Cornell Quarterly Article Examines Restaurant Success Rate
Cornell Quarterly Article Finds Restaurant Owners Have A Higher Success Rate Than Commonly Thought
One common perception of the restaurant industry is that most new restaurants fail within the first year of operation. But that is just not so, according to an analysis published in the August 2005 issue of the Cornell Hotel and Restaurant Administration Quarterly. The article, Why Restaurants Fail, by H.G. Parsa, John T. Self, Dvid Njite, and Tiffany King, is available at no charge from the Quarterly's publisher, The Center for Hospitality Research, at TheCenterforHospitalityResearch.org.
Using actual restaurant statistics for independent restaurants operating between 1996 and 1999 in Columbus, Ohio, the researchers found that the failure rate for independent restaurants was 26 percent in the first year. Not only that, but the total failure rate for the three-year period was 60 percent-far lower than the conventional wisdom suggests. While the study is limited to the Columbus market, there is no reason to believe that it is materially different from the United States as a whole. Over the three-year period, the study also found only marginally greater failure rates for independent operators (61 percent) over franchise outlets (57 percent).
The researchers also interviewed a sample of the restaurant owners to determine the factors that make for restaurant success. Surprisingly, the entrepreneurs did not point to external factors and gave little credit to advertising or promotions for their success. Instead, they said that successful restaurant operators must have a clear concept that they espouse passionately and consistently. Successful restaurateurs also must be able to commit huge amounts of time to their business and be willing to adapt to changing situations.
The article, which is now posted at TheCenterforHospitalityResearch.org, was published in the August 2005 issue of the Cornell Quarterly, the premier journal of applied research serving hospitality practitioners and scholars. The award-winning CQ is published by The Center for Hospitality Research at the Cornell Hotel School and is available by subscription from Sage Publishing (sagepublications.com). For more information on the CQ, see:
http://www.hotelschool.cornell.edu/publications/HRAQ.
About The Center for Hospitality Research
A unit of the Cornell School of Hotel Administration, The Center for Hospitality Research (CHR) sponsors research designed to improve practices in the hospitality industry. Under the lead of the Center's 43 corporate affiliates, experienced scholars work closely with business executives to discover new insights into strategic, managerial and operating practices. The Center also publishes the award-winning hospitality journal, the Cornell Hotel and Restaurant Administration Quarterly. To learn more about CHR and its projects, visit
http://www.thecenterforhospitalityresearch.org.
CHR Partners and sponsors: AIG Global Real Estate Investment Corp., Bartech Systems International, Cendant Corporation, Four Seasons Hotels and Resorts, HVS International, JohnsonDiversey, Inc., Kohinoor Group, Marsh's Hospitality Practice, Nestlé, Smith Travel Research, Southern Wine and Spirits of New York, Taj Hotels Resorts and Palaces, Thayer Group of Companies, Willowbend Golf Management, and Wyndham International.
CHR friends: ARAMARK • DK Shifflet & Associates • ehotelier.com • Gerencia de Hoteles & Restaurantes • Global Hospitality Resources • Hospitality World • hospitalitynet.org • Hotel Asia Pacific • Hotel China • Hospitality Initiatives India • Hotel Interactive • Hotel Resource • International CHRIE • International Hotel and Restaurant Association • KPMG Japan/Global Management Directions • Lodging Hospitality • Lodging Magazine • Mobile MoneySaver • National Hotel Executive Magazine • PKF Hospitality Research • Resort+Recreation • The Resort Trades • RestaurantEdge.com • Shibata Publishing Co. • The Lodging Conference • TravelCLICK • UniFocus • WageWatch, Inc. • WiredHotelier.com
Using actual restaurant statistics for independent restaurants operating between 1996 and 1999 in Columbus, Ohio, the researchers found that the failure rate for independent restaurants was 26 percent in the first year. Not only that, but the total failure rate for the three-year period was 60 percent-far lower than the conventional wisdom suggests. While the study is limited to the Columbus market, there is no reason to believe that it is materially different from the United States as a whole. Over the three-year period, the study also found only marginally greater failure rates for independent operators (61 percent) over franchise outlets (57 percent).
The researchers also interviewed a sample of the restaurant owners to determine the factors that make for restaurant success. Surprisingly, the entrepreneurs did not point to external factors and gave little credit to advertising or promotions for their success. Instead, they said that successful restaurant operators must have a clear concept that they espouse passionately and consistently. Successful restaurateurs also must be able to commit huge amounts of time to their business and be willing to adapt to changing situations.
The article, which is now posted at TheCenterforHospitalityResearch.org, was published in the August 2005 issue of the Cornell Quarterly, the premier journal of applied research serving hospitality practitioners and scholars. The award-winning CQ is published by The Center for Hospitality Research at the Cornell Hotel School and is available by subscription from Sage Publishing (sagepublications.com). For more information on the CQ, see:
http://www.hotelschool.cornell.edu/publications/HRAQ.
About The Center for Hospitality Research
A unit of the Cornell School of Hotel Administration, The Center for Hospitality Research (CHR) sponsors research designed to improve practices in the hospitality industry. Under the lead of the Center's 43 corporate affiliates, experienced scholars work closely with business executives to discover new insights into strategic, managerial and operating practices. The Center also publishes the award-winning hospitality journal, the Cornell Hotel and Restaurant Administration Quarterly. To learn more about CHR and its projects, visit
http://www.thecenterforhospitalityresearch.org.
CHR Partners and sponsors: AIG Global Real Estate Investment Corp., Bartech Systems International, Cendant Corporation, Four Seasons Hotels and Resorts, HVS International, JohnsonDiversey, Inc., Kohinoor Group, Marsh's Hospitality Practice, Nestlé, Smith Travel Research, Southern Wine and Spirits of New York, Taj Hotels Resorts and Palaces, Thayer Group of Companies, Willowbend Golf Management, and Wyndham International.
CHR friends: ARAMARK • DK Shifflet & Associates • ehotelier.com • Gerencia de Hoteles & Restaurantes • Global Hospitality Resources • Hospitality World • hospitalitynet.org • Hotel Asia Pacific • Hotel China • Hospitality Initiatives India • Hotel Interactive • Hotel Resource • International CHRIE • International Hotel and Restaurant Association • KPMG Japan/Global Management Directions • Lodging Hospitality • Lodging Magazine • Mobile MoneySaver • National Hotel Executive Magazine • PKF Hospitality Research • Resort+Recreation • The Resort Trades • RestaurantEdge.com • Shibata Publishing Co. • The Lodging Conference • TravelCLICK • UniFocus • WageWatch, Inc. • WiredHotelier.com
