How many restaurants close in the first year
The restaurant business success rate in India is harsh: 60 to 70% close or change hands inside year one. About 30% survive three years. Those are industry post-mortem averages, not a single government census — but the pattern is consistent across NRAI commentary, lender write-offs, and operator panels. Food is rarely the cause. Cash timing and cost drift are.
If three of the four numbers below are red by month four, the business is unlikely to be in the surviving 30–40%. Track them weekly from week one — not in a year-end P&L.
What actually kills restaurants
It isn't bad food, low footfall, or aggressive competition. The dominant patterns we see in pilot data and in industry post-mortems:
- Working capital exhaustion: month 2 EMI + salaries + rent without enough revenue cushion.
- Food cost drift: opening at 30%, drifting to 38% by month 5 without realising it.
- Aggregator commission compounding: chasing orders instead of profitable orders.
- Retention collapse: opening week is great because of curiosity; week 6 is the truth.
Number 1: break even (and how often you cross it)
If you don't know your daily break even, you can't know if today was profitable. Track ‘days above break even’ in a calendar view from week one. Healthy: 22+ days/month. Tight: 18 to 21. Dying: <17.
Number 2: food cost %
Track weekly, not monthly. A 2 point drift over 4 weeks is the canary. Action: pull a recipe cost on your top 6 dishes against current mandi prices. Most drift comes from 2 to 3 dishes, fix them, not the whole menu.
Number 3: prime cost
Prime cost = food cost + total labour. Healthy Indian casual dining: 55 to 62%. QSR: 50 to 58%. Above 65% the business is structurally fragile; there is no margin left for rent + utilities + everything else. Cut labour before menu price.
Number 4: 30 day cohort retention
Of every 100 first time customers in week 1, how many came back within 30 days? Healthy: 22%+. Below 12% you have a product market problem, not a marketing problem. The most common cause: opening week menu was different from steady state menu.
When to pull the rip cord
How to track these from week one
Forkcast monitors all four in the daily operating brief, with alerts when any number crosses its band. The free tools also help if you're pre launch. Check your viability before you sign a lease.
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