To help existing and prospective restaurant operators and guide the development of the downtown dining and entertainment sector, it is important to understand why restaurants fail. An article in the Cornell Hotel and Restaurant Administration Quarterly, “Why Restaurants Fail” (Parsa et al.)* examines research on why restaurants go out of business. Information from this article, including failure rates and factors linked to those business closings, are summarized here.

For the past three decades, the restaurant industry has consistently posted yearly sales gains. Today’s consumers regard food prepared away from home as a necessity. Convenience, a need for socialization and gains in real disposable income have led consumers to spend more of their food dollars in restaurants. Last year, large chains for the first time captured more of the dining out market than independent restaurants. This article looks at the challenge chain businesses pose to independent restaurants, especially during these economically sluggish times.

Restaurants are an essential component of a vibrant, mixed-use business district. They serve a variety of market segments including nearby residents, shoppers, office workers and tourists. Market data on your area can suggest what types of restaurants might make sense for your downtown. This article provides information on collecting and analyzing data to identify possible restaurant concepts.