Now, in 2024, operators have alleviated some of their pandemic-induced pains and the industry is starting to bounce back. <\/p>\n\n\n\n
But that doesn\u2019t mean restaurants aren\u2019t still at risk.
In this blog, we\u2019ll tackle everything you need to know about restaurant failure, including:<\/p>\n\n\n\n
- \n
- How many restaurants actually fail <\/li>\n\n\n\n
- Four reasons restaurants fail (and how to avoid them)<\/li>\n\n\n\n
- How Craver can help you reduce your restaurant\u2019s risk of failure<\/li>\n<\/ul>\n\n\n\n
Ready? Let\u2019s get started. <\/p>\n\n\n\n
How Many Restaurants Actually <\/em>Fail?<\/h2>\n\n\n\n
At some point in your career, you\u2019ve likely heard the first-year failure rate of restaurants is 90%.<\/p>\n\n\n\n
It\u2019s a shocking statistic, isn\u2019t it?<\/p>\n\n\n\n
That\u2019s because it\u2019s not real. <\/em><\/p>\n\n\n\n
In 2003, American Express shot a commercial with chef Rocco Dispirito<\/span><\/a>, highlighting the difficulties of owning a restaurant (and how an AMEX business card is the solution, of course<\/em>). <\/p>\n\n\n\n
One of DiSpirito\u2019s lines, in particular, would leave a lasting impact on the restaurant industry for decades: \u201cIt\u2019s no wonder that about 90% of all restaurants fail in the first year.\u201d<\/em><\/p>\n\n\n\n
Public opinion suggests DiSpirito\u2019s statistic was fabricated by AMEX\u2019s advertising and marketing department<\/span><\/a>, and it\u2019s since been disproven multiple times over.<\/p>\n\n\n\n
However, while we know with certainty that a 9 in 10 failure rate is wrong<\/em>\u2026<\/p>\n\n\n\n
We don\u2019t necessarily know what failure rate is correct<\/em>. That\u2019s because the restaurant industry has seen a range of (lower-than-90%) estimations over the past two decades.<\/p>\n\n\n\n
- \n
- In 2005<\/span><\/a>, an Ohio State University study said 60% of restaurants fail within the first year<\/li>\n\n\n\n
- In 2009<\/span><\/a>, the National Restaurant Association said 30% of restaurants fail within the first year<\/li>\n\n\n\n
- In 2014<\/span><\/a>, a UC Berkeley study said 17% of restaurants fail within the first year<\/li>\n<\/ul>\n\n\n\n
![\"Restaurant](\"https:\/\/www.getcraver.com\/wp-content\/uploads\/2025\/06\/Restaurant-Failure-Rate-1.png\")
<\/figure>\n\n\n\nIf we average out those studies, that means ~35% of restaurants fail within the first year of business \u2014 almost one-third less<\/em> than AMEX made us out to believe all those years ago. <\/p>\n\n\n\n
\n\n\t\n\n\t\t\t\t\tDon’t be part of that statistic. Grow your sales by up to 40% with a Craver app.<\/div>\n\t\t\n \n\t\t\t\t\t\n\t\t\t\n\t\t\t\tBook A Demo\t\t\t<\/span>\n\t\t\t<\/a>\n\t\t\n\t<\/div>\n\n\n\n4 Reasons Why Restaurants Fail (and Solutions to Help) <\/h2>\n\n\n\n
The industry\u2019s 35% failure rate is a good metric to have in your back pocket, but it doesn\u2019t give much detail about why<\/em> those failures happen. <\/p>\n\n\n\n
Because, in reality, restaurants don\u2019t just fail out of the blue.<\/p>\n\n\n\n
They fail because different factors \u2014 and\/or combinations of these factors \u2014 negatively impact the restaurant over time, eventually rendering it unsustainable or impossible to run. <\/p>\n\n\n\n
So, to illustrate what those factors can look like, here are the top 4 reasons restaurants fail.<\/p>\n\n\n\n
(Plus, warning signs to look out for and what you can do before your doors close for good). <\/p>\n\n\n\n
1. Restaurant Decisions Aren\u2019t Informed by Data<\/h3>\n\n\n\n
You\u2019ve probably heard the phrase \u201cknowledge is power\u201d before\u2026 and that\u2019s because it\u2019s true. <\/p>\n\n\n\n
Customer data is one of a restaurant\u2019s most powerful assets, offering you information on every <\/em>part of your customer\u2019s experience from how frequently they visit to how they take their coffee. <\/p>\n\n\n\n
That data can then inform your decision on just about everything. For example, if your data shows that customers order one protein more than others, you can use that to inform what goes into your next new dish. Or, if your customers visit more at one time of day than another, you can use that to inform when (and how) you try out dynamic pricing<\/span><\/a>.<\/p>\n\n\n\n
Despite the clear benefit of data-based decision-making \u2014 like the 126%<\/span><\/a> increase in profit and 132%<\/span><\/a> increase in ROI \u2014 many restaurants aren\u2019t letting the data do the talking. And, according to William Wilson, CEO of Bloom Intelligence, using customer data is how you keep growing and improving your restaurant (while<\/em> keeping it open). <\/p>\n\n\n\n
