Five Reasons Why Your Favorite Restaurant Is Doomed

David Fields, Valerie Safran, Ellen Yin and Aimee Olexy weigh in on the mathematics of doomed restaurants

We all know (or think we know) the statistics: 90 percent of restaurants—nine out of every 10 new openings—fail in their first year.

Despite the fact that this figure is provably untrue (the first-year failure rate is actually closer to 25 percent, 60 percent at the three-year mark), it’s the one most people quote when talking about the risks of opening a restaurant. And while those same people attribute the high mortality to simple math—razor-thin profit margins, high overhead, the ridiculous amount of time, money and effort required to put an $18 roasted chicken on someone’s plate—we wonder if there’s something more to it. Does just plain sucking come with consequences? Or is it truly all about the pesos?

In light of several recent high-profile flops (Arrow Swim Club/Chenango), closures (Noble) and disappointments (Serafina) on the restaurant scene, we decided to turn to a few of Philly’s veteran chefs and owners. We asked them all one simple question: What’s the biggest reason why new restaurants fail?

It’s Not How Much They Make, It’s How Much They Have
David Fields, A.Kitchen

“What I hear in a lot of situations is that restaurants are undercapitalized. You know, the opening costs are underestimated, and they overestimate revenue.” That’s the biggest problem, from Fields’s perspective—this ego-driven idea that if you can just get your Indo-Bulgarian fusion restaurant off the ground, people will come in droves to throw money at you. Unfortunately, that rarely happens: “I have people I know really well—friends—who haven’t been in yet to A.Kitchen. It’s been six weeks!”

Check the Ego
Valerie Safran, Barbuzzo, Jamonera, Lolita

“Can I give you several reasons?” Safran asked, then did: “People who open restaurants who don’t have any experience opening restaurants. People who can finance it—who can do the business side—but aren’t chefs and have no idea what to do when the shit hits the fan. People who open things and follow their ego when they should be more concerned with what people actually want. People who don’t realize how important it is to have everything ready the minute the doors open. Because somebody is going to walk through those doors on the first day, and if they don’t have a good experience, they’re going to tell their friends, and they’re never coming back.”

It’s All About the Benjamins
Ellen Yin, Fork

“Maybe it’s service, but probably not. Maybe it’s location. Maybe it’s a bad concept. But there are restaurants with bad service that make money. There are restaurants with bad concepts that make money. Look how many bad restaurants there are that are doing better than Fork.” Like so many restaurateurs, Yin says that success or failure comes down to two things: capitalization and revenue. “The majority of restaurant failures are because of cash,” she says. “Bottom line is: cash.”

The Customer is Always Right
Aimee Olexy, Talula’s Garden, Talula’s Table

“They didn’t think about the customer. They didn’t think about the guest. The day when that isn’t at the forefront of every decision you make, that’s the day you start to fail.” It’s a matter of priorities, Olexy says. “If you’re thinking media over guests, if you’re thinking industry over guests, if you’re thinking about making money over guests—as soon as you let those things creep in, it’s a slippery slope.” She doesn’t buy the money-is-everything argument: “Philly is the city for the little hole-in-the-wall BYOB.” Such chefs don’t have or make a lot of money, but they serve their customers well: “That disproves it right there. Capitalization isn’t necessarily the only key to success.”

And Sometimes …
David Fields (again)

“And sometimes, the restaurants are just not that good.” Well, someone had to say it.

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