The Top 22 Reasons Why Restaurants Fail (And How You Can Fix It)

The restaurant industry is a difficult one to succeed in. The statistics illustrate this sobering fact—sixty percent of restaurants don't survive their first year in business, and 80 percent close within five years. Additionally, an IBISWorld report found that 67 percent of a full-service restaurant's costs go directly to purchase expenses and wages. On top of that, the average profit margin for a restaurant is only 6.2 percent. With a profit margin this slim, it's no wonder why insolvency is often, unfortunately, right around the corner. There's good news, though—researchers at Cornell University discovered that the primary reasons for restaurant failure are widely preventable. With savvy business leadership, a delicious menu, experienced staff, a great location, and stellar vision, you might have what it takes to run a successful and financially sustainable establishment people will love. In this article, we'll explore the top reasons restaurants fail and how you can overcome the challenging hurdles that come with the industry.