First-time business buyers weighing their options across industries, a restaurant, a retail storefront, a service-based business, often carry one assumption into the decision without questioning it: restaurants are an unusually risky bet. It’s repeated often enough, sometimes with a specific number attached (90 percent fail in the first year, according to a stat that gets passed around constantly), that most people never think to check where it actually comes from.

It turns out the number is fabricated, and the real data tells a considerably more balanced story.

Where the 90 Percent Myth Actually Came From

The claim that 90 percent of restaurants fail within their first year traces back to a 2003 American Express television commercial that cited no underlying research or data source. Despite having no traceable origin in any actual study, the figure has been repeated so consistently across the years that it’s become an accepted “fact” in casual conversation about the restaurant industry, discouraging plenty of would-be owners in the process.

MORE NEWS: The office trends that are redefining the Phoenix market

What the Actual Research Shows

A rigorous study conducted by economists in collaboration with the U.S. Bureau of Labor Statistics, examining restaurant survival data across two decades in the Western United States, found that the real first-year failure rate for restaurants is approximately 17 percent, not 90 percent. That figure is actually lower than the 19 percent first-year failure rate found across all other service-providing businesses during the same period. In other words, restaurants as a category don’t fail at a higher rate than the broader universe of small service businesses in their first year, they fail at a slightly lower rate.

The picture shifts somewhat over a longer time horizon. Roughly 49 to 51 percent of restaurants remain in operation past the five-year mark, according to BLS-linked research, meaning close to half close within that window. But that’s broadly comparable to failure rates across small businesses generally, not a dramatically worse outcome specific to restaurants. The same BLS research on small businesses overall has found that the five-year survival rate across all industries sits in a similar range, somewhere around 48 to 50 percent.

How Restaurants Compare to Other Common First-Time Buyer Categories

Retail businesses, often assumed to be a steadier, lower-risk category than restaurants, show survival data in a broadly similar range. BLS data has found that approximately 15.8 percent of retail businesses fail within their first year, essentially comparable to the restaurant industry’s first-year failure rate, with a fifth-year failure rate around 41.7 percent, again landing in a similar range to restaurants over that same window.

This pattern holds up across much of the small business landscape: first-year and five-year failure rates cluster in reasonably similar ranges across most common industries a first-time buyer might consider, restaurants, retail, general services. The industries that stand out as meaningfully riskier or more resilient tend to be more specific sub-sectors (certain information-sector startups on the higher-risk end, established professional service practices like dental or medical offices on the lower-risk end) rather than broad categories like “restaurant” versus “retail.”

Why Buying an Existing Business Changes This Calculation Anyway

It’s also worth noting that most published failure-rate research, including the figures above, is based primarily on new business startups, not existing, already-operating businesses being purchased through a sale. An established restaurant, retail store, or service business with several years of consistent revenue, a built-in customer base, and trained staff already in place carries a meaningfully different risk profile than a brand-new concept opening from scratch. Much of what drives early-year failure in these industries, unproven concept, unbuilt customer base, unrefined operations, is precisely the risk a buyer avoids by purchasing an established, already-operating business rather than starting one from zero.

What This Means When Comparing Options Across Industries

None of this means every restaurant, retail store, or service business for sale is equally sound, individual financial performance, lease terms, and local competition matter far more than industry-wide averages for any specific opportunity. But the data does suggest that ruling out an entire category, restaurants in particular, based on failure-rate assumptions isn’t well supported by the actual research. A business for sale in Durham, NC spans exactly this range of industries, and the deciding factor for any specific opportunity should really come down to that business’s own financials and local market position, not a broad industry reputation built partly on a debunked statistic.

The Bottom Line

The idea that restaurants are an unusually dangerous small business investment doesn’t hold up against the actual data. Real first-year failure rates for restaurants run close to 17 percent, comparable to or better than many other small business categories, and the widely repeated 90 percent figure has no legitimate research behind it at all. For anyone comparing opportunities across industries, that’s a good reason to evaluate a specific business on its own financial merits rather than ruling out an entire category based on a myth.