Last Updated On June 24, 2019 / Written By Justin Stewart

The Top 8 Reasons Your Restaurant May Fail

Opening a new business is never an easy venture, which is especially true in the foodservice industry. With so much to do when managing a restaurant, here are the 8 most common reasons that your restaurant may fail. Be sure to avoid them!

Chances are if you’re reading this, you already own or plan to own a restaurant. Even though a lot of hard work goes into running a restaurant, 80% of them fail within the first four years. If you don’t want that to be you, we’ve compiled a few of the top reasons that restaurants may fail so that you can put in the work to avoid these things from happening.

Some of the things that make restaurants fail are easily avoidable, as long as you’re willing to put in the work and stay organized. You don’t want all your hard work, time, and money to go to waste; so, without further adieu, let’s talk about the most popular reasons that restaurants fail after opening.

You’re Not Meeting With Your Suppliers About Order Management

You probably have a handful of suppliers that provide you with the food and beverages for your business. If you don’t already, you should have a list of the names of the companies, the name of the contact, phone numbers and what they supply on hand, to make meeting with who you need to simple. You want to make sure the suppliers are holding up their end of the job, and if you don’t have a solid relationship, things can get ugly quick!

You Don’t Pay Attention to Your Inventory and Ordering Prices

If not communicating with your suppliers, you may not know what you’re paying for ingredients or if the supplier ups the prices. You can and should keep track of your most popular and used ingredients, make a note of how much you’re paying for them, and compare that to menu prices. The prices you’re paying and what you’re charging customers are both crucial to avoid spending too much or not charging enough.

Your Business Suffers From Low-Quality Leadership or Management

Your business may not be successful if you have poor management. When you’re not there, someone else is in charge, and if they’re running the business ineffectively, it can affect a lot of aspects of the restaurant. Your leaders should be assigning tasks so that everything gets done, like keeping track of inventory, which we’ll talk more about next. Manage your restaurant in a way that it resembles a team environment while also able to get the necessary tasks done behind the scenes.

You’re Not Keeping Track of Inventory With an Inventory Tracking App

Keeping track of inventory is crucial to running a successful restaurant. If you’re not doing this as often as you should, you could be wasting money on a product that will expire before you get to use it or on the other side of things, you could run out of food and make guests unhappy.

We know inventory isn’t the most fun part of the job, and it can be stressful to do. Thankfully there are apps available that make it as easy as it can get! Using an app can make inventory a task your team doesn’t dread and, therefore, keeps up with on a regular basis.

Food Waste Isn’t Shown by an Inventory Tracking App or HACCP Software

If you want to waste money, then don’t pay attention to how much food your restaurant is wasting. Doing so is achieved by not taking inventory and not paying attention to your invoices from suppliers. Do you see a trend here? Everything is connected in the restaurant industry.

Having food wasted can also pose a health risk, especially if it molds. If you have moldy or expired food around, you can get a fee (or worse) during health inspections. Keep track of your food waste so you can adjust your ordering accordingly and keep your restaurant up to code.

You Don’t Listen to Customers and Acknowledge Their Valuable Feedback

Listening to patrons is a great way to keep your restaurant thriving. People love feeling like they were heard and listened to, and there are plenty of ways to make sure they are feeling that way. On the other hand, if your customers aren’t being heard, they likely won’t return, and word of mouth can quickly spread and damage reputations.

You can start listening to your customers by having staff ask for welcomed suggestions, or you can monitor your Google reviews to see what people are saying. The internet is a great place to communicate with your customers as potential customers will see you value your patrons and any suggestions they may have.

Poor Marketing Techniques Can Harm Your Business and Its Reputation

If you’re not marketing your business correctly, it could fail. In a time where so much advertising is free, there’s no excuse not to have great marketing. If you don’t understand technology much, hire someone who does. Many restaurants have a social media manager that makes posts on social media and interacts with followers.

If you don’t want to hire someone for marketing, consider paying someone on your staff who is savvy in the field to make a determined amount of posts a week. Online or social media posts can get customers through the door and act as a free way to promote specials or things like happy hours or events.

You’re Not Paying Attention to Your Financial Accounts

Do you have an accountant? Many restaurant owners will skip on an accountant because of the cost. If you want your business to be successful, get an accountant to keep track of your accounts for you. You’ll be so busy, and stressed with a million other things going on as a restaurant owner, this is one thing to invest in to take a load off your shoulders and make sure money is handled well.

Signs Your Restaurant Is Failing and How to Save It

Hopefully, you can take a few of the things you read about today to help your business succeed. It’s entirely possible to avoid your restaurant failing, and after reading about the eight most popular reasons they do, you’re better versed on how to prevent that from happening. Owning and running a restaurant takes a lot of work, and things can easily be forgotten or mismanaged. Follow the tips given to you above to be one step closer to a restaurant that you, your team, and your patrons love!

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