Cool infographic 15 Things You Didn’t Know About Restaurants

http://feefighters.com/blog/ff_infograp ... fographic/

The failure rate and impact on the economy were new to me!

The "failure rate" is not actually a rate because it doesn't specify a time period. Without a time period, I can confidently claim that the failure rate is approximately zero percent and also 100 percent at the exact same time: Approximately zero percent of restaurants close within the first minute of being open. Approximately 100 percent of restaurants close within the first 1000 years of opening.

The effect on the economy is also not correct. Those calculations presume that if you didn't spend money in a restaurant, you'd eat the dollar bills.

I had breakfast at Xoco this morning. You could say that my visit their contributed to "creating" jobs at Xoco. But then you'd also have to say that not eating breakfast at Pauline's Diner contributed to "destroying" jobs there. Not eating cereal at home contributed to destroying jobs at the Barbara's cereal plant. The created jobs roughly balance out the destroyed jobs.

Darren,

Darren72 wrote:The "failure rate" is not actually a rate because it doesn't specify a time period.

The writer clearly states, "We’ve heard that 90% of restaurants fail during the first year, but the real number is actually 26%!"

[quote=Darren72"]The effect on the economy is also not correct. Those calculations presume that if you didn't spend money in a restaurant, you'd eat the dollar bills.[/quote]

What do you calculate as the effect on the economy and how did you factor in the Velocity of Circulation?

Tim

Tim wrote:The writer clearly states, "We’ve heard that 90% of restaurants fail during the first year, but the real number is actually 26%!"

I didn't see that. I just read the so-called infographic (or misinfographic, as the case may be).

Darren,

How about an explanation about your statement on economic value and the velocity of circulation?

Tim

Darren, check out
http://en.wikipedia.org/wiki/Multiplier_(economics)

and
http://www.rri.wvu.edu/WebBook/Schaffer/chap05.html

Desi,

It was obvious that Darren must be an economist given the self-confidence of his response. His current silence also speaks volumes.

T

Tim wrote:Desi,

It was obvious that Darren must be an economist given the self-confidence of his response. His current silence also speaks volumes.

T

My silence spoke to the fact that I have a job.

The idea of a "multiplier" was in the news a lot during debates about a federal stimulus plan. The idea is if the government spends $1 trillion on goods and services, GDP will rise by more than $1 trillion. When the government pays $100 to a contractor, the contractor saves, say, $10 and spends $90. The person who receives the $90 perhaps spends $80, etc. So the $100 initial spending by the government turns into $100+$90+$80.... total additional spending.

The key thing is that the government is spending money that wouldn't have otherwise been spent. (The reason this type of fiscal stimulus is controversial among economists is because some make the argument that the money isn't, in fact, new spending. That's a more complicated issue that is better left to LTHEconforum.com or private messages.)

The infographic is attempting to draw the analogy that when you spend $100 at a restaurant, the restaurant ower pays some of this in wages to employees, pays food vendors, spends some herself, etc. The employees and vendors then spend their earnings. And so on. So your $100 at a restaurant generates more than $100 in spending.

As I said in my initial post, the problem with this analogy is that if I didn't spend the $100 at restaurant X, I'd spend it at restaurant Y, or at Whole Foods, or at the Green City Market, etc. Unlike the government spending story where there is new money injected into the system, when I decide to spend money at a restaurant, that is money (and the associated multiplier) that was already in the system. The $28 that I spent at Xoco was going to generate, say, $100 in total spending whether I ate at Xoco or not.

pitdesi wrote:http://feefighters.com/blog/ff_infographic/15things-you-didnt-know-about-the-restaurant-industry-infographic/

The failure rate and impact on the economy were new to me!

Pitdesi, I see that you are associated with this website. Tell us more about your business.

Would love to!
FeeFighters (http://feefighters.com) exists to help small businesses save money on financial services.

It all started because Sean (the CEO) got ripped off. He owns a company called TSS Radio, an ecommerce store. He has an advanced degree from the University of Chicago, but somehow overpaid by more than $40,000 during his first year of operations. He started a blog to write about how to not get ripped off, and then ultimately decided to start a company to help small businesses.

We are a comparison shopping website for credit card processing, in business to help business owners keep more of their money. We have a unique auction process and comparison engine that allows us to save businesses 40% on average on their credit card processing. It's really quick and simple to use (you can be up and running on a new processor spending just minutes on it, and it can save you thousands per year)... all of the processors on our site are vetted and certified by the FeeFighters to ensure quality and ethical behavior.

I don't want this to be an advertisement for FeeFighters, I posted here because I thought our infographic might appeal... but if you think I should post this elsewhere, please let me know! We have plenty of restaurant customers and they have saved many many thousands... here's a case study from one of our coffeeshop customers http://feefighters.com/blog/case-study- ... s-amazing/
Feel free to drop me a line sheel@feefighters.com if you have any questions or thoughts!

Thanks. You posted in the Professional Forum, which is the appropriate place. It's just important for you to be clear that you are affiliated with the website you linked to. Good luck.