top of page
  • Writer's pictureShraddha Umrao

Reasons Why Restaurants Fail Within The First Year Of Operations

According to a study, 60% of restaurants shut down within the first year of operations, and up to 80% of restaurants close their operations in the first five years. No matter how lucrative the restaurant business seems from afar, running a restaurant business is an arduous task. These figures may make you think, ‘Why Restaurants Fail’ that too ever so often.

Lack of proper information about what the industry entails ultimately leads restaurants to their failure. In this scenario, information is the key area you need to focus on. Most restaurateurs do not even know that they are doing something wrong until it is too late.

We don’t mean to discourage aspiring restaurateurs out there, or to lower the morale of the current ones, but we do believe that prevention is better than cure. So, here we have listed, the top reasons why restaurants fail.

  • Pilferage and Thefts: Internal thefts and staff embezzlements create gaps in which restaurant owners can track only a little too late.

  • Poor Location and High Rentals: You may be located too far from your target audience, or your ideal location may be draining your pockets dry. Either way, it means fewer profits, running into losses, and ultimately shutting down.

  • Poor Customer Experience: If your customers are not enjoying coming to your restaurant, it is only a matter of time before they stop coming to you altogether. Know how you can deliver stellar customer service.

  • Your Inexperience: Your inexperience can lead to mistakes that can cost you more than a couple of customers.

  • Poor Staff Management: If you are unable to manage your staff, it will lead to bad customer experience, an increase in costs, and overall dysfunction. Garner, the knowledge of how you can handle your staff exceptionally well.

  • Poor Allocation Of Resources: If you do not give enough attention to how many resources you need to employ in different segments of your restaurant, it will lead to mismanagement and losses.

  • Complex Menu: A long all-encompassing menu may sound like the right thing for your restaurant, but it will only confuse your customers and hinder profits. Know how you can craft that exquisite menu for your restaurant.

  • No Involvement Of The Owner: If you leave all your operations to your staff, your restaurant will not be able to grow and will ultimately shut down.

  • No reporting and Analysis: If you do not study your restaurant performance and have no tool that can tell you what your performance stats look like, you will never know what is working and what is not working, which will ultimately cause a shutdown.

  • No Marketing: Marketing your restaurant is as essential as preparing good food or giving a great customer experience. Failure to market your restaurant right will make you lose out on customers. This is a massive blunder that most restaurateurs make and is one of the biggest reasons why most restaurants fail.

bottom of page