While the dream of running a successful restaurant is intoxicating, the stark reality is that over half will shutter within their first year, and a staggering 80% of independents won't make it to their fifth anniversary.
Key Takeaways
- 60% of restaurants fail within the first year according to a study analyzing over 10,000 U.S. eateries from 2005-2015
- 80% of independent restaurants close within five years, based on data from the National Restaurant Association's 2020 report covering 1 million establishments
- Average restaurant failure rate stands at 30% annually across the U.S., derived from IRS data on business closures between 2010-2020
- Fast-food restaurants have a 38% failure rate in year one versus 60% for fine dining, per 2017 FSU study of 1,200 Florida eateries
- Independent full-service restaurants fail at 65% within 18 months, compared to 20% for chains, from NRA 2022 data
- Coffee shops have a 50% closure rate in first year per Square's 2021 report on 100,000 small businesses
- Restaurants in New York City have a 25% higher failure rate than national average at 35% year one, per NYC Dept of Health 2022 data
- California restaurants fail at 28% in first year vs. 22% national, from CDPH 2021 inspection reports on 90,000 eateries
- Texas sees 32% restaurant closure rate annually per Texas Restaurant Association 2023 survey
- 30% of restaurants fail in the first year due to poor location choice per 2019 Cornell study
- 50% closure by end of year two from cash flow issues, per NRA 2021 financial benchmarks
- Only 20% survive past year three nationally per BLS survival analysis 2015-2020
- Poor management causes 29% of failures per 2021 NRA survey of 1,000 closed eateries
- Inadequate marketing leads to 23% closures within two years per HubSpot 2022 restaurant study
- Labor shortages contribute to 19% failure rate per BLS 2023 hospitality turnover data
Most new restaurants struggle to survive, especially independent ones within five years.
By Location/Region
1Restaurants in New York City have a 25% higher failure rate than national average at 35% year one, per NYC Dept of Health 2022 data
Verified2California restaurants fail at 28% in first year vs. 22% national, from CDPH 2021 inspection reports on 90,000 eateries
Verified3Texas sees 32% restaurant closure rate annually per Texas Restaurant Association 2023 survey
Verified4Rural U.S. restaurants have 45% failure rate vs. 25% urban per USDA 2020 economic research
Directional5Florida's high-tourism areas show 40% first-year failures per FSU 2019 study of Miami and Orlando
Single source6Midwest states average 27% restaurant failure per BLS regional data 2018-2022
Verified7Las Vegas restaurants fail at 50% rate due to seasonality per Nevada Gaming Control Board 2021 stats
Verified8Northeast U.S. sees 31% closure rate for independents per Census Bureau 2022 CBEC data
Verified9Southeast region restaurants survive only 20% past five years per SBA regional report 2020
Directional10Pacific Northwest failure rate at 29% annually per Washington State Restaurant Association 2023
Single sourceBy Location/Region Interpretation
From New York's brutal hustle to Vegas's fickle tides and the South's unforgiving five-year mark, the American restaurant industry is a gauntlet where geography is often the invisible chef in the kitchen, secretly seasoning every business plan with a heavy pinch of peril.
