May 16, 2022

Question of the Day: What percentage of restaurant businesses fail within the first year?

For many, summer means visiting our favorite restaurants. How many of them are likely to be here a year from now?

 

Answer: Restaurants have about a 20% failure rate within the first year, just like businesses in other industries.

 


 

Questions:

  • Why do you think there's a common misconception that restaurants fail more than other businesses?
  • What are some reasons you can think of that would support the food service industry being a stable business idea?
  • What are some examples of restaurants in your area that either failed or have succeeded? What contributed to that outcome?

 

Here's the ready-to-go slides for this Question of the Day that you can use in your classroom. 

 

Behind the numbers (Fortunly):

"Beliefs about the restaurant business and its supposedly higher failure rate are not based in fact, according to data gathered from the BLS. On the contrary, the business failure rate in this industry has been dropping steadily for the past five years.

  • Roughly 20% of restaurants fail within the first year, just like businesses in other industries. In fact, the restaurant fail rate from 2014 until now has been dropping to 10-12%.
  • Roughly 30% of businesses in the accommodation and food services sector fail after two years, about 3-4% less than in other industries.
  • Roughly 50% of businesses in the accommodation and food services sector fail after five years, just like businesses in other industries.
  • Roughly 62% of businesses in the accommodation and food services sector fail after 10 years, 3-4% less than in other industries."
 
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NGPF's Entrepreneurship mini-unit can get your students thinking about their potential as a future bussinessperson!
 
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Want to give students an opportunity to show off their entrepreneurial spirit? Try out ECON: I've Got An Idea!

 

 

About the Author

Ryan Wood

Ryan grew up with and maintains a love for learning. He graduated from the University of Wisconsin-Green Bay with a degree in Business Administration and worked in sports marketing for a number of years. After living in Texas, Colorado, Tennessee, and Minnesota, the call of education eventually brought Ryan back to his home state of Wisconsin where he was a Business and Marketing teacher for three years. In his free time he likes to spend time with his wife and daughter, play basketball, read, and go fishing. Now with NGPF, Ryan is excited to help teachers lead the most important course their students will ever take.

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