Why Do Restaurants Fail so Often? There’s a Silent Killer

You often see stats like, “80% of Restaurants Fail in Their First Three Years”. There are countless clips of investors saying never to invest in a restaurant. So why do they so often fail?

Sales Tax. It sounds absurd, but not accounting for it properly can quickly become the kill shot in a company that relies on thin margins. In Michigan the Sales Tax is 6%, the average (successful) restaurant has 3-5% profit margins. This means forgetting to account for sales tax can take what looks like a profitable business and quickly put it in a desperate situation.