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New Study Finds Restaurants' Failure Rate Lower than Expected

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1 min read
Opinions expressed by Entrepreneur contributors are their own.

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. But new research suggests the actual numbers may not be nearly so grim. A longitudinal study of restaurants in Columbus, Ohio, found the failure rate for restaurants was 57 for franchised chains and 61 percent among independent restaurants for a three year period--from 1996 to 1999. This rate was 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.

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. -AScribe Newswire