What Percentage of Restaurants Succeed or Fail? [2025 Data]

Key Takeaways:

The widely believed claim that 90% of restaurants fail in their first year is a myth. Credible data shows actual first-year failure rates are closer to 14–30%.
Long-term survival remains a major challenge, with about 50% of restaurants closing within five years.
Only around 34.6% of restaurants survive beyond 10 years.
Franchise restaurants typically have higher success rates than independent ones, benefiting from brand support, tested systems and established customer bases.
Economic conditions, local competition and adaptability are some of the critical factors that influence whether a restaurant fails or thrives over time.

This report explores the current landscape of restaurant failure and success rates in the United States, separating myth from fact with up-to-date data.

It offers a clear picture of how restaurants are performing today — information useful for aspiring restaurant owners, operators and anyone interested in learning more about the industry.

How Often Do Restaurants Fail? Industry Statistics Explained

Many people believe that 90% of new restaurants fail in their first year, but this number is a myth. In reality, the failure rate for new restaurants is far lower.

The actual first-year failure rate for restaurants isn't as high as the aforementioned misconception suggests, but it still varies depending on the source.

A study by economists at the University of California, Berkeley found that only about 17% of independently owned full-service restaurants closed within their first year.

Meanwhile, the National Restaurant Association estimates that the average first-year failure rate for restaurants in general is closer to 30%.

Government data backs this up as well. According to the Bureau of Labor Statistics (BLS), about 14% to 22% of food and accommodation businesses — which include restaurants — close within their first year. This is similar to or slightly lower than the average for all U.S. businesses, which is around 20% to 24%.

These differences come from how each source defines and tracks “failure.” Some count only permanent closures, while others include changes in ownership or bankruptcy. The time period, type of restaurant and economic conditions also affect the results.

Failure Rates After the First Year

Running a restaurant gets harder over time. Even if a business makes it past the first year, many still close in the years that follow.

Research shows that about 30% of restaurants close within the first three years, and about 50% shut down by year five. In some cases, failure rates are reported to be even higher — up to 80% within five years.

Over the long term, survival becomes even tougher. Fewer restaurants make it to the 10-year mark, showing just how hard it is to stay in business for the long haul.

While the first-year failure myth is exaggerated, long-term success still requires careful management, adaptability and consistent effort.

Restaurant Success Rate Statistics: Looking at the Flip Side

While the focus on failure rates can be informative, examining the success rates offers a more positive perspective on the restaurant industry.

Based on recent aggregate data, about 83% of restaurants survive their first year — a much more encouraging number than the often-cited myths.

Looking beyond the first year:

Around 70% of restaurants make it to the three-year mark.
Roughly 50% of restaurants are still open after five years.

However, staying open beyond 10 years is much harder, with survival rates dropping significantly at that point. In fact, only around 34.6% of restaurants make it past the ten-year mark.

Franchise restaurants tend to have a better chance of long-term success compared to independent ones. This may be because they already have brand recognition, proven systems and support from a larger network.

So, while it’s true that running a restaurant comes with real challenges, many do find lasting success.

For owners and operators, understanding what contributes to that success — like strong operations, good hiring and adaptability — can make all the difference.

Factors Influencing Restaurant Failure and Success

Several big-picture factors play a major role in whether a restaurant thrives or fails:

Restaurant type: Quick-service restaurants fail less often compared to fine-dining establishments. This can be attributed to their different operational models, with quick-service relying on high volume and faster turnover, while fine dining depends on higher check averages and consistent guest traffic.
Economic conditions: Things like inflation, rising wages and supply chain problems can squeeze profits. Restaurants that know how to adjust prices and cut costs during tough times usually survive better.
Local competition: Opening a new restaurant in an area already full of similar places makes it harder to stand out. Too much competition can lead to fewer customers and lower profits.
Adaptability and innovation: Restaurants that embrace technology — like delivery apps and online ordering — and regularly update their menu or service model are more likely to keep up with customer expectations.
Quality and experience of the management team: A smart, experienced management team is key. Good leaders help the restaurant run smoothly, keep staff motivated and solve problems quickly.

Understanding and strategically addressing these factors can greatly enhance a restaurant's chances of long-term success.

Conclusion: Navigating the Restaurant Landscape

The 90% myth can discourage some people from starting restaurants, even when they have solid business plans. While the visibility of restaurant closures may fuel this misconception, credible data shows the industry's actual risk level is far more reasonable.

That said, if you're thinking about opening a restaurant, it's important to have a realistic understanding of both the opportunities and the risks involved.

Most restaurants don’t fail in the first year, but success doesn’t come easily. You need a solid plan, good control over your finances, a clear idea of who your customers are, great service and the flexibility to adjust as conditions change.

Whether you’re preparing to launch your first restaurant or building a team for your next concept, OysterLink can help!

Our platform connects hospitality professionals and employers across the U.S., making it easier to find the right talent or the right opportunity in today’s competitive market. With the right tools and people in place, building a successful restaurant is within reach.