\u201cThe most advanced operators understand that guest data is their lifeblood,\u201d says Wilson<\/span><\/a>. \u201c[They know] that it should be used not only for marketing, not only for operations but for improvement across the entire operation.\u201d <\/p>\n\n\n\n
Solution:<\/h4>\n\n\n\n
Reframe your perspective on customer data to see it as the \u201clifeblood\u201d it is. Look at analytics on your restaurant\u2019s mobile app<\/span><\/a> and ordering platforms, explore your guests\u2019 preferences and behaviors, and see how you can better meet their needs \u2014 their data shows what they want! <\/p>\n\n\n\n
2. The Restaurant Area is Low Traffic or Inaccessible <\/h3>\n\n\n\n
Your restaurant might have the best food, the coolest ambiance, and the most attentive customer service. But, if nobody shows up<\/em>, then none of that matters.<\/p>\n\n\n\n
For restaurants in low-traffic or hard-to-get-to areas, a lack of customers is a very <\/em>real concern, because no customers means no money\u2026 and no money means no restaurant. <\/p>\n\n\n\n
Moving locations isn\u2019t the solution, either.<\/p>\n\n\n\n
A 2019 study<\/span><\/a> found that American customers are only willing to travel ~3 miles to eat at a restaurant. What\u2019s more, 62% of restaurant customers<\/span><\/a> use Google to look for restaurants, a search option that typically sorts by distance from where the user is currently. <\/p>\n\n\n\n
So, if a restaurant owner struggling with visitorship can\u2019t just move and solve the problem\u2026 then they need to get more creative (and more online) to stay open. <\/p>\n\n\n\n
\u201cIf people don\u2019t see you [online] right away, then they assume there\u2019s [an] issue and they go on scrolling,\u201d says an Area Manager in TouchBistro\u2019s \u201cState of Restaurants<\/span><\/a>\u201d report. Heberto Portobanco, owner of Portobanco\u2019s Restaurant, adds that<\/span><\/a> \u201csocial media has been helpful in bringing new guests in,\u201d too. <\/p>\n\n\n\n
![\"Group](\"https:\/\/www.getcraver.com\/wp-content\/uploads\/2025\/06\/Restaurant-Social-Media.png\")
<\/figure>\n\n\n\nSolution:<\/h4>\n\n\n\n
Get online and show what you\u2019ve got! Offer loyalty benefits that incentivize customers to go the extra mile (literally), show up authentically on social media<\/span><\/a> to engage with your audience, and set up online ordering\/delivery so people can eat at your restaurant without travelling any<\/em> miles. <\/p>\n\n\n\n
\n\n\t\n\n\t\t\t\t\tRepeat customers order 1.5x more through a Craver app.\u00a0<\/div>\n\t\t\n \n\t\t\t\t\t\n\t\t\t\n\t\t\t\tBook A Demo\t\t\t<\/span>\n\t\t\t<\/a>\n\t\t\n\t<\/div>\n\n\n\n3. Everything is More Expensive for Restaurants <\/h3>\n\n\n\n
Sometimes restaurants fail for reasons outside their control, like the rising costs of just about everything <\/em>a restaurant needs to run. <\/p>\n\n\n\n
Last year, 58%<\/span><\/a> of operators cited rising inventory costs as their \u201cnumber one source of financial strain,\u201d followed by labor costs at 20%<\/span><\/a> and rent at 17%<\/span><\/a>. Inventory costs are increasingly damaging in expensive cities like New York City, where even more<\/em> operators (69%<\/span><\/a>) cite inventory costs as rising concerns.<\/p>\n\n\n\n
\u201cWe do fresh pasta here in the restaurant, and I used to buy that for $17.85 in 2019,\u201d says David Brugnoli<\/span><\/a>, Owner and Chef at Angeletto, NYC. \u201cNow, I’m paying $42.95 for a 25-pound bag of the same product [and] quality. Plus, we\u2019ve had problems finding the products.\u201d<\/p>\n\n\n\n
In many ways, affordability is one of the less \u201cfixable\u201d reasons for failure; the cost of running a restaurant is largely out of owners\u2019 control. <\/p>\n\n\n\n
But, that doesn\u2019t mean you have to just sit back and fall victim to the dollar sign. <\/p>\n\n\n\n
In TouchBistro\u2019s 2024 report<\/span><\/a>, an Area Manager from Chicago says \u201c[automation] has not only saved money, but [has] also made [their restaurant more efficient].\u201d Another Area Manager notes<\/span><\/a> they\u2019ve found two ways to increase profits: \u201cOne is to raise menu prices. The other way is to try and order smarter and reduce waste whenever possible.\u201d<\/p>\n\n\n\n
Solution:<\/h4>\n\n\n\n
