The Best States to Open a Restaurant
Starting a business is practically synonymous with the American Dream. Take a good idea, mix in some money (and a lot of hard work), and it can grow into something special. Unfortunately, any idea, no matter how good, can fail to reach its potential if there isn't a market for it to thrive in. According to a study by Small Biz Trends, 44 percent of startups fail within four years – and the most common cause is "no market need" for that business offering.
Since we at KaTom serve the restaurant industry, we wanted to know where a market need does exist for entrepreneurs wanting to break into the restaurant business. In other words, which are the best states to open a restaurant? We've crunched the numbers and determined just that. Here's a quick look at the top 10.
How We Determined the Best States to Open a Restaurant
To calculate the best states to open a restaurant, we leveraged data from the Census Bureau1, The National Restaurant Association2, the Bureau of Labor Statistics3, and MIT4 to assess market opportunity for new restaurants. Each state was reviewed according to the following metrics:
- Adjusted Disposable Income: The more the better. Adjusted for cost of living in each state.
- 5-Year Population Growth: Higher growth indicates more demand for new restaurants.
- Restaurants per 100,000 Residents: The fewer the better. Less restaurants per capita indicates an opportunity for growth.
With our metrics in place, we ranked each state according to disposable income, population growth, and restaurants per capita. Next, an average was calculated from the three rankings to determine the best states to open a restaurant. When all the dust had settled, Texas emerged with the crown. Want to know how your state fared? Scroll down for a recap of the top 10 or check out the full list at the bottom.
1. Texas
- Adjusted Disposable Income: $23,770
- 5-Year Population Growth (Percent): 8.35
- Restaurants per 100,000 Residents: 167
2. Utah
- Adjusted Disposable Income: $20,044
- 5-Year Population Growth (Percent): 9.08
- Restaurants per 100,000 Residents: 167
3. Washington
- Adjusted Disposable Income: $29,830
- 5-Year Population Growth (Percent): 8.22
- Restaurants per 100,000 Residents: 208
4. Minnesota
- Adjusted Disposable Income: $28,169
- 5-Year Population Growth (Percent): 3.65
- Restaurants per 100,000 Residents: 190
5. Tennessee
- Adjusted Disposable Income: $23,587
- 5-Year Population Growth (Percent): 4.26
- Restaurants per 100,000 Residents: 173
6. Arizona
- Adjusted Disposable Income: $18,517
- 5-Year Population Growth (Percent): 8.09
- Restaurants per 100,000 Residents: 143
7. Maryland
- Adjusted Disposable Income: $28,312
- 5-Year Population Growth (Percent): 2.01
- Restaurants per 100,000 Residents: 188
8. Nevada
- Adjusted Disposable Income: $22,547
- 5-Year Population Growth (Percent): 9.27
- Restaurants per 100,000 Residents: 197
9. Virginia
- Adjusted Disposable Income: $24,892
- 5-Year Population Growth (Percent): 3.21
- Restaurants per 100,000 Residents: 182
10. California
- Adjusted Disposable Income: $27,800
- 5-Year Population Growth (Percent): 3.33
- Restaurants per 100,000 Residents: 193
Reviewing the Data
Where to Next?
Now that you know the best states to open a restaurant, are you thinking about starting one yourself? Not sure where to start planning? You'll find everything you need to know in our beginner's guide to starting a foodservice business, plus dozens of start-up guides in our Learning Center that cover everything from convenience stores to specialty dessert shops.
Sources
- Census Bureau. "State Population Totals: 2010-2018." census.gov. 22 November 2019.
- The National Restaurant Association. "State Statistics." restaurant.org. 22 November 2019.
- Bureau of Labor Statistics. "Disposable Income Totals." bls.gov. 22 November 2019.
- Massachusetts Institute of Technology. "Living Wage Calculator." mit.edu. 22 November 2019.
