Bust that myth! Independent restaurant startups have a first year success rate over 80%! Many experts predict over 30% of new restaurants will not survive their first year in business. A trusted local resource: Restaurantdata.com's Joe Dunbar and has found the closing rate is much lower.
The Irvington, NY firm’s latest research which can be found in the company's new Restaurant Investor Report combats bogus claims of restaurant success, takes a corner to corner, comprehensive approach to real survival and closing rates.
The New York Metro area restaurants fared better than the national average in the second half of 2014. Almost 97% of the restaurants that opened on June 30, 2014 remained open on December 31, 2014. “We will continue to report on success rates twice a year,” noted Dunbar. If the current trend continues in the metro area, only 6.5% of all restaurants would close in a year.
The report shows that the closing rate is higher for new restaurants. In the NYC metro area, we found 94.27% of restaurants opened in the most recent three-year period (2011 to 2014) were still open in the second half of 2014. “We would expect between 11 and 12% (twice the 6 month rate) would close in a one year period,” Dunbar continued. The closing rate is 3% lower than the national average of 14 to 15% for restaurants opened in the most recent three-year period. The NYC metro restaurants opened in the same period have a success rate, which is 3% higher.
Focusing on restaurants opened in the 2011 to 2014 period, the firm looked at the Top 10 metro areas in the US to see how the NYC metro area compares. San Francisco had the highest closing rate in the second half of 2014. Over 11% closed in the 6-month period. “We’d expect between 21% and 23% would close in a 12 month period, ” Dunbar added. Atlanta has the best success rate – 95.74% and we’d expect a full 12 month success rate of over 90% in Atlanta.”
Since 1997, Restaurantdata.com has tracked restaurant openings in the NYC metro area and the rest of the country. The firm's research includes scouring information from government sources, newspaper articles and industry news. As of December 31, Restaurantdata.com found 36,038 restaurants in the New York Metro Area were open for business.
The 1,238 restaurants that closed in the second half of 2014 included 502 locations we reported in our restaurant openings reports. These 502 locations represent roughly 4.3% of the restaurants whose openings were covered in our reports. Independent restaurant annual closing rate in all US regions, cities and towns was over 9%. In contrast, the NYC metro area shows a rate of 6.64%.
The new Restaurant Investor Report also includes summaries by cuisine, service style and check average. These summaries will include recaps by state, zip code, DMA and for 25 major metro areas in addition to the national statistics.