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Only the Bad Die Young: Restaurant Mortality in the Western US
Abstract and Figures
Do 9 out of 10 restaurants fail in their first year, as commonly claimed? No.
Survival analysis of 1.9 million longitudinal microdata for 81,000 full-service
restaurants in a 20-year U.S. Bureau of Labor Statistics non-public census of
business establishments in the western US shows that only 17 percent of
independently owned full-service restaurant startups failed in their first
year, compared with 19 percent for all other service-providing startups. The
median lifespan of restaurants is about 4.5 years, slightly longer than that of
other service businesses (4.25 years). However, the median lifespan of a
restaurant startup with 5 or fewer employees is 3.75 years, slightly shorter
than that of other service businesses of the same startup size (4.0 years).
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... The restaurant menus gave credit to the farms that supplied the ingredients, a practice that added a sense of place to the cuisine that was later dubbed, "California Cuisine" (Fairfax et al. 2012). As Chez Panisse celebrates its fiftieth anniver-75 sary in 2021, it joins the rank of a few long-lived service-businesses (Luo and Stark 2014). The longevity of Chez Panisse, their focus on direct food purchasing practices, and the expansion of multiple restaurants with similar models and values (Chesbrough, Kim, and Agogino 2014), leave many wondering about the material food system changes prompted by this phenomenon. ...
... Findings in this study suggest that social embeddedness in AFNs is pertinent to both fostering sustainable agriculture and the long-term survival of network actors. As other studies of AFNs suggest, both the restaurant industry (Luo and Stark 2014) and AFN businesses are highly volatile (Brinkley, Manser, and Pesci 2021). Since AFNs are formed 645 through direct market connections, the survival of central actors is highly dependent on their connections with other actors, whether it be market channels, suppliers, or customers (Brinkley, Manser, and Pesci 2021). ...
... These relationships may not only support farmers' survival but also, to some extent, the survival of restaurants. As Chez Panisse celebrates its fiftieth anniversary in 2021, it has outlasted the median lifespan of the average restaurant by a factor of ten (Luo and Stark 2014). Although the direct farmer-restaurant relationships came with particular tensions and challenges, our findings suggest that close, trusting, and 660 reciprocal relationships may be crucial to the survival of both Chez Panisse and the ecosystem of affiliated food hubs and farmers. ...
This research examines the extent to which a Farm-to-Table restaurant prompted social and ecological changes in the food system. Chefs and restaurants are uniquely positioned to both generate consumer interest in certain foods and motivate farmers to grow such products. Despite their central role in Alternative Food Networks (AFNs), the influence of restaurants on farming practices and the re-localization of food sourcing is under-explored. In this research, we used archival document review, interviews, surveys, and social network mapping to understand the mechanisms by which direct market connections between farmers and the Chez Panisse restaurant grew over time and influenced farmers’ growing practices. Founded in Berkeley by Alice Waters in 1971, Chez Panisse is frequently credited with pioneering the Farm-to-Table model and spurring the slow, local, and organic food movements. Our study suggests that Chez Panisse inspired farmers toward more sustainable agriculture practices, but the restaurant was not the only influential actor in the network. We found that local food hub managers and the restaurant’s “foragers” were key intermediaries. Our findings demonstrate that social embeddedness in AFNs is pertinent to fostering sustainable agriculture, the long-term survival of network actors, and network growth.
Acronyms: AFN: Alternative Food Network; DTC: Direct-to-consumer; CSA: Community-Supported Agriculture
... Yet, slow accumulation of reviews can be problematic because the lifespan of a business may not be long enough to receive enough number of reviews. For instance, the median lifespan of restaurants in US is round 4.5 years, and it is even shorter for small restaurants that have 5 or fewer employees [51]. If restaurants cannot get enough reviews from the crowds within 4.5 years, a large portion of them will go out of business before achieving a wise appraisal. ...
... In particular, it takes about 8 years for 50% of the 1-dollar-sign restaurants on Yelp to receive 100 reviews (see Fig 3). Yet, the median lifespan of restaurants in US is no more than 5 years [51], so most low-end restaurants may not achieve wisdom of crowds before they go out of business. A previous study shows that reviews from elite users are almost twice as impactful as other reviews on restaurants' revenues [59]. ...
