Owning a Restaurant is fuelled by passion, your passion. In business, passion combined with exceptional management skills is a winning combination. Passion alone is not enough.
Here are the Top 5 Reasons Restaurants Fail:
The concept is not well defined
You know what you are going to get at McDonald’s. When McDonald’s released its Healthy menu, it was initially met with success, but at the end of the day, we go to McDonald’s for Burgers and Fries.
Poor management and lack of leadership skills
In the restaurant industry, you have to crunch every number, count every roll of paper towel, minimize food waste and keep staffing costs low. A restaurant needs a strong leader with military discipline.
Inconsistent customer service and product preparation
If a customer has a poor experience at a restaurant, they will not return for five years!
The business is under capitalized
Lack of Operating capital kills a lot of businesses, not just restaurants. You can not depend on sales targets to generate enough income to cover your month to month expenses. Plan for at least 3 months of operating capitol in the bank.
Ownership being unable or unwilling to react to the market
You may have to coolest concept ever, but if the market doesn’t want it, who cares?
We sometimes forget that we serve our customers. What do they want? What don’t they want?
It is always about them, not you.
If your customers love your place because there are no VLTs, adding VLTs will drastically impact who comes to your restaurant.
Buyers have 3 choices when getting into the food services business:
- Buy a Franchise
- Buy a pre-existing business
- Start up a new business.
Many have an appetite for a new concept they would like to introduce into the local market, and so make a choice for the start-up. As can be seen from the 5 points above, a new owner better be prepared because competition is very strong. By entering into the food service business, you are going head to head with huge corporations that spend millions of dollars each year on marketing, product, process, and brand recognition. If you think you can do a better job, think very carefully.
If you are uncertain about your skills, buy an established local restaurant that has proven itself over a minimum of a 3 year period. If you have no experience in the Food Service industry, buy a franchise and follow their procedures to the tee.
When a modest choice is made according to your abilities, you can not only survive, but thrive!
Larkspur Business Brokers review options with buyers to find out their interests, and make recommendations for a business that is best suited to their abilities and interests.
Discover the Larkspur Difference. Call us or send us a message today to book your free consultation.