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Restaurant failure rate lower than thought!

May 15, 2006

The common business wisdom – that restaurants fail at an alarmingly high rate, maybe as high as 90 to 95 percent in the first year, is flat wrong, according to researchers at Ohio State University.

Their research suggests that the actual numbers may be closer to 57 to 61 percent; the highest failure rate was during the first year – 26 percent; the second year about 19 percent and the third year about 14 percent.

H.G Parsa, author of the study and associate professor of hospitality management at Ohio State said many restaurants close not because they couldn’t succeed financially, but because of personal reasons involving the owner(s) such as divorce, poor health or simply a desire to retire.

“The successful owners were either very good at balancing their family and work lives or single or divorced.”