Restaurant tech can help you reduce costs in areas you can<\/em> control to lessen the impact from the areas you can\u2019t. Inventory management tools, for example, can optimize your ordering and reduce waste while online ordering and apps can alleviate the need for front-counter staffing.<\/p>\n\n\n\n
![\"Restaurant](\"https:\/\/www.getcraver.com\/wp-content\/uploads\/2025\/06\/Restaurant-Inventory.png\")
<\/figure>\n\n\n\n4. Restaurant Retention Rates are Too Low <\/h3>\n\n\n\n
Whether your attractive storefront entices passersby or you\u2019ve gone viral on social media, attracting guests to your restaurant isn\u2019t always a problem \u2014 getting them to stick around is. <\/p>\n\n\n\n
Customer retention (and the repeat business returning customers generate) is a vital part of any restaurant\u2019s success. Not only does it cost 5-6x<\/span><\/a> less to retain an existing customer than acquire a new one, but repeat customers often spend more<\/span><\/a> per order, too. <\/p>\n\n\n\n
But getting customers to come back (and come back often<\/em>) isn\u2019t that simple.<\/p>\n\n\n\n
In 2023, 56%<\/span><\/a> of operators said customer retention posed a significant challenge for their business. Combine that with the industry\u2019s average retention rate of only 30%<\/span><\/a> with diners\u2019 reasons for not returning to a restaurant<\/span><\/a>, and you\u2019ll see why operators have had to get creative with incentivizing repeat visits through offerings like loyalty programs. <\/p>\n\n\n\n
\u201c[Loyalty] programs remain one of the best ways to drive repeat visits<\/span><\/a>,\u201d with more and more restaurants and cafes jumping on the opportunity for stronger retention. 85%<\/span><\/a> of bistros and cafes developed loyalty programs in 2023 (up 33% from 2022), reflecting an industry-wide, loyalty-focused shift\u2026 and one that seems to be working<\/span><\/a>. <\/p>\n\n\n\n
Solution:<\/h4>\n\n\n\n
Give people a reason <\/em>to come back with loyalty and\/or membership programs<\/a>. By consistently offering your most loyal customers rewards, discounts, and benefits, you\u2019re showing your diners how much you value them while proving it\u2019s worth it for them to come back again (and again). <\/p>\n\n\n\n
How Restaurant Tech Can Help<\/h2>\n\n\n\n
Every restaurant struggles with its own challenges, whether that\u2019s not using customer data enough or grappling with ever-increasing food prices. <\/p>\n\n\n\n
But, no matter your restaurant\u2019s pain points<\/a>, all of our solutions have one thing in common: <\/p>\n\n\n\n
They leverage the incredible capabilities of restaurant tech like Craver\u2019s. <\/p>\n\n\n\n
- \n
- If you need to amp up how you\u2019re using customer data for decision-making<\/span><\/span>\u2026<\/span> Craver’s platform<\/span><\/a> collects and displays all kinds of behavioral data, from what your customers are ordering to when they visit most frequently, so you can cater your services to what they want (plus, you\u2019ll own the data, too!).<\/li>\n\n\n\n
- If you need to find ways to combat low foot traffic or a less-than-ideal location\u2026<\/span><\/span> our mobile app<\/span><\/a> and online ordering platform open up ordering capabilities for customers who may be a little farther away. You can also offer delivery through your Craver app, using your own delivery drivers or our third-party, commission-free delivery integrations.<\/li>\n\n\n\n
- If you need to get creative with savings to offset high operational costs\u2026<\/span><\/span> all of our solutions integrate with the systems you\u2019re already using (or want to use!) in a way that saves you time, effort, and money. Choose from integrations<\/span><\/a> like Square, Toast, Stripe, DoorDash, Uber Eats, Relay<\/span><\/a>, and more! <\/em><\/li>\n<\/ul>\n\n\n\n
Sure, 35% of restaurants fail within the first year. <\/p>\n\n\n\n
But yours doesn\u2019t have to be part of that statistic. <\/p>\n\n\n
- If you need to find ways to combat low foot traffic or a less-than-ideal location\u2026<\/span><\/span> our mobile app<\/span><\/a> and online ordering platform open up ordering capabilities for customers who may be a little farther away. You can also offer delivery through your Craver app, using your own delivery drivers or our third-party, commission-free delivery integrations.<\/li>\n\n\n\n
- In 2009<\/span><\/a>, the National Restaurant Association said 30% of restaurants fail within the first year<\/li>\n\n\n\n
- In 2005<\/span><\/a>, an Ohio State University study said 60% of restaurants fail within the first year<\/li>\n\n\n\n