Here Are a Few Reasons Why New Restaurants Fail

02.8.21 | Restaurant Planning
New Restaurants Fail

It’s no secret that the restaurant business can be tough—and not just during a pandemic. All too often, new eateries are closed and shuttered within a year of launching. The good news is, understanding (and planning for) some of the most common obstacles that arise can greatly increase your chances of success.

Here are a few of the most common reasons why new restaurants fail…

Why do New Restaurants Fail?

The wrong location

No doubt about it: setting up shop in the wrong place can lead to restaurant failure. One of the biggest reasons is the lack of foot traffic, which can limit opportunities for walk-ins. Even if your eatery is one of the best in your area, it could fail to attract customers if it’s out of the way.

On the flip side, renting square footage in a hot district is no guarantee of success. Where diners have no shortage of options, your establishment could flop if it doesn’t stand out. To prevent that from happening, you have to not only provide incredible food and great service, but ensure that it matches local demographics.

Insufficient financial planning

It’s not uncommon for a new restaurant to fail because costs have spiralled out of control. Often, shortsightedness is the culprit. Overspending on equipment and labour right out of the gate is a common mistake, as is delaying bill payments simply because you can.

While there are expenses (such as some taxes) that don’t have to be covered every month, coasting on the bit of extra money you have before the bills come up due is a big mistake. To avoid falling into this cycle, budget conservatively and try not to leave payments until the last minute.

Not having a unique identity

When potential customers are deciding where to grab their next meal, your restaurant has to grab attention. It won’t do that unless it has a distinct identity. Whether it’s a fast-casual Mexican grill or an upscale French bistro, potential customers should instantly know what you’re offering.

Choosing a theme, ensuring that your branding reflects it, and marketing your eatery accordingly is key. From working with a skilled designer on your logo to building a strong social media plan, having a strategy can help you set your business apart.

Failing to optimize dining experiences

One happy table can lead to several positive online reviews—while a small handful of bad ones could chip away at your eatery’s good reputation. That’s why making sure every customer walks away happy is worthwhile.

Start by putting in the time to train staff on providing top-notch customer service. Incentives, rewards, and recognition can help encourage employees to keep standards high. You should also maintain good consumer relationships and build loyalty by responding to online reviews and engaging on social media.

There are many reasons why restaurants fail, and knowing what they are can help ensure your success. By planning to prevent financial, marketing, and management issues, you can lay the groundwork for a restaurant that will thrive for years to come!

READY TO FIND YOUR IDEAL RESTAURANT SPACE—AND START CARVING OUT YOUR NICHE IN THE TORONTO FOOD SCENE? REACH OUT TO LEARN HOW I CAN HELP YOU MAKE THE SMARTEST PURCHASE POSSIBLE!

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