What Are Five Factors Which Contribute To The Failure Of New Restaurants?

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third of those remaining would fail in
their third year. As a result, there is about a 90% compound failure rate over
the first 3 years of a restaurants lifespan. (Mullen & Woods, 61)
You are not alone if you feel intimidated by the numbers. They can be
quite blunt and negative which attributes to one simple fact - it takes planning,
research and risk to venture into the restaurant world. There are five major
factors which can lead to success or, in this case, failure of new restaurants:
capital, type of establishment, location, labor and management.
In order to start any business, an entrepreneur needs money or capital.
This capital could include all expenses, such as loans, rent, payroll, and
insurance. Some argue this is what causes restaurants to fail. Given the
information that restaurants are most likely to fail than succeed, it is always
difficult and often impossible to interest bankers in making loans to
entrepreneurs who operate in a high risk industry. ...

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it could eliminate ten percent of the
industry's nine million jobs in ‘95. Many factors could lead to ultimate
failure of restaurants due to poor financing and uncontrolled external factors.
The term failure means a lot of different things. Going broke certainly
constitutes a failure, but terminations and nonrenewals of franchises are also
failures in many cases. Selling the store to another franchisee or to the
company could also qualify depending on what motivates the sale. In some cases,
a restaurant in a poor location may change hands several times- each a failure-
yet each change of ownership may go unnoticed because the signage, menu, and
interior decor will be virtually ...

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