The following are some selected quotes I found particularly interesting:
His research—consistent with similar studies—found that about one in four restaurants close or change ownership within their first year of business. Over three years, that number rises to three in five. While a 60% failure rate may still sound high, that's on par with the cross-industry average for new businesses.
One widely held belief is that franchise restaurants are much safer bets than independent restaurants. But Parsa found that the three-year success rate for franchised restaurants is actually only a few percentage points higher than it is for independents—about 43%. That's a far cry from the 90% or higher success rates trumpeted by many franchisors.
Restaurant owners weren't failing because they had ill-defined competitive strategies. They weren't failing because they lacked access to capital, or because they chose poor locations, either. (These are factors, Parsa says, just not typically make-or-break ones.) Rather, the single most critical element of a restaurant's success, Parsa says, is the presence of a distinctive, well-researched concept. This insight is, admittedly, a bit of an anticlimax. The importance of a concept seems like it would be obvious to anyone prepared to invest thousands of dollars in said concept. As it turns out? Not so much. When asked to describe their concept, failed restaurant owners answered "vegetarian food" or "Alaskan seafood"—when pressed, and they couldn't expand their description beyond food production. In contrast, the successful restaurant owners could describe, in detail, an entire operating philosophy encompassing everything—the ambiance, the service, the decor—not just the food.
