A business owner’s age was also recognized as a significant
determinant of business failure, as Headd (2003)
observed that businesses owned by younger owners have
higher failure rates. Similarly, an owner’s educational level
and work experience were directly related to the likelihood
of business survival (Boden and Nucci 2000; Brüderl,
Preisendörfer, and Ziegler 1992; Carter and Auken 2006).
Businesses whose owners had more than ten years of work
experience and an appropriate higher education proved to
have significantly lower failure rates compared with others
(Boden and Nucci 2000).
The owner’s race has also been a meaningful demographic
characteristic, as research has shown significant
racial disparities regarding business ownership. Fairlie and
Robb (2008, 1) reported that only “5.1 percent of African
American workers and 7.5 percent of Hispanic workers
own businesses, compared to more than 11 percent of
Caucasian and Asian workers.” However, those researchers’
big concern is that African American– and Hispanic-owned
businesses have lower sales, lower profits, and higher failure
rates compared with businesses owned by Caucasian
and Asian American owners.
Based on the above discussion, the study described
here investigates the effect on restaurant failure of demographic
factors not relating directly to the owner, including
restaurant size, location (operationalized by ZIP code),
neighborhood characteristics, and nature of ownership
(chain or independent). We also look at the effect of restaurant
turnover at a specific site. Our study is motivated
by the following research questions, which we investigated
with the secondary data obtained from the local
health department.