Opening a restaurant sounds like a fun thing to do, and it is. You become popular, make plenty of friends, and every day experience the pride of ownership and the joy of providing hospitality that other people only get a taste of when they throw the odd party. Unfortunately, though, seven or eight of ten new restaurants fail within the first six months, depending on whose figures you use. If you stretch the period to a year, the figure climbs to nine out of ten failures.
Why do most new restaurants fail?
Answering this question is crucial. To make sure your restaurant will be a success, you need to know why restaurants fail.
But before I go any further, let me briefly tell you why I am in a position to tell you the answer. For about a year, I was tasked with reviewing newly opened restaurants for a local website. I carefully observed dozens of brand new eateries, and tracked their life cycles.
Some of the restaurants involved massive capital expenditure, with interiors from professional designers. Others were home made affairs, with furniture hauled over from the living room of the owner. Some had chefs flown in from overseas. Others had kitchens staffed by the owner's spouse.
Some restaurants were blatant imitations of existing eateries that had succeeded. Others - many others - had a unique twist, or gimmick, to make things interesting. For example, one had the front of a fire engine mounted to the facade. At others, table staff might be equiped with headsets, or the cooking might take place behind a glass wall in full view of the diners.
In almost all cases, the owners and investors had expended enormous effort and expense to make the restaurant a success. And, in all cases, the onwers were utterly and totally convinced of success, and tremendously excited about their venture. They would give enthusiastic interviews, and in the evening circulate amongst the diners, basking in the warm and cozy feeling that only the owner of a busy and popular restaurant can experience.
And in almost all that failed - and of course, almost all did fail in the end - the owner was completely baffled by the outcome.
"I just don't understand it," they'd tell me. "The place was packed, people were so happy, they loved it! And then everything just slowed down to a trickle."
It was hard for me to do these "end of the road" interviews. The few owners that were available for interviews would be a completely different person from the one interviewed six months ago. With their ego and financial portfolio badly damaged, most became forlorn, bitter, and angry. Grown men would fight back tears, while blaming it on the fickle and ever-changing tastes of customers. Others put the blame on new competition, or the lack of support from the media.
Some doggedly refused to accept failure, nor the reality of empty seats and negligible turnover, and sold of asset after asset to keep the place going, prolonging their own agony and aggravating their financial predicament. At least one owner I know committed suicide; several became alcoholics.
Why most new restaurants fail
Still up to take the challenge? Relax - the key to success is very simple. You need to know just one thing. It is of course important that you pay attention to the menu, the interior, the service, the ambience, the promotional activies, and all those myriad details. But to make sure you succeed long term, there is only one thing you need to know.
It's this: Get it right from Day 1.
Running a restaurant is different from most other businesses. People do not go to a restaurant because they require sustenance. They go out for the social experience, and to alleviate their boredom. Consequently, whenever a new restaurant opens, crowds will immediately flock to it, because it is new and because it is interesting. So if there is a new restaurant in town, people will check it out at least once.
However, they will not come back unless you get everything exactly right.
That explains why new restaurants will be packed at first, and why the owners will be puzzled when suddenly, almost overnight, the whole place becomes empty. Just yesterday they were thinking of expanding, or turning it into a franchise. And now, nothing.
With any other business, you have a small honeymoon - a window of time to tune your model and adapt to customer requirements. But the restaurant business is harsh and unforgiving. If you do not make a fan out of your client on her first visit, you're dead.
And, unfortunately, in nine out of ten restaurants, things will be a mess on opening day, and for a few weeks thereafter. The staff won't have had any practice. Questions about the menu won't be answered well. The kitchen will take forever to deliver. The quality of the food and service will go down in direct proportion to the number of customers.
The inexperienced restaurateur will not worry about minor delays or problems. After all, surely people won't expect everything to be perfect right from the start? Besides, isn't the place packed? People are happy, complaints are far and few between. And doesn't every new day bring a new boatload of customers? With diners arriving in droves, why worry about delays, or the odd problem here and there?
That's where you're wrong. Slow or surly service, anything except perfect food, anything annoying (such as the thermostat set too cold, the music too loud, etc), and the customer will take back a bad experience. Even if you got it mostly right, the faults will stand out, and your customer will not become one of the very large number of customers you need to form your loyal base. They might not be upset enough to speak up and complain, but they won't bother coming back either.
Unable to build a base of loyal repeaters, you're dependent on those trying out your place for the first time, and when you run out of those, it's time for the fat lady to sing.
Conclusion
Remember, customers will not give you a second chance. Use relatives of employees (or whatever) as testing material to get your kitchen and table staff to practice, practice, and practice even more. Make sure everybody has been trained and drilled to perfection, and that they get it absolutely 100% right the first time. You will spend a lot on free food and salaries during the pre-opening phase, but do not worry - it's either you spend that money now making sure it all clicks, or you spend it later subsidizing a loss-making enterprise. Think about which is the smarter way to spend.
Do not invite food critics when you're not 100 percent ready. Do not invite ANYONE when you're not ready. If necessary, delay the opening. If you're still not ready, delay it again, and again, and again. Use the training period to weed out incompetent or unfriendly staff. Hire and fire, again and again. Whatever you do, make sure your restaurant is able to expertly cope with a large crowd of impatient and demanding diners from Day 1. That is the only way to make sure you will still be there on Day 1,000.
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Contributor's Note
I personally have never owned a restaurant. I'd like to open a restaurant eventually, but I'm not ready yet - and if you've read the article, you'll know why.
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