This study shows that while status seeking motivates people to participate in crowdsourcing platforms, it also negatively impacts the bedrock of crowdsourcing–wisdom of crowds. Using Yelp restaurant reviews in 6 cities, we found that motivations of status seeking lead people to review a greater variety of restaurants, and achieving status further encourages this variety seeking as well as the targeting of more expensive restaurants for review. The impact of this individual-level tendency is confirmed by our aggregate-level analysis which shows that restaurants with higher price levels, higher uniqueness levels, and a larger percentage of elite reviews tend to obtain enough reviews to generate wisdom of crowds sooner than other restaurants. This leads to a different kind of distortion to crowd wisdom: an over-representation of status-conferring products and an under-representation of products that are not status-worthy. The findings suggest the importance of studying sources of distortion that are endemic to crowdsourcing itself.
... This resulted in a 20% loss of edge connections, as compared to a 3% loss rate for nodes and edge connections in the Chester County dataset. Restaurants have a median lifespan of 4.5 years (Luo and Stark 2014), and other network actors may have a longer business lifespan, thus translating to increased stability within the network. Many restaurants that close see the owners or chefs establish new eateries shortly thereafter. ...
... Widespread restaurant closures may have ripple effects across the local food movement, impacting collective action and mobility for a variety of topics ranging from food justice policies to land-use planning. While turnover in the restaurant business is well documented, with the median restaurant lifespan of 4.5 years (Luo and Stark 2014), this research raises questions about the median lifespan of other businesses, such as CSA farms and farmers' markets, and the impact of market outlet closure on small-scale farms. SNA also demonstrates that the closure of just a few nodes can substantially alter network connectivity, be those restaurants or other node typologies. ...
Local food systems are growing, and little is known about how the constellation of farms and markets change over time. We trace the evolution of two local food systems (Baltimore County, Maryland and Chester County, Pennsylvania) over six years, including a dataset of over 2690 market connections (edges) between 1520 locations (nodes). Longitudinal social network analysis reveals how the architecture, actor network centrality, magnitude, and spatiality of these supply chains shifted during the 2012–2018 time period. Our findings demonstrate that, despite growth in the number of farmers’ markets, grocery stores, farms and restaurants in both counties, each local food system also experienced high turnover rates. Over 80% of the market connections changed during the study period. Farms, farmers’ markets, and grocery stores showed a 40–50% ‘survival’ rate, indicating their role in sustaining local food systems over longer time periods. Other actors, such as restaurants, had a much higher turnover rate within the network. Both food systems became more close-knit and consolidated as the center of gravity for both local food systems pulled away from urban areas toward rural farmland. Evidence of both growth and decay within local food systems provides a new understanding of the social networks behind local food markets.
... It is considered a main cause of the agglomeration economy. However, the Jacobs externality that the competitive effect is because of a local concentration and the Porter externality that causes a positive externality have been suggested as background theories [10,55]. In empirical research, assessing the magnitude of the agglomeration and competitive effects (positive and negative, respectively) is a common debate topic [56][57][58]. ...
Commercial gentrification is a common cause of urban transformation in modern cities. Former residential and industrial areas are being transformed into commercial ones specializing in the food and beverage (F&B) industry because of their unique atmosphere. However, F&B businesses in the gentrified commercial areas are prone to intense competition for survival that debate on the emerging commercial street's sustainability. Thus, this study analyzed F&B street businesses' survival characteristics where commercial gentrification has occurred. The research site was selected among Seoul's commercial streets by performing data analysis. The Cox proportional hazards model and urban spatial indicators were used to analyze the factors affecting survival time. The research findings were as follows: First, physical attractiveness, such as openness or visual accessibility, lowered the closure risk. Second, accessibility to cultural facilities or open spaces was beneficial for the nearby F&B demands; however, it occasionally intensified the competition. Finally, competitive businesses' agglomeration increased the closure risk, while non-competitive ones' agglomeration and diversification decreased it. This research's results could be useful for policymakers in promoting a more sustainable business environment for F&B entrepreneurs.
... Second, this paper expands the research describing factors specifically related to restaurant exit decisions (e.g. Parsa et al. (2011), Luo andStark (2014), Parsa et al. (2021)) by employing Yelp and SafeGraph data from multiple major US cities and by concentrating on restaurant closures during the COVID-19 pandemic. Next, this paper is related to the IO literature dealing with turnover and firm entry/exit decisions (see early surveys by Geroski (1995) and Caves (1998) and subsequent updates by e.g., Audretsch et al. (2000), Agarwal and Audretsch (2001), Fackler et al. (2013)). ...
