Building on the 2005 study’s findings Parsa et al (2010)
and Parsa et al (2011) compared restaurant failures of independent
operation with that of franchise or chain ownership
operations. That study concluded that 25 percent of the independent
restaurants would close in the first year versus 10
percent of chain restaurants. This study also highlighted the
importance of size and operational complexity. The greater
the operational complexity, the higher the chances of success.
Finally, the presence of barriers to entry was actually a
benefit. Restaurants with low barriers to entry are more than
likely to have higher failure rates than larger more complex
operations with higher barriers to entry. As we explain
below, the study described in this article adds the variables
of health inspection records and demographic data to the
many possible causes of restaurant success or failure.