It requires effort, dedication and hard work with meticulous planning to run a restaurant. It is not an easy job to run a restaurant business successfully.
Statistics suggest that more than 50% of newly opened restaurants went out of business last year. Even more than 70% closed their business in the first three years of their setup.
Various factors lead to the shutdown of the restaurant business. Some of the reasons are mentioned below.
You must keep these in mind and prepare well in terms of planning and strategy to avoid these and run your restaurant business successfully.
What mistakes lead to the failure of the Restaurant Business
For any successful restaurant business, you need to have a good pricing strategy for the menu. Your restaurant should get a lot of traffic. Do not sell the items at a lower price. That will incur losses to you despite the traffic.
You are selling your services as well. Hence you must include the cost of your experience, services, overheads, and profit in addition to the food cost while deciding the prices of your menu.
Especially for women entrepreneurs, remember not to sell anything on loss. If you need financial assistance, you can apply for loans for women in business.
Mistakes to avoid for your restaurant
Not giving the location the importance
This is one of the crucial factors that determine the fate of the restaurant and its location of the restaurant. Easy accessibility to the restaurant often attracts customers.
Customers also prefer to dine at a restraint located in a good location. Visibility of the restaurant to customers plays an essential role as it inclines them to come into the restaurant.
Especially for new customers who have never had an experience in your restaurant, location is pivotal in attracting them and trying your restaurant food.
The food and service quality comes second. Hence the site selection for your restaurant is the most important factor. You must plan a lot about the location before you invest in the place.
Next comes the concept and theme of the restaurant and the ambience you provide to your customers inside the restaurant.
An in-depth market analysis helps in deciding this and should be done before investing in the place. You may consider taking easy loans in the UK if you are short of funds to invest in the right location.
For example, a fine dining restaurant and not work near a university area. No posh dining restaurants around a university; this could be because of no market for that kind of restaurant.
Near the university, a quick service restaurant or fast-food joints or pick-up-and-go restaurant are likely to you have a higher success rate.
Bad Concept Execution
For any business idea to become successful, it requires proper execution of the idea. Many businesses fail at this step. The restaurant business is not any different.
It often happens that people have a great idea and concept right away to start the restaurant business but end up with the result that is not quite the same as the initial thought.
The key is to plan in detail before getting into the execution stops. Everything needs to be planned right from the finances to operation to how to manage your staff etc.
Proper market research and industry analysis are important and help you ensure that the concept you are following will work. Especially if you are a first-timer, consider hiring a consultant who will guide you through the whole process.
Not Thinking of a Grand Opening
For any restaurant, a grand opening is a must. Opening happens only once, so make sure it gets noticed. It is the chance or the opportunity for you to make the first impression and let the surrounding people know that you exist in the market.
The first impression often does get you good reviews. You may organize an open house to attract customers to come and taste your food, even for free.
This way, not only the people around will get to know that you are open but also will be forced to taste your food if they like your food, the probability of them returning to your restaurant increases.
In case you are working on a tight budget you are not very sure of your business model, a soft opening is advised for your restaurant. In a small opening, you invite a few people to your opening, and you see their response.
As per their feedback, you make changes to your restaurant, and then you go for a grand opening. At the grand opening then, you can invite media, food blockers, celebrities, friends and almost anyone.
Depending On the Manager to Manage Your Restaurant
You must not rely entirely on the manager to run your restaurant business as an owner. You should be aware of all the tasks happening in the restaurant at all times.
Analyze daily reports, be physically present at the restaurant and take charge of some of the key decision-making activities for your restaurant.
You can also use POS software by which you can get all the reports regarding sales, inventory, raw material etc., directly on your phone.
Thinking Back-End is not important
Often when you are focusing on your interiors, the location of your restaurant and marketing, you tend to ignore the back-end activities.
The back-end includes everything that happens apart from the front desk work. The staff, kitchen equipment, inventory stock materials, etc., form part of the back-end.
These must not be neglected or provided lesser efforts while running the restaurant. There must be proper coordination between different it and the back of the restaurant.
Conclusion
Starting a restaurant business is not a piece of cake. It requires a lot of planning and execution to make it a successful business. A restaurant business is not just about the food and taste, but many other ancillary things that need proper attention.
When these other things are missed out or not given the proper attention leads to the failure of the business. Just making sure to avoid some mistakes, you can take your business to grow.