Our investigation of the role of local demographic factors
on restaurants presents the first empirical evidence regarding
the effects of various neighborhood demographic factors
on restaurant failure rates. Contrary to the common
belief, having homeowners nearby was not found to be
effective in aiding restaurants’ viability, while a substantial
number of apartment dwellers and a transient population
were found to contribute to restaurants’ success. Similarly,
non-household families appear to contribute to the success
of Boulder’s restaurants, most likely due to the presence of
a substantial number of students. This was unexpected, and
further research is needed to determine whether these
effects pertain to non-campus towns. In another finding that
is probably driven by the university, level of customer education
was found to have an effect on restaurant failure. ZIP
codes with a low failure rate had a higher percentage of
college graduates, but customers’ type of profession had no
relationship to restaurant failure. Restaurant size and location
seem to influence restaurant failure rate, with larger
restaurants having a greater success rate. Full-service restaurants,
which are generally larger than quick-service
operations, had a lower failure rate than QSRs. Finally, the
current study empirically shows that fatal attraction of
restaurant locations may cease to attract new restaurant
entrepreneurs after it has been leased three times to the
failed restaurateurs.