affiliated with, and frank admiration aside, we do not have any relationship with begoodmonster.

Editor’s Note:  An earlier version of this commentary was published just prior to the pandemic.  We thought it deserved a second look.