The 90% Restaurant Failure Myth: What Really Happens

If you've ever dreamed of opening a restaurant, you've probably heard the grim warning: "90% of restaurants fail in their first year." It's repeated so often it feels like gospel. Food bloggers cite it. Business advisors warn about it. Your risk-averse uncle definitely mentioned it at Thanksgiving.

There's just one problem: it's completely made up.

Where This Myth Came From

The 90% statistic traces back to a 2003 American Express television commercial that cited absolutely no source. No research study. No government data. Just a scary number that made for compelling advertising. Yet somehow, this fabricated claim became the most repeated "fact" about the restaurant industry.

Here's what the actual data shows: according to research from UC Berkeley and the U.S. Bureau of Labor Statistics, only 17% of restaurants fail in their first year. That's not just lower than the myth—it's actually better than the 19% first-year failure rate for other service businesses.

The Numbers Keep Getting Better

In 2025, Datassential Sales Intelligence found that first-year restaurant failure rates dropped to just 0.9%—the lowest since at least 2018. While the National Restaurant Association estimates a higher industry-wide failure rate of around 30%, even that figure includes restaurants that close for all sorts of reasons beyond "failure"—retirement, relocation, or simply deciding to pursue other opportunities.

Think about it: if 90% of restaurants really failed in year one, your town would be a graveyard of empty dining rooms. Every strip mall would be haunted by defunct bistros. The reality? About 51% of restaurants survive past their fifth year, and more than a third are still operating after a decade.

Why the Myth Persists

Fear sells. Drama gets clicks. And there's something perversely satisfying about believing that restaurants—those glamorous, creative businesses we all romanticize—are secretly deathtraps for aspiring entrepreneurs. The truth is more boring: restaurants succeed and fail at roughly the same rates as other businesses.

That doesn't mean opening a restaurant is easy. It requires brutal hours, thin margins, and relentless problem-solving. But it's not the 90% failure rate nightmare that internet wisdom suggests. The restaurant industry is expected to generate $1.5 trillion in sales in 2025, supported by millions of establishments that are very much not failing.

So the next time someone warns you about the "90% rule," you can confidently correct them. The real risk isn't nearly as dramatic—but it's a whole lot more accurate.