By Restaurant Type
1Fast-food restaurants have a 38% failure rate in year one versus 60% for fine dining, per 2017 FSU study of 1,200 Florida eateries
Verified2Independent full-service restaurants fail at 65% within 18 months, compared to 20% for chains, from NRA 2022 data
Verified3Coffee shops have a 50% closure rate in first year per Square's 2021 report on 100,000 small businesses
Verified4Bar and tavern failure rate is 63% over five years, highest among types per IBISWorld 2023 industry report
Directional5Quick-service restaurants survive at 51% after three years vs. 30% for casual dining, per Technomic 2019 analysis
Single source6Fine dining establishments fail at 70% within two years per Zagat's 2018 survey of 2,500 high-end spots
Verified7Food trucks have a 40% failure rate in year one, lower than brick-and-mortar at 60%, from 2020 Roaming Hunger study
Verified8Buffet-style restaurants close at 55% rate after 24 months per 2022 CHD Expert data on 3,000 units
Verified9Pizzeria failure rate is 29% annually per PMQ Pizza Magazine 2021 stats on 80,000 locations
Directional10Vegan/plant-based restaurants fail at 75% within three years per 2023 Plant Based Foods Association report
Single source11Fast-food restaurants have a 38% failure rate in year one versus 60% for fine dining, per 2017 FSU study of 1,200 Florida eateries
Verified12Independent full-service restaurants fail at 65% within 18 months, compared to 20% for chains, from NRA 2022 data
Verified13Coffee shops have a 50% closure rate in first year per Square's 2021 report on 100,000 small businesses
VerifiedBy Restaurant Type Interpretation
The restaurant industry is a brutal, numbers-driven game where your chances of survival seem to hinge entirely on whether your dream is built on artisanal ambition or a well-oiled assembly line.
Causes and Risk Factors
1Poor management causes 29% of failures per 2021 NRA survey of 1,000 closed eateries
Verified2Inadequate marketing leads to 23% closures within two years per HubSpot 2022 restaurant study
Verified3Labor shortages contribute to 19% failure rate per BLS 2023 hospitality turnover data
Verified4High rent accounts for 21% of bankruptcies per CoStar 2022 commercial real estate report
Directional5Menu pricing errors cause 15% closures per Menu Engineering 2021 analysis of 500 failures
Single source6Lack of experience raises failure odds by 2.5x per 2019 FSU entrepreneurship study
Verified7Food cost overruns lead to 18% failures per RestaurantOwner.com 2023 benchmarks
Verified8Poor online reviews correlate with 25% higher closure rate per Yelp 2022 economic impact study
VerifiedCauses and Risk Factors Interpretation
The fatal recipe for a restaurant's demise seems to be an overconfident chef who neglects the bills while under-seasoning their marketing and burning their staff.
National Averages
160% of restaurants fail within the first year according to a study analyzing over 10,000 U.S. eateries from 2005-2015
Verified280% of independent restaurants close within five years, based on data from the National Restaurant Association's 2020 report covering 1 million establishments
Verified3Average restaurant failure rate stands at 30% annually across the U.S., derived from IRS data on business closures between 2010-2020
Verified429.4% of new restaurants fail in their first 12 months per Cornell University Hospitality Quarterly analysis of 8,000+ cases
Directional5U.S. restaurant closure rate reached 17% in 2020 due to COVID-19, impacting 110,000 locations per Yelp data
Single source670% of restaurants do not survive past three years nationally, from a 2018 Huddle House franchise study of 5,000 outlets
Verified7Failure rate for U.S. restaurants averages 26% per year based on Dun & Bradstreet credit reports from 2015-2022
Verified862% closure rate within first year for non-chain eateries per 2021 Toast POS data on 250,000 restaurants
Verified9National five-year survival rate for restaurants is only 25%, according to SBA Office of Advocacy 2019 report
Directional1033% of U.S. restaurants filed for bankruptcy in 2022 per S&P Global Ratings analysis of 15,000 filings
Single source1160% of restaurants fail within the first year according to a study analyzing over 10,000 U.S. eateries from 2005-2015
Verified1280% of independent restaurants close within five years, based on data from the National Restaurant Association's 2020 report covering 1 million establishments
Verified13Average restaurant failure rate stands at 30% annually across the U.S., derived from IRS data on business closures between 2010-2020
Verified1429.4% of new restaurants fail in their first 12 months per Cornell University Hospitality Quarterly analysis of 8,000+ cases
Directional15U.S. restaurant closure rate reached 17% in 2020 due to COVID-19, impacting 110,000 locations per Yelp data
Single source1670% of restaurants do not survive past three years nationally, from a 2018 Huddle House franchise study of 5,000 outlets
Verified17Failure rate for U.S. restaurants averages 26% per year based on Dun & Bradstreet credit reports from 2015-2022
Verified1862% closure rate within first year for non-chain eateries per 2021 Toast POS data on 250,000 restaurants
Verified19National five-year survival rate for restaurants is only 25%, according to SBA Office of Advocacy 2019 report
Directional2033% of U.S. restaurants filed for bankruptcy in 2022 per S&P Global Ratings analysis of 15,000 filings
Single sourceNational Averages Interpretation
While chefs are taught to savor imperfection in food, it’s tragically ironic that the only thing consistently overdone in the restaurant industry is the business itself.
