restaurant business fail

Reasons why most of the restaurants fail?

Many people had come up with a thought of opening their own restaurant, at least one in life. Sometimes we fail to open the restaurant because of some circumstances, or sometimes the restaurant didn’t work well. Some people also think that restaurants are a source of passive income. The money will come automatically after opening that, But If I tell you the fact that 60% of restaurants closed in their first year and 80% of restaurants closed in their first 5 years! So in this article, I will explain why this thing happens and how to market your restaurant. So if you are a restaurant owner or thinking of opening it so definitely you are coming to the right place.

why most of the restaurants fail?

restaurants fails

1. Location:

Location is the most important factor. Restaurant owners fail to choose that location where people like to come. There are some restaurants which are located in the streets but still, people go there because those restaurants are famous now, But you are new and nobody knows you so you need to open your restaurant where people usually come and try out your recipes. So location is the most important factor for a restaurant. It also depends on your cuisine.

, If you are thinking of selling Chinese, Italian, Burger or something else than location should be suitable for your food, So always choose the location according to your food. For example, if I am going to sell any foreign dish so I wouldn’t go to any local area. So always choose the location wisely.

2. Restaurants owner thinks it is a source of passive income:

 Restaurant owners think it is a source of passive income and because of that, they don’t do hard work. One thing that you need to understand is you have invested the money so you need to work in your restaurant and nobody can understand your business better than you. So the restaurant is a type of liability business. It’s not like you open the restaurant and will start to make money from the first day. In order to make it the source of passive income, you can start the franchise model and chain model, but for this, you need to work hard to make your restaurant full-fledged business.

3. Management:

As you know as an owner you can’t be available at the restaurant all the time. Suppose you expand your business to 50 restaurants so you can’t be available everywhere, right? So for that, you need a good leader who can manage your restaurant whenever you are absent and this is necessary, If you don’t choose a good leader then he won’t be able to handle all other employees and will lack good leadership qualities due to this thing employee will be left your restaurant soon and then the thieves will start and things like this will keep happening.

4. customer service:

Customer service means they came to your restaurant and everything is fine the food, price everything is OK but your communication is not good or your behavior to your customer is not acceptable. For example, sometimes what happens is you gave your customer burnt food, and he started complaining but instead of listening to him you are avoiding him So due to this, the customer will spread negative word of mouth and in the end, you will get a negative response from the market. For this, we have to build a feedback system.

5. Accounting:

Most of the people don’t know how much money I need to start or run my business for the next 8 months or 10 months until it becomes profitable. People just consider the onetime investment and don’t think about the extra cost. They just have one lakh rupees extra which they don’t want to spend in initial days so because of this they don’t spend on marketing, additional dishes, and staff which is required. And due to this thing, only a few audiences will come to our restaurant because we have already skipped so many things. Less audience means fewer sales and automatically restaurant will be in loss and unfortunately, it will be closed soon. They are not good at accounting and this is one of the reasons why many restaurants failed. They didn’t do calculate properly about how much time and money do they need to run a restaurant. It will easily take around 4-6 months for any restaurant to become profitable. So you need to calculate the expense for 6 months and you should have that amount of money. The second calculating mistake people do is they don’t calculate the proper costing of their product, which is a bad thing. You should know the exact cost of your product or service whatever you are selling and if you don’t know so don’t do that business. Some people do reverse calculation. They calculate like how much sales do we need to earn a certain profit on behalf of that stats they set their daily sales target, So you also need to set a daily sales target like 5k or 10k, etc. If the target didn’t achieve so, you can also run some offer to achieve that target.

6. Hiring staffs:

According to me if any of your staff is waiting for work so it means we don’t need that worker. So there is no need to hire extra staff because if you do your overall expenses will be high and ultimately you will be in loss. There was a restaurant which was located nearby my house and their food was good but it was expensive because due to unnecessary staff overall cost was increasing, So the point is we shouldn’t hire extra staff unless it required.

7. Taste:

For me and for the majority of the people’s taste is the biggest factor Without taste, you can’t expand your business. Instead of sell, every food item sells a few ones, but it should be tasty. So good taste is a mandatory thing because in initial days try to sell only a few things just focus on one or two foods dishes and then try to increase more food items according to your specific industry, Don’t ever try to compromise food taste because of the price. Nowadays people are ready to pay the extra price for food, but the taste should be worth the amount.

Conclusion: Here are some biggest reasons why most of the restaurants fail. Nowadays people don’t like to compromise with their basic needs. Food is the most important thing for human beings, they never compromise with it and always searching for the best in the market. Restaurant business may have high competition, but it will never go out of fashion. While starting your own restaurant business, make sure that you will take a look at the list that I mentioned above.  

Take a look at this top 7 franchise business ideas -> click here

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