The environment in which the restaurant
operates helps to determine its success
or failure. Some attributes of the competitive
environment that can influence a
restaurant’s failure are the business’s
physical location, its speed of growth, and
how it differentiates itself from other restaurants
in the market. In addition to the
problem of having less cash to handle immediate situations, operators of new
restaurants are often unable to manage
rapid growth or changes, lack experience
in adapting to environmental turbulence,
and usually show inadequate planning.12
An additional failure factor for independent
restaurateurs is the ability of chain restaurants,
with their economies of scale, to
outspend the independents to gain greater
market share.