Starting up a business is a really difficult task, there is a lot to consider when starting your business like looking at competitors in the area you’re starting up in and looking at the demand to see if it is likely that you’ll succeed. Some businesses are known to be successful like if you start up a roofing company in ct as there is so much demand for roofers, but some businesses often fail, like restaurants for many reasons. The most common reason is that the market is already saturated and if there is no unique selling point about your restaurant then it can be difficult to attract customers who are likely already loyal to a restaurant in the area.
No Vision
It is so important for a business’s success that they have a strong vision for the future of the business so it makes it possible for the business to make a strategy. Restaurants that don’t think about their future often fail within the first year as they’re making decisions based on the short term, not the long term.
Lack of Experience
When opening a restaurant, it is important to employ staff who have experience in the industry as even if you’re great at cooking, if you don’t know how to navigate the industry and find the correct pricing then it is likely that your restaurant will fail.
Not Enough Start-Up Money
This is one of the biggest mistakes people make when opening a new restaurant. They underestimate how much the operations of a restaurant will cost or they spend too much on furnishings for the restaurant. This often leads to cash flow problems and can cause a restaurant to close during its first year.
Bad Location
Choosing a location for your restaurant is so important when predicting how successful your restaurant will be. You don’t want your restaurant to be in a dangerous area as it will deter people from visiting but you also don’t want to open your restaurant where rent prices are more than you can afford.
Finances
Keeping on top of your finances is vital for your restaurant’s success, if you let your finances get out of hand then it can be hard to recover. You need to be able to properly understand your financial statements and what the significant numbers on them mean for your business.
Menu Pricing
In your restaurant every item you sell needs to make a small profit, if you price your ingredients too low then this will mean that you’re likely not making a profit and your restaurant will not survive the year.
Target Audience
Many restaurants fail in their first year as they do not appeal to a specific audience, you should try and attract the new wave of consumers as they often aren’t already loyal to another restaurant.
Too Trendy
Whilst a trend is popular if you base your restaurant off it, you will have short-term success provided there isn’t a lot of competitors in your order, but all trends come to an end. Once the trend is over then the success of your restaurant will decline rapidly so avoid trends.
Staff Issues
Restaurants have one of the highest turnover rates of staff in any industry, this causes problems as it makes hiring staff difficult and without staff, the restaurant cannot operate.
Inconsistency
If your food is sometimes outstanding and sometimes not very nice, people won’t return as it will be a risk. This also applies to service which is important for a restaurant’s survival. Without consistency in these 2 areas then it’s likely your restaurant will fail.