Why Restaurants Fail

There are many reasons why a business can fail, especially a restaurant. Knowing where other businesses have fallen short is where a new business can excel. The basis for this article is to show the key reasons why restaurants fail, so that others can learn from these mistakes without having to experience them firsthand. The 14th page of the document titled “Elements of Restaurant Success and Failure” by H. G. PARSA, JOHN T. SELF, DAVID NJITE, and TIFFANY KING is the basic overview of what to do and what not to do.

Past research on restaurant failures has focused mostly on quantitative factors and bankruptcy rates. This study explored restaurant ownership turnover rates using qualitative data, longitudinal data (1996- 1999), and data from Dun and Bradstreet reports. In contrast to frequently repeated statistics, a relatively modest 26.16 percent of independent restaurants failed during the first year of operation. Results from this study indicated marginal differences in restaurant failures between franchise chains (57.2 percent) and independent operators (61.4 percent). Restaurant density and ownership turnover were strongly correlated (.9919). A qualitative analysis indicated that effective management of family life cycle and quality of-life issues is more important than previously believed in the growth and development of a restaurant.

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