Longevity in the restaurant business is tough, but just getting a new restaurant off the ground can be even more challenging. In fact, 60% of all restaurant startups fail within the first year. What are the top reasons why most restaurants fail and how can the most common pitfalls be avoided from the get-go? Aspiring restaurateurs, take note and jot down these tips.
1. Beware of a Bad Location
This is arguably the most important decision you can make at the beginning of your restaurant journey. A good location can have a significant impact on your restaurant’s success, so be sure to take your time and choose wisely. Think about your location from the perspective of your future customer and ponder these questions before making it official:
- Is it easily visible on the street?
- Will this location encourage walk-in customers?
- Is there ample parking to fill the restaurant on a regular basis?
- Are there several other competing restaurants nearby?
2. Good Staff is Hard to Find
The people you hire to work in your restaurant become the backbone of the business. Your staff will represent your restaurant to the public and are in charge of creating a great experience for your customers.
Good staff can be hard to find, but if you set clear expectations from the start, each team member will understand their role and responsibilities. This can avoid unnecessary confusion, which will set them up for success and allow you to hold them accountable for their actions.
But not every hire will be a good hire.
Terminating employees is difficult, but the moment it becomes clear that someone isn’t a good fit with your company’s vision and values, it’s best to let them go.
Unfortunately, it’s not always obvious right away who should be terminated. For example, without systems in place to monitor inventory, a server, bartender or chef can easily get away with theft and go undetected for years.This can be avoided by implementing a system for restaurant inventory management.
3. Customer Experience
Your restaurant reputation is about much more than just the menu. People go to restaurants to have a complete dining experience. If your customers don’t enjoy the time they spend at your restaurant, they’re not going to come back. Even worse, they can share their bad experience with friends, family and strangers by giving you a bad review on Yelp, Facebook and a multitude of other online platforms.
How will your customer experience stand above the competition?
- Quality and timeliness. For starters, craft a delicious menu that’s worth raving about. Serve your entrees fresh and hot, and make sure that people aren’t waiting a long time for their meals.
- Friendly staff. A smile goes a long way in building rapport with people. Train your employees to maintain a positive attitude when interacting with customers. Also, teach them how to handle issues with customers in a polite, responsible manner.
- Restaurant cleanliness. Keep all tableware clean, control pests, and make sure all common areas look great before you open for the day.
4. Keeping Payroll too High
Most of the payroll issues in restaurants come from overstaffing during slow shifts. Anytime you have employees waiting around for customers to arrive, they’re increasing your restaurant overhead.
It’s important to track your staffing needs from the start. New restaurant owners tend to over staff their restaurants in case there’s a sudden rush of customers. Just remember that playing it safe can be costly in the long run.
5. Watch the Bottom Line
A restaurant cannot survive without generating a consistent profit. Inexperienced restaurant owners tend to sink a bunch of money into complex marketing campaigns, interior decorating, or expensive kitchen equipment.
But catchy taglines and trendy decor don’t always result in a packed house, rave reviews and positive cash flow. Restaurant owners and managers need to invest in implementing the right tools from the start to set them up for success.
Beyond overspending in the beginning, tons of restaurants lose money due to poor inventory management and food waste. Investing in a high-quality restaurant inventory management software is vital to ensuring that you’re maintaining a consistent profit and not losing money where you don’t need to.