Restaurant Statistics

Many new restaurant operators are told that 90-95% of new restaurants fail within the first year. The truth is bad, but not quite THAT bad. I believe that this percentage is inflated on purpose, to keep the competition away. One of the more recent studies conducted in the late 1990’s in Columbus, Ohio produced results showing that the failure rate of new restaurants was between 67% and 81%. (click here to read that article...)

Yes, the statistics of restaurant failure are high. However, there are reasons for this high failure rate. There are many people who simply won't disclose the insider information that could help new restaurant owners succeed.

After all, would you give a new competitor down the street the helpful information they need to succeed? Of course not, they would end up taking some of YOUR business!

restaurant business statistics After looking at restaurant statistics over the years I must say that most of the published stats don't add up! I'm not sure what sources are used, or if these stats are verified by any government agencies, but they seem very questionable. The reporting of statistics in the restaurant industry see to change very little from year to year. Sure, there are some fluctuations based on the economy, interest rates and food costs, but they don’t change as much as you might think. Yes, even during the economic crisis you didn't see 50% swings in the statitics. So, make sure you taken any data with a grain of salt, and always check the source. Who's profiting from publishing these statistics?

The Ugly Published Restaurant Statistics

Let’s start with the scary restaurant facts. The statistics most people focus on are the restaurant failure statistics.

These statistics haven’t been updated after the economic slowdown, but had remained steady for almost a decade before that.

- 50% of new restaurants that open won’t make it to their first anniversary
- of the remaining 50% only a little over half of those will be open in 4 years.

So, only about 25% of new restaurants develop into a long term profitable operation.

Those statistics should cause anyone thinking of opening a restaurant to make sure they have done their market research, found a great location and can prove their business plan assumptions.

*these statistics don’t include franchises. Established franchises have a tremendous success rate. However, the upside is capped and it requires a huge financial resource to buy into a franchise. Also, a true entrepreneur would never be totally happy running their business with somebody else’s rules. (That seems like a “job” to many!)

The Better Restaurant Statistics

Although the previous statistics might dissuade many from pursuing ownership of a restaurant business, there are some other statistics they say the restaurant industry is booming.
The outlook is bright. And there is a huge opportunity for someone looking to start a business.

Here’s a snapshot of restaurant statistics taken from various current reports.

restaurant statistics (these are US statistics)

It’s estimated there are almost 13 million people working in the restaurant industry
It is estimated that total sales will be over $600 billion this year (up from last year, despite the recession)
almost 50% of restaurant workers surveys say they are considering owning their own restaurant someday.
almost 50% of the money spent on food is spent in a restaurant (49%)
The USA has over 950,000 restaurant locations
Going to a restaurant is listed as a top 5 enjoyable activities by over 80% of adults.
Over 80% of current restaurant owners started their careers working in lower level positions in the restaurant industry.
The overall impact on the economy from the restaurant industry is over $1.5 million.
Every time another $1 Million dollars of restaurant revenue is created, 34 jobs are created.
Almost 70% of customers surveys said they would rather go to a restaurant that has organic or environmentally friendly grown food. They would like to know where the food comes from and how it’s prepared. (they weren’t asked whether they’d pay a premium for fresh and organic food)
Right now, the restaurant industry does over $1.5 billion in sales daily!

These restaurant statistics demonstrate that there is still an increasing demand by the public for good restaurants. Busy lifestyles and an aging population makes this a golden opportunity for years to come.

There are the scary restaurant statistics and the restaurant statistics that show the industry is growing and still has a fabulous opportunity for owners and entrepreneurs. Make sure you evaluate both side of the coin and make informed decisions when looking at current restaurant statistics.