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Restaurant Failure Rate

May 10th, 2008 by papo

Restaurant Failure Rate Much Lower Then Assumed

Restaurant failure rate studies indicate are not as high as people think, and affecting you when you apply for a restaurant loan.

Ohio state research news did a study on Restaurant failure, and its findings are worth while mentioning. I believe anything you can use to educate your self about restaurant failure, is a worthwhile investment of your time.

Restaurant business causes of failure, is something that all restaurateurs should research and look into what are those reasons for restaurant failure.

Misinformation, about failure rates in the restaurant industry, could cause some to make bad decisions on these findings, those thinking of opening a restaurant, those already operating as restaurateurs, and worst yet, financial institutions who make business loans to small businesses.

Excerpt from study below:

( Source: Full article - Restaurant Failure Rate )

COLUMBUS, Ohio – The common business wisdom is that restaurants fail at an alarmingly high rate – maybe as high as 90 to 95 percent in the first year.

In fact, the alleged 90 percent failure rate was repeated during each episode of the recent NBC reality show “The Restaurant.” 
 
Failure Rate Research Will Surprise You - Not Bad
H.G. ParsaBut new research suggests the actual numbers may not be nearly so grim. Alongitudinal study of restaurants in Columbus, Ohio found the failure rate for restaurants was 57 to 61 percent for a three year period (1996-1999) – still high, but much more in line with other businesses, said H.G. Parsa, author of the study and associate professor of hospitality management at Ohio State University.
No Where 90% Restaurant Failure Rate Stats 
Moreover, his review of other published studies also suggest failure rates of restaurants to be closer to 60 percent or less after three to five years, and nowhere near to 90 percent.“The 90 percent figure seems to be a myth, a myth that is harmful to the restaurant industry,” Parsa said.