What percentage of restaurants fail in the first year?

About 26 percent. A study of 2,439 restaurants in Columbus, Ohio between 1996 and 1999 found first year failure at 26 percent, second year at 19 percent and third year at 14 percent, for a cumulative three year rate of 57 to 61 percent. The widely repeated claim that 90 percent of restaurants fail in year one has no research behind it.

How much commission do third party delivery apps charge restaurants?

DoorDash publishes three partnership plans charging 15, 25 and 30 percent commission on delivery orders, and 6 percent on pickup orders.

What is a typical restaurant profit margin?

A typical independent restaurant ran roughly a 5 percent pre-tax profit margin before the pandemic. The National Restaurant Association reported in July 2026 that total restaurant expenses rose 36 percent since 2019 and that 42 percent of operators said their restaurant was not profitable in 2025.

The Receipts

Real numbers. Every one sourced.

Sourced figures on the costs, wages, commissions and closure rates that shape this industry. Every figure below is credited to the study, agency or company that published it, and links to the original.

What the delivery apps charge

The top tier takes thirty percent. A typical margin is five.

30% Commission on a delivery order at the top published tier.

15%Basic plan

25%Plus plan

30%Premier plan

6%Pickup, all plans

5%Typical margin, pre-pandemic

This is not a leak and it is not an accusation. It is the published price list, sitting on the merchant site where anyone can read it.

Before the pandemic a typical independent restaurant kept about five cents of pre-tax profit on every dollar of sales. The top delivery tier takes thirty cents of that same dollar before food, labor or rent is paid.

The commission is six times the size of that margin. The National Restaurant Association reported that 42 percent of operators were not profitable in 2025.

At that rate an order can carry a strong ticket total and still lose money once food and labour are paid.

The higher tiers buy greater visibility in the app, so the businesses most dependent on the orders pay the most per order to receive them.

Sources: DoorDash published merchant pricing, merchants.doordash.com/en-us/pricing. Margin figure from the National Restaurant Association, July 8 2026, restaurant.org.

How often places actually fail

The ninety percent figure has no research behind it. The real number is twenty six.

26% Closed in year one in a study that tracked 2,439 restaurants.

26%Year one

19%Year two

14%Year three

2,439Restaurants studied

The claim turns up from bankers, landlords and business podcasts alike. No published study supports it.

Over three years the real cumulative rate is 57 to 61 percent. The hospitality professor who ran the numbers says he found no evidence of a ninety percent rate anywhere in the literature, and calls it "a myth that is harmful to the restaurant industry."

Source: H.G. Parsa et al., Ohio State University. Columbus, Ohio, 1996 to 1999, n=2,439. news.osu.edu

What costs have done since 2019

Menu prices rose thirty six percent. So did costs.

42% Of operators reported their restaurant was not profitable in 2025.

+36%Total expenses since 2019

+41%Hourly wages

+35%Wholesale food

+36%Menu prices, 2020 to 2026

Menu prices rose 36 percent between February 2020 and May 2026. Total expenses rose 36 percent over roughly the same period. The two increases cancelled each other out.

A typical independent restaurant ran about a five percent pre-tax margin before the pandemic. To simply break even against today's costs, the association's own modeling says you need sales roughly 29 percent above 2019. To get that five percent back, you need 36 percent.

Source: National Restaurant Association, July 8 2026. restaurant.org

Turnover in food and hospitality

Food and hospitality workers quit at twice the rate of everyone else.

4.5% Of everyone working in restaurants and hotels quit in a single month, June 2026.

4.5%Our industry, monthly

2.2%All private industry

2xMore than double the rate

Restaurant and hotel workers quit at more than twice the rate of every other private industry in the country, and have done so month after month.

The figure is industry wide rather than specific to any one operation.

Source: US Bureau of Labor Statistics, Job Openings and Labor Turnover Survey, Table 4, June 2026. bls.gov

What the law allows for tipped wages

The tipped wage has not moved since 1991.

$2.13 Federal minimum cash wage per hour for a tipped employee. Same as it was 35 years ago.

$7.25Federal minimum wage

$5.12Maximum tip credit

1991Last time it changed

Under federal law an employer can pay a tipped employee $2.13 an hour in cash and count up to $5.12 of their tips toward the $7.25 minimum. If the tips do not get them there, the employer owes the difference.

The industry does not agree on tipping. What is not in dispute is that the federal floor underneath the argument has not moved in 35 years.

Source: US Department of Labor, Wage and Hour Division, Fact Sheet #15. dol.gov

How we handle numbers

Sourced or it does not run.

Every figure links to its original source, not to a blog that quoted it.
We name the study, the sample size, the location and the years when they exist.
If we cannot verify a claim at the source, we leave it out, even when it helps our argument.
When a number is contested or a range, we say so instead of picking the scariest one.
When something we published turns out to be wrong, we correct it in public.

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