3 Common Causes of High Restaurant Fail Rates
Restaurant businesses often have the highest open and close rates. This means that every year, hundreds of thousands of restaurants first open their doors. Many of these same restaurants then close their doors just a year or two later. A high percentage of restaurant businesses fail within the first two years. A lot of this is caused from lack of business skills, poor ingredient choices, or the inability to listen to customer complaints to better the business.
Lack of business skills
If you enjoy cooking, you might have considered opening a restaurant before. However, a hobby or even a strong cooking skill is not quite enough to succeed at restaurant ownership. Successfully running a restaurant business also requires business knowledge. You have to understand financing terms, how to best choose a location, marketing strategies, and pricing. Careful menu planning is also important. If you do not create a product that customers want and are willing to pay your asking price for, they are unlikely to return.
If you enjoy cooking and desire to open your own restaurant, it can be helpful to either take business classes or to partner with someone experienced in the business side. Simply serving the best artisan bread and quality coffee will not guarantee success. You also need someone who is familiar with purchasing. Serving the best quality ingredients as the highest profit is important. When you secure whole bread suppliers, for example, you can receive a discount on ordered items, allowing you to increase your overall profits.
Poor ingredient choices
Poor ingredients in a dish drastically reduce the quality of that meal. If customers are going to pay for a meal out, they want something that is of high quality and something that they are unable to make in their own kitchens. Too many restaurant owners fail because they pay more attention to price than quality. Sometimes, it is even better to take a smaller profit margin, if it means increasing the quality of the artisan bread and keeping the customer satisfied. Their loyalty and word of mouth will increase the business and its customer base.
Ensure that all of your menu ingredients are coming from the best sources possible. If possible, bread baking in house is ideal, because it gives the customers the freshest bread possible. The FDA current recommends that adults should eat six to eleven servings of carbohydrates, including bread, daily. Bread is an extremely commonly consumed item. Opt for artisan breads or other types of wholesale bakeries that are of higher quality.
Inability to listen to customer complaints
Being in the restaurant business industry requires somewhat of a thick skin. You will receive complaints and criticism around your prepared meals. Restaurant owners that take this personally tend to fail. Instead of taking customer complaints personally, learn from them. Look for common complaints among regular customers. Are you customers complaining that the artisan bread is stale tasting or that it is too expensive? You might want to change your wholesale bread suppliers or find a way to offer fresher bread options.
Consumption of bread was declining in the 20th Century, but the rediscovery of artisanal breads has changed that, with bakers producing breads similar to those from 1,000 years ago. In 2016 alone, 11.76 million Americans used 5 or more loaves or packages of bread in a week. Complaints surrounding bread can harm your business, especially if you do not listen and then learn from them.
Restaurant businesses, unfortunately, have the highest fail rate of any type of business. This is because many of the people who decide to purchase a business do not have any business background. Owning a restaurant is much more than creating unique menu items. Without quality ingredients, the ability to create a unique business plan, or learning from customer complaints, you will find it very difficult to succeed in the restaurant industry.