One thing I'd note is that a potential city that is very racist but with a racially homogeneous population probably would have few reviews that include the word "racist" on Yelp.
That's a vey good point (and a key weakness in this analysis). However, a counter-point is that a racially homogenous population probably will have a lower incidence of racist issues since by definition their minority population is low, and the aim of this was try to gauge a metric for prevalence of racist issues.