Number one cause of new restaurants failing is of course lack of money! Refer back to any past episode of Dragons Den if you will and what is the one thing that always trips even the most inventive and charismatic presenters up? It's the figures, I even noticed new 'dragon' Hilary Devey threatening well perhaps not threatening but gently yet firmly persuading one of her latest business partners to create and maintain a set of management accounts to keep a close eye on what the finances were doing on a frequent basis.
Even when I was at university doing my degree in traditional marketing in first year we all had to complete a module called management finance which did not teach us how to balance books or create accounts but to be able to read, interpret and plan from the accounts that we were given and that has proved invaluable into my professional career.
Number two reason for fifty percent of new restaurants failing within the first year of opening is trying to fill a gap in the market that is just not there. When people lets say, entrepreneurs reason their business proposition with they a filling a gap in the market or meeting needs that were not previously being met by existing providers that's fine - when the gap was actually there in the first place.
If on the other hand you come up with a concept that is outlandish to say the least for instance a restaurant where people have to all wear purple and only eat with their left hand for fear of retribution, this is where the problems begin. If you want to be very and I mean very literal then yes there was a gap in the market, more like a gaping crevice because no one would ever want such a service or restaurant to be in operation in the first place.
My advice when coming up with a restaurant is to carry out in depth research into your target market and in most cases of new restaurants this will be done within quite a close geographical area as you do not want to for instance over or under price your restaurant as both can end up being as deadly to business as the other.
The third reason that I feel contributes towards the relatively high failure rate of new restaurants is the - it's a piece of cake attitude. (Note the foody reference). By this I mean the attitude that an enthusiastic and no doubt well meaning future restaurateur thinks... well I've eaten in a lot of restaurants. I can/know someone that can cook, I like food, I have a bit of money saved away so I think in fact I know I can open my own restaurant, 'I mean how hard is it'? Classic error, four walls, some dining tables and a larder full of food do not a restaurant make. There has to be some initial talent there in the first place by that I mean, a talented chef as the back bone or enough money to hire in and create the very best of everything from staff and venue to only the finest ingredients and the most decadent dining experience. Neither come easily.
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