The purpose of this study is to examine the connection
between certain demographic factors in a market and the
failure rates of restaurants in that market—in this case,
Boulder, Colorado. This study will build on the three previous
studies on restaurant failure rates (e.g., Parsa et al.
2005) that have debunked the myth that nine out of ten restaurants
fail in the first year (among other findings).1
Our
purpose was to study restaurants as small businesses, and in
that connection we discovered that the definition of small
business varies as widely as the reasons for wanting to
know that definition. Although the preponderance of restaurants
is small by any measure, we conducted a literature
review to confirm the definition of small businesses.
Peterson, Albaum, and Kozmetsky (1986) surveyed over
900 U.S. citizens who defined a small business as a familyowned
entity with only a single outlet in operation. Their
findings also indicated that the consumers viewed small
businesses as having an average of 10.2 employees, with
annual sales of no more than $10 million (and a median of
$100,000).