Top 10 Reasons Why Restaurants Fail

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					Owning a restaurant in a good economy is a challenge. Owning one in a down
economy is even more difficult. Here are the top 10 reasons why restaurants fail.
Avoid these mistakes.

1. Constrained by Your Vision. A savvy owner knows it's all about the customer, not
his or her personal tastes and opinions. Don't be self-possessed. Be open to opinions
other than your own.

2. No Identity. Lack of identity is the opposite of being constrained by your vision. A
restaurant's success depends on its ability to establish a brand and stick to it, so
develop an identity and focus on perfecting it.

3. A Bad Opening. "You never get a second chance to make a good first impression"
was never truer than in the restaurant business. There's a reason actors rehearse before
opening night—you should too.

4. Hiring & Training. Just like a bad opening, bad service will kill your business
quickly. If your vision isn't executed properly, the damage to your current and future
customers is unavoidable. Most restaurants lack formalized training, procedural and
operational processes. Learn from an experienced owner or hire a restaurant or
hospitality consultant for expert advice.

5. No Formal Recipes. How can your kitchen, bar, and waitstaff train your staff
without formal recipes? This step is critical to controlling costs, curtailing waste, and
providing effective staff training. 6. Poor Inventory Management. The cost of food is
a restaurant's single biggest expense and, unless the financial control systems are in
place, you are vulnerable to a drain on your cash. Reducing inventory means a
reduction in food cost, so manage your resources carefully.

7. Undercapitalization. Unexpected and unforeseen events happen all the time,
especially in the restaurant business. In many instances, incorrect budgeting is the
culprit. Don't get caught up in the dream of being profitable from Day 1—make
sure you've got money left in the bank to help you ride out the difficult days.

8. Poor Ownership. Don't be an absentee owner. If you want to own a restaurant,
expect to work. Otherwise, don't expect to get paid. But—and this is a big
but—if you haven't put the systems, tools, and people in place that allow you to
step away from the day-to-day operations, then you haven't bought yourself a
restaurant; you've bought yourself a job with a misleading title.

9. Insufficient Market Analysis. A thorough examination of your restaurant's location
is vital to know if it is to be successful and, once it is successful, staying on top of
business trends will keep it that way. This is another area where an experienced owner,
marketer or restaurant consultant can help.
10. Lack of a Business Plan. The previous nine points MUST be addressed in your
business plan, and the plan MUST be right the first time. The business plan is what
everything your restaurant will do is based on. It will force you to plan ahead, think
about the competition, formulate a marketing strategy, define your management
structure, and plan your financing, among other things. It is your roadmap to success.
Do not proceed without a solid business plan.

The old adage "failing to plan is planning to fail" is never more critical than in the
restaurant business. Avoid these top 10 mistakes and enjoy the fruits of your labor!

				
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posted:1/26/2011
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