At the end of 2022, when America’s restaurants were still stumbling their way through the post-pandemic reality, Miami’s Giorgio Rapicavoli opened his third eatery. Eating House, a 150-seat indoor-outdoor establishment, riffs on dishes Rapicavoli developed at smaller restaurants, including tuna tartare topped with crispy potatoes, fried chicken thighs, and buttery yellowtail snapper.
Compared to the pandemic years, said Rapicavoli, 38, “money is easier to come by” and his customers appreciate spending money on good food, wine, and dining experiences. And his business is just one of millions in the small-business boom that has taken America by storm since the pandemic.
Last year, Americans started businesses in record numbers, with the IRS recording nearly 5.5 million new-business applications by December—double the pre-pandemic rate. It’s a stunning turnaround for American entrepreneurship after decades in which the economy seemed to become dominated by large corporations and economists bemoaned its declining “dynamism.”
Business-review website Yelp reported 20% more openings last year than in 2022, with big growth in home services and food- and travel-related businesses. Overall, the figures show 40% more businesses on the platform than what was normal pre-pandemic.
“Last year there was so much anticipation about an economic recession, but entrepreneurs helped defy those predictions and set a new all-time high for business openings on Yelp,” Samantha Auerbach, data science manager at Yelp, said in a statement.
Far from a fluke, the business boom is now showing real signs of a major shift in the U.S. fabric, with new patterns started in the pandemic now here to stay, while COVID lockdowns are becoming a far-off memory. Here are the major reasons economists cite for the entrepreneurship explosion.
Money in your pocket and nowhere to go
The business boom actually started during the pandemic, when millions of Americans—some laid off from their jobs and many with stimulus checks in hand—decided to set off on their own.
For some who had lost jobs, starting a new gig was a matter of necessity to put food on the table; for others, it was an aspirational act during a world-changing moment.
“You had zero interest rates [and] you had a lot of people sitting around with stimulus checks who’d never had cash before,” Julia Pollak, chief economist at job site ZipRecruiter, told Fortune.
Many of the startups responded to new ways of living and consuming that Americans leaned into during the pandemic. Research shows new businesses sprung up in the suburbs, reflecting where more Americans were now spending their time, and were heavily concentrated in new-technology sectors, including software, online retail, data processing, and AI.
The momentum has continued after the pandemic’s most acute phase thanks to the strength of the American consumer and the rise of “revenge spending,” which helped propel restaurant openings this year above their pre-pandemic level, according to Yelp data.
According to an Economic Innovation Group analysis from last year, accommodation and food industries and retail have seen the most new-business growth since the pandemic.
Hybrid work is here to stay
Many small businesses were able to start and thrive thanks to the endurance of remote work, Pollak said. While the phenomenon is a headache for corporate leaders, who prefer their teams onsite, and urban downtowns still struggling with empty commercial space, the remote paradigm has made it easier to both start a business and hire for it, said Pollak.
“The costs of starting a new business are lower now, because you can have access to talent across the entire country, and low-cost areas of the country,” Pollak told Fortune. “It’s not expected anymore that you must, as a law firm, have an office in the most expensive part of the city. The norms have changed.”
Workers trust themselves more than their bosses
Post-pandemic, workers have been increasingly empowered to not just demand more of their employers and seek out higher-paying ones, but to ditch them altogether to start their own gig—the ultimate form of betting on yourself.
This is partly more prevalent among younger generations. One-third of Gen Z believes that the best way to wealth is self-employment, according to a December survey. Even those who hold down a standard job are increasingly hedging their bets and often freelancing on the side, as the number of workers with multiple jobs hit a record recently.
But it’s not just Gen Z getting restless. Many small-business owners last year spoke to Fortune about their decision to strike out on their own—often after feeling an employer burned them, or was unreliable, or simply deciding they had a better shot solo than as someone else’s employee. Jeremy Howell, an Austin-based business consultant, described feeling “strung along” by an employer that dragged their feet on a promotion—so much so he left his $200,000-a-year job to start his own company, thinking it a better path to success. Another worker, in his late fifties, was laid off from a corporate role and couldn’t get a new job—he blamed ageism. Finally striking out on his own as a consultant, he told Fortune his income now tops what he previously earned.
Did it before, can do it again
Many of last year’s new businesses are repeating a skill they learned during the crushing day of the pandemic: adapting on the fly. While data on repeat entrepreneurs is hard to come by, several business owners told Fortune their pandemic experience had a confidence-boosting effect.
Jeff Tonidandel, who along with his wife owns five restaurants in Charlotte, N.C., had a scheduled opening in 2021 interrupted by the pandemic. Successfully surviving that challenge inspired the couple to relaunch their first restaurant as a high-end Italian eatery, Ever Andalo. It recently made Yelp’s best new restaurant list.
Typically, “you don’t have a lot of practice changing where your tables are, changing your hours,” Tonidandel told Fortune. Constantly changing pandemic-era guidelines gave him and his team that practice. “We got very good at dealing with those details with the pandemic,” he said.
Federal programs helped too. “The grants, the [employee retention] credits, the SBA loans, all of that stuff was really really helpful keeping us afloat and let us be a lot more aggressive than we would have otherwise,” Toninandel said. He already plans to open two more restaurants, he told Fortune.
Rapicavoli likewise believes that some fellow restaurant owners got a confidence boost after surviving the pandemic. He also thinks diners have a renewed interest in going out after being cooped up during the pandemic and are willing to spend on “good wine, delicious food, and dining experiences that are beautiful.”
“There’s a demand for people wanting to eat out,” he said. That’s what the business is about, for him: “finding the balance between what makes people happy and let our restaurant be a bit of an escape.”
