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

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.