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Cornell Hotel and Restaurant Administration Quarterly, Vol. 46, No. 3, 304-322 (2005)
DOI: 10.1177/0010880405275598
© 2005 Cornell University

Why Restaurants Fail

H. G. Parsa, Ph.D.

The Ohio State Universityparsa.1{at}osu.edu

John T. Self, Ph.D.

California State Polytechnic University, Pomonajtself{at}csupomona.edu

David Njite

Tiffany King

The Ohio State University

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.

Key Words: restaurant failure • dinner-house operation • entrepreneurship • restaurant bankruptcy


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