When choosing where to open a restaurant, many businessmen may recall the adage “location, location, location.” But even a prime location doesn’t always protect against restaurant failure. In “Why Restaurants Fail: Part IV: The Relationship Between Restaurant Failures and Demographic Factors” from Cornell Hospitality Quarterly, the authors illustrate how an area’s demographic characteristics can affect the success of a restaurant.
Although location is a significant factor in a restaurant’s survival chances, contrary to the commonly held belief, the presence of nearby homes did not help in lowering failure rates between 2000 and 2010 for restaurants in Boulder, Colorado. Instead, having a substantial population of apartment dwellers and transient residents (notably, university students) enhanced the restaurants’ success, as did the presence of people aged eighteen to twenty-four, those with higher educational levels, non-household families, and low- to middle-income families. Larger restaurants and those with chain affiliation had a greater probability of success than small, quick-service operations. Among the factors that had little effect on restaurant success or failure were unemployment rates, the nature of nearby residents’ profession, and the geographical presence of families with children under eighteen. The study’s results also support the long-held industry perception regarding avoiding locations where restaurants have already failed. When a location had experienced three ownership turnovers, the study found that the location generally ceased to host restaurants as tenants. As explained further in this article, this is the fourth in a series of examinations of the elements of restaurant success and failure.
Click here to read “Why Restaurants Fail: Part IV: The Relationship Between Restaurant Failures and Demographic Factors” from Cornell Hospitality Quarterly. Want more articles like this sent directly to your inbox? Click here to sign up for e-alerts from Cornell Hospitality Quarterly!