Why most restaurants fail within one year of operations

Why restaurants fail

Running a restaurant is not as easy as it may seem. Unfortunately most restaurants, no matter how well they thought they tried, fail within one year of operations.

Check out below some common mistakes which many restaurateurs make that ultimately result in their failing –

Mismanagement of Finances

Poor business acumen, no financial planning and lack of management are some of the major reasons why most restaurants shut down in a quick time.

Many first time restaurateurs get enticed with overspending to garner immediate results and lose focus on cash flow, food costs and higher payroll expenses.

Therefore, planning and management of finances is critical to restaurant running well.

Poor Customer Experience

A single instance of customer dissatisfaction can greatly hamper the restaurant branding (more so for newer and lesser established restaurants). These days when there are a variety of options available, it is quintessential to provide superior customer experience consistently.

Poor customer experience in the form of disengaged staff, disorganized restaurant, low food quality, slow service, unhygienic environment etc can influence the customer to post negative reviews on social media and restaurant review sites which can hugely damage the reputation of a restaurant.

Therefore, taking immediate and proactive action on customer feedback is extremely important.

Pilferage & Thefts

A casual attitude towards reporting and analytics can lead to restaurant failure. Depending completely on the restaurant manager and being an absentee owner can results in occurrences of thefts and pilferages.

On counter thefts, inventory thefts, over invoicing of vendor bills are some of the common occurrences in restaurant thefts that can bleed the business dry.

Hence, it is very important to implement systematic processes that documents of all business transactions.



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