Table Time

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Factors Why Restaurants Fail in their First Three Years of Running

Based on studies, 60 per cent of failed restaurants close down or change ownership in the first year in the business industry. But why do these businesses quickly fail? Let us identify the factors that contribute to the collapse of restaurants within their first three years in the business.

Advertising

To keep ahead of the rising competition in the restaurant industry, it is important to consider advertising and marketing. It is a way of establishing a reputation. If not, then you’ll remain from the shadows of your competitors.

Cash Flow

Restaurants that don’t keep a close eye on their cash flow are likely to fail. This is why it is very important to have enough cash to cover huge expenses such as weekly payroll and food orders, as well as other bills.

Location

When setting up a restaurant, location is a contributing factor to the success of the business venture. People nowadays even order meals online. If found that your location is bad which means no foot traffic, no parking, and no visibility, most probably your business won’t last long. So look for the most strategic location during your planning phase.

Owners

In most cases, being a restaurant owner means working inside the restaurant. Some just hire managers to run the business from them and chefs to create dishes for the customers. Little did they know that this is an affecting factor for a business not to prosper. So if you are a restaurant owner, you should also provide a personal touch to your business.

Management

Hiring managers you think is well-experienced in dealing with the staff, profits, and customers is a good idea. However, don’t trust the job completely to them as your restaurant’s money and reputation are at risk.

Taxes

Not paying taxes on-time may come with hefty penalties and other fines. If this occurs at a frequent pace or taxes aren’t paid fully, the local government may decide to shut your restaurant down.

How about you? Why do you think restaurants fail in the first three years of running in the business? Let us know your thoughts by commenting down below.

Customer service

For a restaurant to stay open, food and customer service should be handled well. Through getting customer feedback, you are given clues on how to improve your business to serve them better the next time. Simply, customer service can make or break a restaurant business.