5 Reasons Why Restaurants Fail

A restaurant is one of the most popular businesses that budding entrepreneurs dream of owning. While being a restaurateur can be a rewarding and challenging adventure, it is important to remember that a great deal of restaurants fail in the first 5 years. Certainly every failed business has its own unique combination of reasons behind its failure. However, your business can avoid some of the major restaurant pitfalls if you know what they are.

The first pitfall is high overhead. Usually when someone starts a restaurant, they call a local restaurant supplier to provide them with all their needs. This is a mistake. Shopping around for bulk food, restaurant equipment, and other needed items can save sometimes up to 50%. This really can make a difference in your bottom line. Also, with so many restaurants failing, you may want to check out purchasing used cooking equipment that can be acquired for a fraction of the cost of a brand new item.

The second pitfall which no restaurant owner wants to deal with is employee theft. Employee theft can be an employee taking cash out of the register and something more subtle like giving away free food/drinks or smuggling steaks home for personal use. Sadly, employees that get away with theft are more likely to do it over and over again, so firing or having an employee arrested for such an infraction is the only appropriate action. Catching employees in the act is the hard part. Installing a video surveillance system is a great way to catch this behavior and you may even catch a break on your insurance premium. Also, make sure that your employees bring no backpacks or large bags to work.

The third pitfall is bad customer service and consistency. If a customer comes in every day and orders a burger from your restaurant, he or she should reasonably expect to get the same quality and size of burger each time. This type of consistency can occur when you set specific portion sizes in writing and train your cooks exactly how you expect each food item on the menu to go out. This extra training you provide may be more costly, but you will be rewarded when customers get what they expect and return for the same quality. Complaints are another way to keep a consistent restaurant. If someone complains about food or service, there should be some sort of protocol to follow to make that customer happy. Complaints should also be documented to be able to tell if there are any patterns in an employee's work and action can be taken to correct it.

The fourth pitfall is poor bookkeeping. Oftentimes, restaurateurs are spend happy and don't know when to say "no." An accurate and careful account of how much is spent and made needs to be kept, not only for tax purposes, but to make sure that you are operating at a profit. Additionally, pay bills on time whenever possible. A number of companies provide discounts as large as 10 or 15% to companies that pay their bills on time. While 10% may only add up to a few dollars on each order, over the course of a year, that savings quickly adds up and helps your bottom line.

The fifth pitfall of way too many restaurants is lack of originality. You may open up a great "mom and pop" diner, but what sets it apart from the rest of the similar restaurants in your area? Originality can be achieved in many ways. Your restaurant can have a clever gimmick or theme that is well presented throughout. You could run daily specials that encourage repeat customers. You can have a unique and memorable jingle that you frequently run in all your advertisement. There are actually millions of ways to set you apart from the competition. One of the best examples of restaurant originality is with the Quaker Steak & Lube restaurant chain in Sharon, PA. Quaker Steak & Lube's name in itself is a play on words. It was formerly a gas station that was turned into a restaurant and the name is a play on Quaker State oil that was sold at the former gas station. Also, the restaurant is filled with garage and gas station items as its theme. The restaurant is mainly known for its chicken wings, for which they have dozens of flavors and a special all-you-can-eat wing night. Also, to attract customers, the restaurant is home to the world's largest weekly motorcycle show/gathering during fair weather. All these things make Quaker Steak & Lube extremely busy and profitable. While there are many places to eat great wings all throughout the town of Sharon, PA, more people patron them, despite their higher prices, for the atmosphere and the same quality service. This type of originality is what every restaurateur should strive for in order to stay at the top of their competitive market.