The industry is changing so quickly that there is little time for clients to get used to new places. A “turnover” of restaurants is not uncommon, and there are a number of factors behind it. Today we’ll talk about 10 potential issues that affect many restaurateurs.
Wrong location
The most common and obvious cause of all. Have you considered some of the following things to make sure it’s a good location? How close is it to public transportation? Will those who work at the company be allowed to bring their dogs inside? We’ll help you with these and more. Considering the factors of location & time of maximum activity is important to find a successful location. The more you consider, the more likely you are to find the perfect spot. Also keep in mind competitors and logistics. [In addition to any of these factors, restaurant owners make mistakes that force them to go out of business. Moreover, other people’s examples do not always teach others. For instance, several restaurants open in the same place, but then all go bankrupt a year later. A bad location is a big problem. Once you’ve opened, it’s already hard for you to do anything about it. The best solution in this case would be investing in a marketing campaign.
Lack of finance
Interestingly, the most common type of restaurant is usually not open for long periods of time. Establishments in fashion make the highest profit for the first few months until they lose popularity. The establishment will recover its value after an interval of 1.5-2 years, but it will start generating a net loss from then onwards. At this stage, business owners should sale their establishment to receive their maximum possible potential income. Some people find meaning at work and pour everything into their career. As a result, when there are no regulars in the store, it’s hard to keep some afloat without problems – namely, not being able to pay staff or products that are due. The establishment has still not opened but, at the same time, it sucks all the money out of owners. Of course, this does not apply to some successful or well-networked projects.
Disagreements
Many of us have been told from a young age, “Don’t do business with your friends.” This applies to any restaurant business, in full. Business partners often don’t get along and uncooperatively shift blame. Ultimately, the relationship suffers and business problems bury the once-good relationship between the people who opened it.
Leaps in rent
Food is the cornerstone of any restaurant and real estate is always a problem. First off, this list only applies to those establishments that have rented premises. Even if the initial rate suits everyone, the business goes on and payments are made in a timely manner, the tenant is not immune from a surprise after the end of the contract. The change in rental law has led to much more expensive rents. This especially affects many people living in large cities or areas where construction is ongoing.
An annoying concept
We all know that burger boom from a few years ago, don’t we? It was only later when more of these places with this type of fast food started appearing everywhere that people, following modern trends, starting booking tables at these burger restaurants. Speaking of fashion, in 2000s the trend of wearing jeans every day took over. But today, there’s a bit more variety in what people wear and trendy eateries that tried to do too much closed. And all because the concept has become outdated. Now it only takes a couple of years for this
Weak governance
Incompetent management can ruin a café. Even if there are plenty of customers, a few bad decisions might make them lose loyalty and popularity. Financial mismanagement is another common problem which results in an inefficient mode of operation. If your business is well-managed, there could be success in your future. But if you have a less stable income, you can always try to make the rest of the business suffer by being inept in managing it.
There are different types of people who are needed to make a restaurant work. The best suited for this role are people who have built a career in the restaurant industry, starting from the bottom. There are still opportunities out there for someone starting in this field. It’s not uncommon for beginners to get a few good opportunities.
A restaurant is an organism that is constantly changing. They need their manager to be aware of these changes and have the requisite skillset to be able to deal with it all.
A poor manager is a very serious threat to the success of any restaurant and can lead to its closure. For this reason, you need to make sure you find someone who is competent enough for this high-pressure job. As the General Manager, he is in charge of training new employees on server-related skills, making sure all guests are happy with the service they receive and keeping up with regulatory standards across his restaurant.
Competition
It’s important to bear in mind that not all fake news is the result of deliberate sabotage or an information war between competitors. The success of just a few restaurants in the area are enough to drive out other businesses. Competition is tough in the fast food business – at some busy intersections, there are so many stalls and small cafes to choose from. And if someone is able to afford advertising, they’ll be able to take advantage of their products’ range and lower prices. For example, if there’s a company that can advertise and offer lower prices than the competition, most people will go for it.
Deceived expectations
There are a lot of misconceptions and myths for the catering industry. Once one is faced with them, they can lose interest in their business. The most common misconceptions about retail businesses include that it’ll give you an unbelievable profit margin, that you’ll be cash rich after a few months, and that customer acquisition will be easy.
Newcomers without the knowledge of basic economics typically don’t receive benefits and so inevitably close their businesses. Cafés and restaurants can take a long time before they start making a profit. It’s worth it in the long term, though! For those who are not familiar with “pouring in,” it means the original customer base will pour in after the opening and then they should maintain products and services at a certain level. This can be quite challenging.
Unsanitary conditions
Even 15-20 years ago, customers loved the cafe only because they were not poisoned there. Now everything is different. The new legislation comes with a number of guidelines and clauses catering owners must follow. Any violation of occupational safety standards will be met with checks, fines, and suspension of activity. This is followed by a drop in stats, a loss of loyalty and, often, closure.
Urban planning
Sometimes, there are events around the restaurant that do not depend on its activities. To give you an example, I could talk about how city planning is different in this way. A shopping mall with a food court can be built next door, which is likely to attract most of the customers again. A new roundabout might be just what your business needs to attract more customers! A roundabout opening would have both good and bad effects. It’s up to you to decide how it will affect your business?
Bad marketing
There are a lot of restaurants these days – it’s more critical than ever to stand out from the crowd. The unique selling proposition of a restaurant is a matter of life and death. Restaurants that do not promote themselves online and offline will be easily pushed out by their competition- the larger, more well-known restaurants.
