Owning a restaurant can be a very rewarding and difficult business to have especially during the first 3 years of operation. Based on a recent study conducted at Ohio State, 80 percent of restaurants fail within the first five years.
There are many common reasons that lead to a restaurant closing its doors and most of the time it is a combination of more then just one problem. In order for restaurant owners to have longevity in their business and surpass the disheartening statistics, here are 5 bad decisions that they must avoid.
Paying managers to run the restaurant for you vs. working in the business
Most restaurants owners (especially within the first few years of opening) have to work, manage, and maintain the restaurant in order to be successful.
Selecting a bad location
Just as it’s stated in the real estate industry, everything is based on “location, location, location” One of the biggest reasons that lead to a failing restaurant, is having a bad location with poor visibility & no foot traffic.
Choosing not to advertise
New restaurants need a lot of exposure and awareness in order for customers to know about them. With hundreds of chain restaurants that constantly advertise to get in front of millions of people, marketing & advertising a new restaurant concept is essential to its success.
Having too many employees on the payroll
Most restaurants have slower days of the week and times during each day that customers are not there to spend money. Having too many staff members on payroll leads to several people standing around and not earning their wages but increasing the restaurant expenses.
Not getting customer feedback
In order to maintain good customer service and repeat business, restaurant owners need to seek feedback from their everyday customers. This can be in the form of social media, a comment card or asking customers in person about their experience.