Most restaurants don't fail in year one. They fail in year three

There is a comforting myth among first-time restaurant owners that if they can just survive the opening year, they have made it. The data disagrees. The 12-month survival rate for UK independent restaurants is about 81%. The 36-month survival rate is 43%. The killing field is not the opening. It is the third year, when the lease renewal arrives, the original team has rotated out, the energy of opening has faded, and the founder discovers that their margins were lying to them the whole time.

The structural reason year three is fatal is that most independents are running on what I call "founder economics" for the first two years. The owner is in the kitchen six nights a week, doing the books on Sunday morning, taking deliveries themselves, and quietly burning out without putting their own salary on the P&L. The business looks profitable because the founder is working for free. Year three, when the founder finally hires the head chef and the manager and starts paying themselves properly, the real margins appear, and they are often catastrophic.

The fix is unsexy and operational. You build the year three economics into the year one model, even if you are personally absorbing the labour to keep cash flowing. You price the menu against the future P&L, not the current one. You hire one of those two key people in month nine rather than month thirty. And you renew the lease early, when the landlord is uncertain, rather than late, when they know your trade. If you are opening this year and you skim only one line from this: model your business on the assumption that you, the founder, will earn £60,000 a year from it from day one. Everything that follows from that assumption is closer to the truth than everything that follows from the assumption that you will work for free.