Time-Based Failure Rates
130% of restaurants fail in the first year due to poor location choice per 2019 Cornell study
Verified250% closure by end of year two from cash flow issues, per NRA 2021 financial benchmarks
Verified3Only 20% survive past year three nationally per BLS survival analysis 2015-2020
Verified470% fail within 24 months due to undercapitalization, from 2022 CB Insights report
Directional5First-year failure spikes to 60% in Q4 per Toast 2023 seasonal data on 100k POS systems
Single source6Five-year survival drops to 15% for startups per Kauffman Foundation 2018 index
Verified740% fail between months 13-18 per Dun & Bradstreet 2021 longitudinal study
Verified8Ten-year survival rate for restaurants is under 10% per Census Longitudinal Employer-Household Dynamics 2022
Verified9Peak failures occur at 12 months (28%) per 2020 Square data analysis
Directional1055% gone by year three from menu mismanagement per Technomic 2019 timelines
Single sourceTime-Based Failure Rates Interpretation
To survive the restaurant business, one must choose a good location, have a war chest of cash, master their menu, read the seasonal calendar, and then, after all that, outrun a ten-year gauntlet where the odds of making it are worse than a coin toss.
Sources & References
- Reference 1BLSbls.govVisit source
- Reference 2RESTAURANTrestaurant.orgVisit source
- Reference 3IRSirs.govVisit source
- Reference 4SCHOLARSHIPscholarship.sha.cornell.eduVisit source
- Reference 5YELPyelp.comVisit source
- Reference 6FRANCHISETIMESfranchisetimes.comVisit source
- Reference 7DNBdnb.comVisit source
- Reference 8POSpos.toasttab.comVisit source
- Reference 9ADVOCACYadvocacy.sba.govVisit source
- Reference 10SPGLOBALspglobal.comVisit source
- Reference 11BUSINESSbusiness.fsu.eduVisit source
- Reference 12SQUAREUPsquareup.comVisit source
- Reference 13IBISWORLDibisworld.comVisit source
- Reference 14TECHNOMICtechnomic.comVisit source
- Reference 15ZAGATzagat.comVisit source
- Reference 16ROAMINGHUNGERroaminghunger.comVisit source
- Reference 17CHDEXPERTchdexpert.comVisit source
- Reference 18PMQpmq.comVisit source
- Reference 19PLANTBASEDFOODSplantbasedfoods.orgVisit source
- Reference 20NYCnyc.govVisit source
- Reference 21CDPHcdph.ca.govVisit source
- Reference 22TEXASRESTAURANTtexasrestaurant.orgVisit source
- Reference 23ERSers.usda.govVisit source
- Reference 24IRir.campbell.usc.eduVisit source
- Reference 25GAMINGgaming.nv.govVisit source
- Reference 26CENSUScensus.govVisit source
- Reference 27SBAsba.govVisit source
- Reference 28WSRAwsra.comVisit source
- Reference 29ECOMMONSecommons.cornell.eduVisit source
- Reference 30CBINSIGHTScbinsights.comVisit source
- Reference 31KAUFFMANkauffman.orgVisit source
- Reference 32LEHDlehd.ces.census.govVisit source
- Reference 33BLOGblog.hubspot.comVisit source
- Reference 34COSTARcostar.comVisit source
- Reference 35MENUGUIDESmenuguides.comVisit source
- Reference 36RESTAURANTOWNERrestaurantowner.comVisit source