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Where's the best place to open a new restaurant concept? Try Texas.

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Texas may already be packed with restaurants and chain headquarters, but an upstart has a better chance of succeeding there than it does in any other state, according to a new ranking of the best places to open a restaurant or other small business.

The study found that the Lone Star State provides the best overall business environment for startups, a distinction earned in part by the relatively high proportion of entrepreneurs who manage to stay in business for at least five years. Other gauges that factor into that business-environment measure (one of three major criteria underpinning the ranking) include the size of the local workforce, the rate of job creation and the variety of businesses that prosper there. 

Best states to start a restaurant, ranked

States are ranked on business environment, access to resources and business costs

Source: WalletHub


Texas finished in the middle of the pack on the two other major criteria: access to financing and other resources (No. 12 on the list) and the cost of doing business there (No. 16). 

The report’s publisher, the credit and personal finance advisory firm WalletHub, gave Texas an overall startup index of 64.4 points. At the other end of the spectrum was Hawaii, adjudged by WalletHub to be the worst place to open a restaurant or other small business, with an index of 37.16. The research indicated that the remote state is the nation’s worst in terms of providing access to resources such as financing or human capital, and ranks 43rd in terms of the cost of doing business there.

Rounding out the listing’s overall top five are Utah (scored by WalletHub as providing the best access to business resources), Georgia (seventh in overall business environment, but middle of the pack on access to resources and costs), Montana (No. 8 in both business environment and costs) and Oklahoma, which earned its No. 5 slot despite being ranked the most expensive place in the nation to run a business.

Texas is the restaurant industry’s second-largest market in terms of the number of establishments. California, the biggest market, was ranked No. 8, despite having the fourth-worst rating on costs. Florida, the third-largest market, was sixth, the result of having a high score on the business-environment evaluation. 

Narrowly beating Hawaii as the worst states to locate a new restaurant were Pennsylvania, Vermont, Rhode Island and New Hampshire, largely because of the business environments they provide. 

Earlier this year, WalletHub looked at the best and worst big cities in which to open a restaurant. Oklahoma City topped that ranking. 

The state list was based on 25 metrics grouped together under the three headings of business environment, access to resources and business costs, each weighted to generate the overall index. 

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