This paper analyzes restaurant closure patterns during the first year of the COVID-19 pandemic. Using establishment-level data from Yelp and SafeGraph, I describe restaurant and location characteristics related to the closure decisions. Lower-rated restaurants and restaurants located closer to the city center were more likely to close in 2020.
... Instead, the focus of PacTrustwas to carefully mentor and prepare the businesses so that they could find their own way to success, which was regarded as a more sustainable strategy in the end. One indication of the success of this strategy is that at this writing, some 18 years after their opening, three of the four original restaurants are still in operation, while the median lifespan for all restaurants (including chains) is 4.5 years, and lower for smaller independent restaurants (Luo and Stark, 2014). ...
Small and Medium Enterprises (SME) play an essential role in the Sri Lankan tourism industry, whereas relatively little is known about the restaurant sector and its challenges. This research aims to examine the challenges facing SME restaurants in Sri Lanka. Given the relatively new and unexplored nature of the research problem, a qualitative, specifically multiple case study method was adopted. Twenty-eight respondents, including the restaurant owner, manager, and two customers from each selected case, were purposively approached. In-depth interviews and observations were used to collect data which was then analysed using the thematic analysis for the implication and conclusion. The key challenges highlighted by the study respondents are lack of skilled employees, high labour turnover, stiff competition in the industry, wrong location, increased budget tourists, lack of technical support from the government authorities and no proper waste management system. The study results support the view that the Sri Lankan restaurant sector requires much more governmental and institutional support. Therefore, the government and other supporting agencies of SMEs can use these findings to develop the SME sector for future programs. Furthermore, this study enriches the understanding of challenges on the experience of Sri Lankan entrepreneurs, which is influenced by the industry-specific factors.
The best practices in the organizations have gained momentum amongst entrepreneurship scholars, but much of the benchmarking literature is about large firms. The purpose of this qualitative multiple case study research aims to explore the best practices of successful SME restaurants in Sri Lanka. The research is based on social reality, which is closely aligned with the critical realism philosophy. The purposive sampling method was used to recruit participants in the study. Twenty-eight interviews were conducted with the owner of the restaurant, manager and two customers from each case. In addition to that, the researcher kept notes of any notable observations. The data were analysed using a thematic approach. The best practices found in this research were categorised into five major themes: leadership, process management, people management, strategies and social responsibility. The findings illustrate by which best practices SME restaurants attempt to incorporate into their overall business strategy. The practical motivators in this effort are exemplified and benchmarked.
Business closure is a critical stage in the lifecycle of any business. Despite a body of literature on the factors influencing business failure and/or success, studies on business closure prediction are next to none. Additionally, the identification of those factors has focused primarily on the managerial and economic dimensions rather than the consumer dimension. This research investigates the prediction of business closure from online consumer reviews, and validates the predictive models in the restaurant industry, which is subject to a relatively high attrition rate. Our proposed method for predicting business closure includes several novel artifacts, including integrating deep learning and time-series analysis techniques, extracting information embedded in online reviews using a hybrid classification method, and incorporating a novel triple word embedding model for text representation. The evaluation results of the proposed method using Yelp online reviews demonstrate its superior performance in business closure prediction, which indicate that online reviews provide strong signals for predicting business closure. We conduct another experiment with review data collected from TripAdvisors.com, and the experiment results are consistent, which provide evidence for the generalizability of the proposed method. The findings of this research have important managerial implications for business and investment decision making.
This article contains a theoretical discussion and an empirical test of Stinchcombe's "liability of newness" hypothesis, which assumes higher risks of failure for young organizations compared with old ones. It is shown that this hypothesis is not a good representation of the mortality hazard of West German business organizations. Therefore, we introduce the concept of a "liability of adolescence," which proposes an inverted U-shaped risk pattern. It is shown that mortality, depending on the initial resource endowments of a firm, peaks between one and fifteen years after founding. From this perspective, extended interpretations of the liabilities of smallness and legal form are given. These arguments are well supported by a log-logistic rate model estimated with our data.
