Business & News

Why Restaurants Fail Within First Year Of Operation

Jun 16, 2023

Why Restaurants Fail Within First Year Of Operation

There are many aspects restaurant owners have to look into to ensure their business gain a reputation in the industry. However, they tend to make mistakes they aren’t even aware of; poor customer experience, poor staff management, or even menus that are too complicated. Here’s a breakdown of the top mistakes restaurants make that cause them to shut down too soon:

Poor staff management

Poor staff management results in unhappy employees, which can cause serious damage to the restaurant. Otherwise, hiring people without providing training and background checks will directly affect many other aspects, primarily customer experience, and ultimately the restaurant’s long-term reputation. Good staff management requires adequate training, rewards, and excellent communication since they all play essential roles to operate smoothly.

Poor customer experience

Customers should be a restaurant’s top priority to ensure success in the long run. Poor customer experience can root from many reasons. Rude waiters, delayed service, bad ambiance, and cleanliness can be reasons why customers don’t return—even when the food is good. Besides affecting the profit margin, it also damages the restaurant’s reputation when customers leave reviews on social media. 

Complicated menus

Crafting an extensive menu may sound appealing, but it can confuse and overwhelm customers. It is not only tedious for the cooks to prepare, but it can also cause food wastage due to unused ingredients. On top of that, restaurant owners may end up spending extra costs on them. Hence, it is best to have a simple menu design and analyze it to remove or replace items that sell slower.

Poor location

Like many businesses, a strategic location to open up a restaurant ensures a consistent gain in customers, reputation, and profit. For instance, when restaurants run in dead malls—often with high costs on rental—owners lose more than they gain. Such irreversible damage can be hard to recover from and may cost owners more money in the process. Research and consultation should be an effective way to avoid this.

Poor allocation of resources

An aesthetically pleasing restaurant may be a great ‘Instagrammable’ spot for customers, but when owners allocate their resources solely on ambiance and furniture—for instance–they may not realize the smaller details that actually make their restaurant worthy of a five-star review. As a result, the hype built around the restaurant may be short-lived. Owners should work out a proper financial plan that considers details like quality ingredients and an efficient POS system.

No analytics and reports

When running any business, documenting and keeping track of sales and customer patterns is crucial to make changes. Without daily reviews and reports, owners may not be informed of customer feedback, staff misconduct, stock shortages, or system failures.  Because of that, they are not able to take action to make improvements. To ensure efficiency in the restaurant, management software should be integrated.