these 4 reasons made over 50% of restaurants fail within the first three years of business

Every once in a while, the idea of running a restaurant can inspire you to launch a new business while oblivious to the actual duties and challenges that come with operating a restaurant. This frequently results in new restaurant owners closing their establishments within the first three years. But there is more to this than meets the eye. So without any further ado, let us dive right in and check them out. 

Not choosing the correct location for the business 

The National Restaurant Association of US recognizes a 30% failure rate as the norm in the restaurant industry. And a lot of it can be associated with the location.

When selecting a place, numerous factors must be taken into account. You’ll need plenty of convenient parking, your restaurant must be simple to discover, and your location must cater to a lively neighborhood. It will be challenging to boost restaurant sales and maintain your business if your establishment doesn’t cater to your target clientele. 

Lack of cost tracking

To start turning a profit, you must understand how to set menu prices for your restaurant. Do you know how to figure out your cost per plate? Most owners don’t, though. To maximize your cost and profit margin, you might, for example, consider adding a costly premium component to a meal that otherwise costs less.

Several more changes can lower the price of food without sacrificing flavor. You should create healthy profitability for each item on your menu by adhering to the 30% consumer prices golden rule.

Poor management 

The operations manager you choose to oversee your day-to-day operations will likely
have the most experience, the best references, an altogether positive attitude, and a cultural match.

However, occasionally you can discover a few weeks later that they aren’t managing the restaurant correctly. They might be mistreating members of staff, spending excessive amounts of time off, or even worse, robbing banks or abusing the restaurant’s resources. If these daily responsibilities of owning and running a restaurant, as well as the challenges of staffing restaurant and hotel chains, are not handled, your employees and
the environment could suffer greatly. To make sure your administration and team are operating at their peak efficiency, you must do routine check-ins with them.

Poor customer service

Any establishment closing due to poor treatment is evident. Poor service has a way of spreading like wildfire and sometimes seems unrepairable. Even the best restaurant would close if its patrons received subpar treatment, therefore providing excellent customer service is essential to remaining in business. In order to iron out the problems before it’s too late, it’s important to solicit client input early on.

To conclude

Now that you are aware of the main causes, many restaurants fail. Make sure your strategy actually works by studying your market and looking into new ideas. But if you never take the risk and give it a shot, you’ll never truly understand what it’s like to run a restaurant. 

Despite your best efforts, the restaurant might not succeed. However, you will maximize your chances of success if you consistently work to improve and learn while performing the essential duties of every successful restaurant (great cuisine, service, and location).