It takes a lot of effort to run a restaurant. Within the first year, 60% of eateries fail. Furthermore, 80% of restaurants close their doors before their fifth anniversary.
We don't want to scare off potential (or established) restaurateurs. However, we believe that taking precautions ahead of time is always a better option.
You may avoid your restaurant failing by studying the common risks and making the proper decisions.
Why Do Most Restaurants fail?
1- Bad Location
The location of your business is extremely important to its success. You'll need an easy-to-find site, plenty of parking, and a populous neighbourhood to generate foot traffic to boost your chances of success.
Good locations, on the other hand, come at a premium, and most restaurants are unable to afford the expenditures (especially in the first few months).
How to Avoid This Problem?
Finding a low-rent area is one approach to avoid this issue. This may take some time, but in the long term, it will reduce the likelihood of failure. Also, make certain that your location is convenient for your target audience.
If your primary target market is university students, for example, locate your restaurant in a location where they congregate. Then go to the market a few times to get a sense of the folks who frequent the area's spending patterns. This will assist you in narrowing down your options.
2- Poor Customer Experience
While you need new clients to maintain revenue, it's just as crucial to keep the ones you already have. Old customers will return to your restaurant more frequently and may even become brand ambassadors (and spread the word).
Poor customer service, on the other hand, nearly always guarantees that the consumer will not return. They may even write nasty reviews of your restaurant on key digital sites (Google, Yelp, TripAdvisor, and social media), tarnishing your brand and scaring away potential consumers.
3- Inexperience
While no formal education or professional experience is required to operate a restaurant, a thorough understanding of the industry is essential.
That's because some of the key reasons restaurants fail are a lack of adequate management, financial planning, and a lack of business understanding among first-time restaurateurs.
Do as much research as you can. Watch restaurant-related videos, read blogs, and chat to people who are already in the industry.
You might also recruit someone with prior restaurant management experience, depending on your budget. This will assist you in getting through the initial few months of your firm without difficulty.
4- Poor Resource Allocation
Set aside money for each component of your restaurant (rent, ambiance, furniture, staff, and raw materials). You can, for example, engage temporary staff on busy days to avoid paying them to sit idle on other days.
Use the Eatance restaurant ordering system to see which meals are the most popular and which ones aren't selling well. Then adjust your raw material spending accordingly. Eatance also offers a contactless dining option (in the Pro version). Customers can scan the menu and place orders, allowing you to reduce the number of employees in your restaurant while increasing profits.
Source: https://eatanceapp.com/7-reasons-restaurants-fail-and-how-to-ensure-yours-doesnt/