Reason so Many Restaurants Fail

Opening a restaurant is one of the most popular things people consider doing for their own business. This alone is one of the many reasons that 2/3 fail in the first two years. There is a lot of competition. Even so, some new restaurants do manage to survive in well saturated markets. The key factors one will usually find in these success stories are:

1. Experienced Operators - There is a lot more to running a restaurant than just throwing some food on the grill and serving it. Proper operations and personnel management skills are essential to maximize margins, provide value for the money and to select and maintain a proper staff.

2. A Niche - You may want to open a steak house but if there are already three well established steak houses in the area, you will find it hard to compete. Instead, see what is missing in the neighborhood. Once you've done this, select one or two menu items to become "known for" and do them right every time.

3. Value and Service - Customers demand, not request, value for their money. This value is mostly linked to the portion size and quality of the food. At the same time, they want to be seated and served quickly by friendly and accommodating people.

There is a lot more that can influence your success beyond these factors but you can be sure that without these three, you have virtually no chance of success. If you have never operated or worked as a manager in a restaurant before, do not assume you have what it takes. You will need to seek out an experienced leader for your business and you will need to learn all they know. There is a wealth of free knowledge available on the internet and forums where new and experienced operators exchange ideas, struggles and advice. You need to do your homework.

Some factors new operators usually forget are:

1. Human resources - you have to be familiar with and abide by laws and policies regarding employment. There are age restrictions for certain functions in a kitchen, over time rules that differ between hourly and salaried personnel and titles. You need to be familiar with hiring and firing practices and the proper steps to take to save yourself fees, fines, suits and other headaches. Losing a lot of unemployment claims can drive your rates up fast.

2. Food Safety - ServSafe and others offer courses that are not only a good idea but required in most states. Making people sick and even killing them is not as uncommon as you may believe. Jack In The Box had a major E-coli outbreak in the western US for failure to properly temp food. One such incident can cripple a new owner.

3. Equipment and Facility Maintenance - Shock and awe is a good way to describe these costs for new owners. Even experienced operators armed with years of knowledge on how to properly maintain these areas still face massive charges. At the end of day one, when your new cook pours ice water on your $10k grill and it cracks, you quickly lose that safety net you thought you had. Grease removal and hood cleaning services are often overlooked leading to sewage back ups and kitchen fires. Overlooking those tiny holes in the walls or tiles and taking in loads of supplies in cardboard boxes allows a sudden pest infestation.

4. History - Maybe the reason the location you chose is "such a good deal" is because it has poor traffic patterns and that is why five restaurants before you in that location have failed. Maybe the other restaurant next door has a huge pest issue that they won't address. You must look up these factors and study them closely so that you are not doomed before you start.

5. Family vs. The Public - Many of us are considered the best cook's in our family and assume this means we can cook for a restaurant. We couldn't be more wrong. What we consider as outstanding at home is often considered average at best in public. We also don't consider that we have to send out 100 plates in an hour or two and we are now working under pressure rather than leisure.

I am not going to write all that you need to know to open and run a successful restaurant here. I will also tell you that any one book on the subject isn't enough. As you will learn, should you take the plunge, the knowledge and experiences of this business could fill a volume of encyclopedias. If you plan to invest your life's savings into your new endeavor - make it count. Go work in a restaurant(s) for at least a couple years. Get familiar with as many aspects of the business as you can. Pick the brain of the owner(s), read books, blogs, forums and prepare yourself. In the end, you may get "the bug" as we call it. This is the passion for this business and it is a strong and compelling one indeed. If you do, you will find you love the job and the challenges that come with it and will find your new business very rewarding when done right.