There Are Too Many Restaurants
Want to see more small eateries? Zone out the chains
Restaurants, like marriages, are a big risk. You’ll find studies quoting a range of conflicting statistics and factors. But the common denominator is that the failure rate is high. And yet, because the heart wants what it wants, that doesn’t stop anyone from doing either. The reasons for failure in both scenarios are pretty similar — inexperience, lack of planning, and undercapitalization.
A new restaurant can reasonably predict many of its first-year expenses, the tens or hundreds of thousands allocated to rent, renovation, inventory, food, and labor costs. But it is much more difficult to predict revenue, because competition is deadly fierce. Yes, product, quality, location, and marketing all play a role in potential sales. And competition usually improves a service. But there are just too damn many restaurants out there.
At last estimate, there were 660,755 restaurants in America and 329 million people. That’s one restaurant for every 497 people. If that seems like plenty of customers per business, consider that the average Applebee’s has 225 seats.
To keep their engines running, large chains and franchises eat up the majority of dining clientele. And chains, operated by corporations whose boards of directors expect constant…
