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By contrast, ZIP code 80302 with its lowest failure rate also had the lowest percentage of small-size res- taurants (83.11%) along with the highest percentage (12.89%) of midsize restaurants (100-200 seats) and the second highest percentage (4.00%) of large-size (over 200 seats) restaurants (see Exhibit 6).It can also be explained by the fact that larger restaurants with high number of seats also require high initial capital, thus requiring greater scrutiny by the lenders. Moreover, the high capital requirement of larger size restaurants discourages inexperienced and undercapitalized entrepreneurs from entering this arena, which helps to ensure the higher rate of success for larger size restaurants. An alternative explanation would be that inexperienced and undercapitalized entrepreneurs are most likely to open smaller size restaurants thus contributing to the greater percentage of restaurant failures.
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