How many restaurants fail in the first year? Not 90%.

About one in five. Not nine in ten.

Two large studies followed real restaurants for years. One found that 17% of new restaurants closed in their first year. The other found 26%.

That is close to the rate for any new business. Restaurants are not a special case.

Where the 90% number came from

In the summer of 2003, NBC ran a reality show about opening a restaurant. During the show, an American Express ad said that 90% of restaurants fail in their first year.

The line stuck. More than twenty years later, people still repeat it.

A team at Ohio State University, led by H. G. Parsa, decided to test it. They put the claim in a spreadsheet.

If 90% of restaurants closed every year, a city of 3,000 restaurants would have about 30 left after two years. No city looks like that. The number could not be true.

The real numbers

Parsa's team followed every restaurant in Columbus, Ohio, from 1996 to 1999, using health department records. In the first year, 26% closed or changed owners.

After three years, about six in ten independent restaurants had closed or changed hands. Chains did only a little better.

In 2014, two researchers at the University of California, Berkeley, used 20 years of government data on 81,000 restaurants in the western US. First-year failure: 17%.

Half of those restaurants lasted longer than 4.5 years. That is a bit longer than other service businesses started in the same years.

The U.S. Bureau of Labor Statistics keeps the count for every kind of business. Of businesses opened in 2023, 79% were still open one year later. Of those opened in 2020, about half were still open after five years.

Restaurants, Columbus, Ohio, 1996 to 1999

26%

Restaurants, western US, 20 years of data

17%

Other service businesses, western US

19%

All US businesses opened in 2023

21%

Columbus: 19% more closed in year two and 14% in year three; chains reached 57% after three years. Sources: Parsa and others, 2005. Luo and Stark, 2014. U.S. Bureau of Labor Statistics, 2025.

So a new restaurant has the same odds as a new shop, a new salon or a new repair business. Some close. Most do not.

And the ones that close in year one often change owners rather than shut the doors.

What the ones that stayed open did

The Ohio team also sat down with owners: the ones who made it and the ones who did not. On paper, the two groups looked alike.

Both had plans. The difference was in a few habits.

• One clear idea of what the place is. The owners who lasted could say it in one sentence. A muddled idea was one of the biggest reasons for closing.
• Watching the money every week. The survivors kept strict records and ran a cost-conscious kitchen.
• Food quality first. Owners who lasted named it as the thing that kept people coming back.
• Time and family in the plan. Every failed owner talked about the huge amount of time a restaurant takes. The ones who lasted had set limits, like the owner who refused to open for lunch so he could see his family.
• Marketing they did themselves. The survivors credited their own marketing, mostly relationships with regulars. The failed owners blamed the competition's marketing.

If you are planning a place, start with the one sentence that says what it is. In the Ohio study, that was the biggest difference between the two groups. The next step is a short menu that is easy to order from.

Common questions

Is it true that 90% of restaurants fail in the first year?

No. The line comes from a 2003 American Express ad that ran during an NBC reality show. Studies that followed real restaurants found 17% to 26% closed in the first year.

How long does the average restaurant last?

In a 20-year study of 81,000 restaurants in the western US, half lasted longer than 4.5 years. Very small restaurants, with five or fewer staff, lasted 3.75 years.

Sources

1. Why Restaurants Fail, H. G. Parsa, John T. Self, David Njite and Tiffany King, Cornell Hotel and Restaurant Administration Quarterly (2005)
2. Only the Bad Die Young: Restaurant Mortality in the Western US, Tian Luo and Philip B. Stark, University of California, Berkeley (2014)
3. Business Employment Dynamics, Table 7: Survival of private sector establishments by opening year, U.S. Bureau of Labor Statistics (2025)

Nicolae Cojuhari · Software engineer with a finance background. Founder of 1food.menu.