Although there is disagreement about the rate at which restaurants fail — with some research indicating a rate of 17 percent in the first year and others as high as 90 percent — the real takeaway should be that preparation and contingency planning are central to every restaurant's success.
Restaurants don't usually fail for just one reason. It's a combination of issues that build upon one another, stymieing any forward trajectory and growth. But when you are proactive and preemptively address the common reasons why restaurants can't get off the ground, then you substantially increase your odds of success. Here are 10 common reasons why restaurants fail, along with solutions to avoid each one.
There's no denying that location is important. If you choose an area that is not easily accessible, not visible from the road, or that has insufficient parking, you're going to be facing an uphill battle just to get people in the door.
Solution: Complete market research and a thorough competitive analysis so that you know exactly who your target market is and where to find them. Then, partner with a local commercial real estate agent who can offer guidance on the ideal areas to launch your concept.
2. Lack of Leadership
As the owner-operator, you simply can't do it all on your own. That's why you need a reliable team of likeminded and capable managers and leaders who understand your vision and have your back.
Solution: Leadership starts with you, so make sure you are setting a proper example. From there, you need to align your leadership team as soon as possible. If you have internal candidates who show promise or possess several of the desirable yet hard to teach soft skills, work on mentoring them and further developing their talents. You can also seek external managerial candidates who are experienced in restaurant operations.
3. Poor Customer Experience
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Legal Disclaimer: The information I publish is not legal advice but rather is intended to prompt a discussion on best practices in human resources. Further, federal and state laws are amended frequently and vary significantly from jurisdiction to jurisdiction. Therefore, the published information may not be current at the time that you read it or it may not be applicable to your jurisdiction. As such, you should not rely upon any of the published information without first consulting directly with Restaurant HR, legal counsel, and reviewing your local, state, and federal laws as well as any applicable industry practices and company policies.
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