The Korean fast food industry has grown rapidly since the 1988 Seoul Olympic Games. There are now 1500 fast food restaurants in Korea. This study investigated the relationships between consumer values of eating-out and the importance of fast food restaurant attributes in Korea. Using a questionnaire, 279 fast food restaurant patrons were surveyed. The results showed that consumer values of eating-out divided into two factors; hedonic and utilitarian. The hedonic value of eating-out had positive correlation with mood, quick service, cleanliness, food taste, employee kindness, and facilities, the utilitarian value centered on reasonable price, quick service, and promotional incentives. Also, the hedonic value more influenced buying frequency than the utilitarian. This study presents empirical evidence showing that Korean consumers choose fast food restaurants more by hedonic, not utilitarian, values of eating-out. Consequently, fast food restaurant marketers in Korea should consider hedonic aspects as the most important factors in attracting customers. Limitations and further research issues are suggested.
This greatly expanded second edition of Survival Analysis- A Self-learning Text provides a highly readable description of state-of-the-art methods of analysis of survival/event-history data. This text is suitable for researchers and statisticians working in the medical and other life sciences as well as statisticians in academia who teach introductory and second-level courses on survival analysis. The second edition continues to use the unique "lecture-book" format of the first (1996) edition with the addition of three new chapters on advanced topics:
Chapter 7: Parametric Models
Chapter 8: Recurrent events
Chapter 9: Competing Risks.
Also, the Computer Appendix has been revised to provide step-by-step instructions for using the computer packages STATA (Version 7.0), SAS (Version 8.2), and SPSS (version 11.5) to carry out the procedures presented in the main text.
The original six chapters have been modified slightly
to expand and clarify aspects of survival analysis in response to suggestions by students, colleagues and reviewers, and
to add theoretical background, particularly regarding the formulation of the (partial) likelihood functions for proportional hazards, stratified, and extended Cox regression models
David Kleinbaum is Professor of Epidemiology at the Rollins School of Public Health at Emory University, Atlanta, Georgia. Dr. Kleinbaum is internationally known for innovative textbooks and teaching on epidemiological methods, multiple linear regression, logistic regression, and survival analysis. He has provided extensive worldwide short-course training in over 150 short courses on statistical and epidemiological methods. He is also the author of ActivEpi (2002), an interactive computer-based instructional text on fundamentals of epidemiology, which has been used in a variety of educational environments including distance learning.
Mitchel Klein is Research Assistant Professor with a joint appointment in the Department of Environmental and Occupational Health (EOH) and the Department of Epidemiology, also at the Rollins School of Public Health at Emory University. Dr. Klein is also co-author with Dr. Kleinbaum of the second edition of Logistic Regression- A Self-Learning Text (2002). He has regularly taught epidemiologic methods courses at Emory to graduate students in public health and in clinical medicine. He is responsible for the epidemiologic methods training of physicians enrolled in Emory’s Master of Science in Clinical Research Program, and has collaborated with Dr. Kleinbaum both nationally and internationally in teaching several short courses on various topics in epidemiologic methods.
Three differing perceptions of what constitute the real problems of small business are examined: (1) the management deficiency diagnosis, (2) the unfair competition hypothesis, and (3) the government intervention hypothesis. Valid arguments and factual data can be demonstrated for each model, depending upon the portion of the small business universe from which the data is drawn. Hence the sampling Problem is a serious difficulty in small business research, due to the lack of a current and comprehensive data base on the small business universe. The most comprehensive data set on the universe now available is from IRS tabulations of tax returns. In testing two of the hypotheses above against IRS data by business size, the findings are: (1) small business is not deficient in management competence relative to large business, but rather is more competent, and (2) the tax burden on small business is regressive and prejudicial to the accumulation of internal or external capital.
SUMMARY Multi-centre databases are making an increasing contribution to medical understanding. While the statist- ical handling of randomized experimental studies is well documented in the medical literature, the analysis of observational studies requires the addressing of additional important issues relating to the timing of entry to the study and the e⁄ect of potential explanatory variables not introduced until after that time. A series of analyses is illustrated on a small data set. The influence of single and multiple explanatory variables on the outcome after a fixed time interval and on survival time until a specific event are examined. The analysis of the e⁄ect on survival of factors that only come into play during follow-up is then considered. The aim of each analysis, the choice of data used, the essentials of the methodology, the interpretation of the results and the limitations and underlying assumptions are discussed. It is emphasized that, in contrast to randomized studies, the basis for selection and timing of interventions in observational studies is not precisely specified so that attribution of a survival e⁄ect to an intervention must be tentative. A glossary of terms is provided. ( 1997 by John Wiley & Sons, Ltd. Stat. Med., Vol. 16, 1041—1074 (1997).