Reference no: EM132039158

Question: 1. "Few restaurants fail because of a lack of commitment or drive on the part of the owners. However, many restaurants fail because of poor market planning or under-capitalization."

2. "Would-be restaurateurs often open their operations on a shoestring: selecting an inexpensive site, purchasing used equipment, and minimizing the initial investment at every step. This often happens because new restaurateurs are spending their own money (often borrowed from family members, insurance policies or credit cards!) and so their decisions are driven by what they can afford. Rarely does this approach lead to success. The investment decision (is this a good concept that will be successful in the market?) is separate from the financing decision (where will I get the money to open the restaurant?). A compelling food-service concept will be welcomed by investors because it promises them a good return at an acceptable risk. How much it costs to build doesn't really matter (within reason, of course), because it will generate profit. Building and equipping a restaurant based on how much one can afford is bad practice, and often leads to severe financial losses."

What is your initial reaction to these statement? What is the affect, if any, on your perspective within the industry? Corroborate your perspective by referencing textbook and/or an external source.

Your initial post should be at least 250 words