The McKinsey Institute for Economic Mobility published research in February counting restaurants among the businesses least likely to survive a change of ownership. About six million small and medium-size firms in the United States will face ownership transitions by 2035 as their owners reach retirement, and more than one million of those are viable candidates for sale, carrying up to $5 trillion in enterprise value. Food services appears in the report among the labor-intensive sectors with the highest exposure, and restaurants fall squarely into the size band where closure is the most common outcome.

Micro Businesses Carry the Highest Closure Risk

Nearly 80 percent of projected exits will occur among businesses valued under $2 million. McKinsey classifies firms worth less than $500,000 as micro businesses and names restaurants directly in that category alongside small retailers, salons, and neighborhood service providers. The researchers put an estimated 130,000 ownership exits in accommodation and food services specifically, which is the sector count that turns the national projection into a number Boston operators can measure against their own corridors. Those operations sit below the deal thresholds that attract institutional capital, and their owners have the least access to advisers and acquisition financing of any group the researchers measured.

The outcome data shows what that exposure produces, because an estimated 510,000 small and medium-size businesses left the market in 2022 and 92 percent of those exits happened through closure. Five percent were completed as sales, and three percent transferred to new owners, most often within a family. Since 2010, between 7 and 8 percent of all firms have closed each year, and McKinsey estimates that 6 to 13 percent of those closures could have been avoided.

Annual exits are projected to climb as high as 665,000 per year, roughly 42 percent above 2011 levels, against a prior decade in which about 4.5 million businesses left ownership altogether. More than half of American small-business owners are now over the age of 55, which is the concentration that compresses the whole transition into a single decade.

What Sits at Stake Across Greater Boston

Census Bureau figures count 22,034 employer establishments in Suffolk County, 44,624 in Middlesex County, and 20,745 in Norfolk County as of 2023, with another 298,681 owner-operated businesses carrying no employees across the three. Accommodation and food services generated $7.04 billion in sales in Suffolk County alone in 2022, ahead of Middlesex County at $6.74 billion despite Middlesex holding twice the establishment base across fourteen times the land area.

The statewide concentration is heavier still, and the National Restaurant Association projected that Massachusetts eating and drinking places would contribute $36.54 billion in direct economic output during 2025 and support 320,691 jobs. Full-service restaurants account for 146,593 of those jobs and $17.10 billion of that output, and full service is the segment where owner-operators are most common and where the succession question arrives with the least warning.

McKinsey found that major metropolitan areas hold more than three-quarters of the total enterprise value at stake while posting lower exit rates and stronger institutional capacity to absorb ownership change. Boston sits on the favorable side of that divide, with buyers, lenders, and advisers concentrated in the city in a way they are not across the rest of New England. The regional risk shifts away from geography and onto the size of the business.

The Buyer Pool Narrows With the Concept

A restaurant valued under $500,000 rarely reaches the buyers who could underwrite it, because the search costs of finding, diligencing, and financing a business of that size are roughly the same as for one worth ten times more. Value that does transfer concentrates in the physical assets, the location, the leasehold, and the license. Goodwill attached to a named chef or a founding family travels poorly in a sale, so a concept built entirely on the owner standing in the room converts to very little on the day that owner steps away.

A current restaurant appraisal is what turns that question into a number an owner can act on, and most owners approaching retirement have never had one prepared. McKinsey locates most transition failures in the earliest stage of its five-stage path, where owners have neither priced the business nor identified who might buy it, and by the time retirement arrives there is no transaction available to them.

The Lease Sets the Exit Date in New England

Boston operators face a second clock that owners in other sectors do not. A renewal date functions as a scheduled referendum on the business whether or not the owner treats it that way, and Traveler Street Hospitality demonstrated the arithmetic this summer when it declined a renewal at Ink Block and chose to close Bar Mezzana after ten years rather than absorb the new terms or market the space. Independent groups signed a wave of Boston leases in the middle of the last decade, and those renewals are arriving now against a rent basis set in a very different market.

Working the lease position backward from the renewal date, eighteen to twenty-four months out, keeps signing, selling, and closing all available as choices. An operator who reaches the renewal with no valuation and no buyer conversation underway has only one of the three left.

Retirement With a Transaction Attached

The five percent outcome is reachable, and Nantucket produced a clean example of it in July when Evan and Maria Marley listed Pi Pizzeria at $12.5 million after 25 years and scoped the buyer profile themselves. The listing bundles the restaurant, the real estate, and a staff house into one transaction, which is exactly the structure that pulls a business up out of the micro category and into a range where financed buyers compete for it.

Massachusetts owners hold one asset that improves those odds further. Boston’s on-premises licenses remain quota-limited, which keeps a clean transferable license among the most liquid pieces of any restaurant sale in the city, and it should be priced separately from the business it currently serves rather than folded into a single number at the last minute.

Owners weighing a timeline against the McKinsey window still have most of a decade to work with, and the difference between the 92 percent and the 5 percent is preparation that starts years before the closing date. Corbett Restaurant Group advises restaurant and hospitality owners on that decision across Boston, New England, and the other markets it covers, and a confidential conversation about what the business, the lease, and the license are worth is the right first step.

Sources

Businesses Mentioned

Pi Pizzeria Bar Mezzana