The Benefits of Revealing Race: Evidence from Minority-owned Local Businesses

Abstract

Is there latent demand to support Black-owned businesses? To explore, we analyze a new feature
that made it easier to identify Black-owned restaurants on a large online platform. We find that
labeling restaurants as “Black-owned” increased customer engagement and firm performance, as
measured by online traffic, calls, orders, and in person visits. These effects are most pronounced
in left-leaning areas characterized by lower bias against racial minorities, as measured by regional
variation in voting patterns and IAT scores. Restaurants that receive the label also see an increase
in the fraction of reviews that are left by White customers.