We’ve all seen the sight before: the urban block, suburban strip mall, or rural crossroads whose businesses change ownership in rapid-fire succession.   A barbeque joint gives way to an Asian restaurant, which, overnight, turns into a vegan smoothie place – not one of these businesses reaches the one-year mark.  And in today’s brutal economy, when the vegan place dims its lights for the last time, it might remain closed indefinitely.  Fortunate vacant retail spaces get plastered with signs luring potential tenants or future customers with promises of a new arrival, while the unfortunate vacant store fronts get graffitied.  It’s no wonder these failed endeavors are referred to as “cursed locations.”

Restaurants, regardless of location, bring their own set of economic risks.  A research team at Ohio State University determined the rate of restaurants failing within their first year to be 29.6%, growing to 57% to 61% failing in the first three years.  Restaurants close for obvious reasons.  Celebrity chef and Travel Channel host, Anthony Bourdain explains in Kitchen Confidential highlighted the following factors: inferior menu, poor service, unskilled staff, bad management, ineffective restaurant concept, or effective one that might be ill-placed.

So where does the cursed location factor fit in all this?  And why are we, an economic consulting firm, even analyzing the phenomenon?  First, another quick case-study.

Last year a New York Burger Company opened a spot at one infamous cursed location in Chelsea, and at the restaurant partner’s direction, clergy who represented five faiths blessed the storefront.  A year later it remains in business with a significant following.  So is divine intervention the only solution for cursed locations?

As economists, we don’t think so.  While some barriers are “exogenous” (or in non-egghead terms, insurmountable) such as traffic-related issues, a shrewd restaurateur who thoroughly researches the location, identifies and addresses pitfalls of past restaurants, hires an effective staff, and hones a marketing plan should stand a fighting chance.  A Restaurant Hospitality editorial recently noted “There is no curse or dark cloud or magic spell … This business has to be in your heart and you have to be passionate about it, but it’s a business and you need to know when to work from your brain as well.”

So, through economics, we see how our need for emotional understanding – hence the label “cursed” – can give way to reasoned analysis… as long as the passion is there to make the business succeed.