Success in the hospitality industry is not easy to come by. A lot of restaurants are born out of passion but go south in record time. With a high failure rate, it is safe to say that restaurants don’t operate or thrive through dumb luck.
Considering the current situation has not been very kind to the hospitality industry where restaurants have been shut for months on end, it’s become highly challenging to make ends meet. But even without the pandemic, the restaurant industry has had a reputation for being very risky.
Let’s look at the top reasons for the high restaurant failure rate.
- Not choosing a niche:
The most successful restaurants enjoy popularity because of their niche. Your niche is a particular cuisine or concept that you excel at and that helps you stand out from your competitors.
If there are thousands of restaurants serving the exact same thing and implementing a similar concept, you get lost in the crowd. Not having a thorough understanding of your target audience and failing to offer something unique contributes to your restaurant’s failure.
- Poor choice of location:
A lot of businesses pick a popular location that is in the public eye but it costs them a fortune to lease the space, renovate & maintain it. On the contrary, there are business owners who do not research their targeted audience before choosing a location for their restaurant.
In both these cases, the location is not wisely selected which leads to a huge loss of money. This drains the restaurant of their profits quicker than usual. This means that your restaurant location can heavily impact the success and failure of your business.
- Unskilled staff:
Not hiring the right staff can be detrimental to your restaurant’s reputation as they are closely interacting with your customers. At the same time, it is crucial to invest in their training so they can help customers have a great experience at the restaurant.
With tools like Lessonly, you can easily offer flexible learning solutions to your staff and ensure they know how to offer stellar customer service. Moreover, the affordable Lessonly pricing makes it a suitable option for both big and small restaurants alike.
- Lack of planning:
Considering the high investment in a restaurant, it is crucial to plan every aspect thoroughly before starting it. You need to be aware of the permits you need to get and the expenses you will be making throughout to understand the best way to ensure gains.
Your menu pricing should be able to cover these expenses and ensure profits. In addition, calculate losses like leftover food wastage and unused & expired ingredients. A lot of restaurants make huge losses because of their incompetent price planning.
- Not marketing your restaurant:
Just opening a restaurant is not enough. You need to ensure your audience knows about what you are offering to be able to increase sales. Even the most successful restaurants invest in marketing to ensure they are always in the sight of their customers.
Without customers knowing your business exists, your business has very little chance of survival. If you are hosting events or offering discounts, you need to have a marketing strategy to let your customers know about it.
Conclusion:
All these mistakes keep customers away and drive restaurants to failure. With cut-throat competition and a lack of well-trained staff, it is not easy to build a great restaurant business. By avoiding these above mentioned mistakes, you can ensure your restaurant business doesn’t suffer. Do you own a restaurant? What are the major challenges that you face on a day-to-day basis? Let us know in the comments below!
