12 Reasons Why Restaurants Fail

12 Reasons Why Restaurants Fail

Even without a global pandemic to contend with, the restaurant trade is notoriously difficult. It is claimed that 60% of all eateries fold within twelve months. This number increases to 80% within five years. Those are worrying statistics for any restaurant.So, what makes restaurants so prone to failure? Let’s review the twelve most common mistakes that owners make. By avoiding these pitfalls, your establishment stands a greater chance of success in a competitive marketplace and is less likely to become another sad statistic.

Substandard Hygiene

restaurant fails

If you own a restaurant, you understand the importance of superior hygiene. All the same, it remains a hurdle that trips many new restaurants. Nothing is more critical than safety and hygiene when operating an eatery. Customers will tolerate many quirks, but substandard sanitation is not among them. This practice can cost an eatery 61% of its customer base.

Failure to Meet Customer Needs

A successful restaurant must tailor service to customer expectations. Consider what your customers want from your business, and tailor your offering to this. If the bar earns more than your food, focus on cocktails. If the majority of customers order steak, don't push a new range of vegetarian produce. Give customers what they want, not what you want.

Inappropriate Location

Restaurant fails

Location is critical when opening a restaurant. Many eateries fail due to positioning themselves in an inappropriate region. Things to consider before opening a restaurant include:

  • How high is the property rent, and is this overhead sustainable?
  • How many competitors are in the area?
  • Do your prices match the spending power of the local community?
  • Does your menu appeal to the lifestyles of the community?
  • Does the local area match the target audience – are there numerous offices, universities, and bars nearby?

Any restaurant can fail if located in the wrong territory, no matter how impressive the offering. Think very carefully and do your due diligence before setting down roots and opening an eatery.

Poor Business Practices

The best food in the world cannot save a restaurant that is poorly managed. Keep an eye on your finances, ensuring that your bottom line remains healthy. Things to consider here include:

  • Food waste
  • Staff wages
  • Popular menu items
  • Busy periods
  • Profit and loss impact of offers and discounts

Running a restaurant is a business, and that requires financial acumen. Seek external help from an expert if that is not your strong suit. In the meantime, the Snappmeal app can aid you in tracking performance and statistics.

Failure to Acknowledge and Act Upon Customer Feedback

Whether their feedback is good, bad or indifferent, customers want to feel that their voice is being heard. Engage with your customers and take what they have to say under consideration – especially if they suggest improvements. If a diner feels ignored, they will eat elsewhere.

Unwelcoming Ambience

Restaurant fails

Customers want to feel like dining out is an experience. If this is not the case, why bother leaving the house? Millennials and Zoomers already order out more than eating in, and few eateries can stay afloat relying exclusively on delivery orders. Make your restaurant the place to be, encouraging people to enter – and return – with a friendly and fun atmosphere.

Spreading Core Values Too Thin

Your restaurant’s core values are what will sell you to the customers. They help you build a bond of trust with your regulars. Do not abuse this trust by moving the goalposts in an attempt to gain more business. For example…

  • If you focus on vegan food, don’t add burgers to the menu to attract more business
  • If your brand is, “reassuringly expensive”, do not suddenly drop your prices
  • If you are a family eatery, do not expand your bar to attract a drinking crowd

If you try to please everybody, you’ll end up satisfying nobody. Loyal regulars will feel betrayed, and new customers will consider your restaurant neither fish nor fowl. As discussed previously, learn what your customers want and build your values around this.

Too Many Promotions

Promotions can be a great way to attract new customers. Used to excess, however, they can damage the reputation of an eatery. Constant discounts can appear desperate and devaluing. Avoid gaining a reputation as, “the cheap restaurant down the road.” Use discounts and promotions sparingly, making them feel like an event.

Poor Marketing

Restaurant fails

It doesn’t matter how good your food and service are if nobody has heard of your restaurant. You need to step up your marketing. In the age of the internet, it has never been easier – or more cost-effective – to reach new customers. Consider:

  • Social media campaigns
  • Online banner advertisements
  • Partnerships with other local businesses 
  • Offline advertising, such as shop windows and newspaper adverts

If you ever need help with your restaurant marketing, Snappmeal is only a click away. We would be delighted to offer our advice and expertise.

Bad Reputation Management

Bad news travels fast. If you see that a customer is unhappy with your food or service, work quickly to mend the relationship. Sadly, people are more likely to discuss bad experiences at your restaurant than positive interactions. Never let a customer leave your restaurant without a smile on their face.

Poor Online Reviews

It’s not just the world of mouth on the street that you need to worry about. Arguably more than any other business, poor online reviews impact the restaurant trade. 70% of customers will avoid a restaurant with four or more negative reviews. Manage your online reputation, taking the time to address negative reviews where appropriate.

High Staff Turnover

Regular customers appreciate consistency. A revolving door of staff, whether in the kitchen or waiting on tables, can be unsettling for customers. What's more, you will constantly accrue costs in recruitment and training. Focus on retaining the staff you have. If they feel like part of a family, so will your customers.Here at Snappmeal, we are as determined as you to make your business a success story. We will provide you with the tools required to make your restaurant the hottest ticket in town. Prosperity is just one app download away.Share on facebookShareShare on twitterTweet it