Question
How does the restaurant failure rate compare to other industries?
Answer
Restaurants fail at a much higher rate than most industries, both early and over time. The gap reflects the unique operational strain of food service.
| Industry | Year 1 failure | By year 5 |
|---|---|---|
| Restaurants | ~60% | ~80% closed |
| Retail and construction | ~25% | - |
| All small businesses | ~20% | ~50% closed |
- Higher early risk: restaurants fail roughly three times as often as the average business in year one.
- Operational strain: perishable inventory, labor, and razor-thin margins drive the difference.
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