True or false? Over 90 percent of restaurants fail in the first year. Actually, that statement is false, but the truth may not be all that encouraging either. According to the National Restaurant Association, 30 percent of new restaurants fail in the first year and of those that survive, another 30 percent close in the next two years. Why is this phenomenon so prevalent you ask? Well, let’s look at some of the most common reasons.
1. Lack of a Comprehensive Business Plan. This step is so fundamental and encompasses many different elements that are key to success such as:
-Financing and Start-up Capital
-Marketing and Promotion
-Market Study and Demographics
-Choice of Location and Why
2. Lack of an Original Idea. Even if you decide to specialize in steak and fries you need to differentiate yourself in the environment. It could be the way you market yourself to the type of service you provide. It can even be as simple as the way you dress your staff!
3. Inability to Balance Family and Restaurant Demands. Most owners underestimate the amount of time and energy that is required to start up and operate a restaurant. This causes both the owner and family members to become frustrated and overwhelmed. Another mistake is that many restaurant owners try to do everything themselves and may lack the skills necessary to effectively delegate.
4. Bad Partnership Relations. Sharing financial risks can be very stressful. Partners need to provide emotional and working support all the time. Unfortunately, many restaurants fail because of the inability of partners to resolve disputes. Many friendships have been lost in restaurant ventures.
5. Lack of Inventory and Staff Controls. An average bar can lose $4,000 to $5,000 a month due to theft, free drinks, spilled drinks, over pouring and other expenses without you even knowing about it. If you are unaware of how to put the correct controls in place, this could be a disastrous for your restaurant.
This is only a partial list of considerations you need to make before making the leap into restaurant ownership. If this sounds negative, it doesn’t need to be. Having the right resources and guidance from the beginning can lead to a highly rewarding and profitable restaurant experience. Never underestimate the value of a professional consultant to help guide you along the way.
For more information please visit our website at www.thealdierigroup.com or call our office at 661-799-7876. Ask to schedule a free one-hour consultation.