15 Reasons Why Restaurants Are Successful
March 28, 2019
Why Do Some Restaurants Succeed But Many Fail?
What are the Reasons Restaurants Are Successful or Fail Dismally?
Once upon a time there were three restaurants. You can see them in this photo.
Two of the restaurants weren’t very busy, but the third thrived. They were all in a row in the same street so why did one thrive and the other two struggle?
Click on the image and you’ll see how busy the middle restaurant is, every table is occupied. But only one table is occupied in the first restaurant … And one table in the third restaurant. Why do some restaurants succeed while others fail?
In 2005 Professor Dr. HG Parsa et al investigated the percentage of hospitality facilitity failures in the US. Their report is here. The report looked at the feequent assertion that 95% of restaurants fail. Prof. Parsa came up with a much lower, though worryingly high, figure. Of course this research only looked at one geogrsphic area. Their findings do not exactly apply worldwide but they certainly do point to an international trend.
Local Competition is One of the Reasons Restaurants Are Successful
What is clear from various research is that location is important. And it might surprise some people but being located next to competitors is actually a positive factor. A cluster of restaurants attracts diners.
The proviso is that you differentiate yourself from the other restaurants or you will get missed in the stampede of diners to those restaurants that do.
In the image above the restaurant managed to differentiate itself in several ways despite, in many ways, being typical of the region it is located.
When we visited one differentiation factor was very obvious. Whilst the first restaurant tried to appear exclusive and private by adding a barrier between the street and the dining area, this felt to us like it was exclusiing us. The entrance to the dining area was arrow and “guarded” by waiters. It felt unfriendly.
The last restaurant in the row also had a barrier between the road and dining tables. Admittedly it wasn’t as dense a d it was possible to walk between the barriers. But it still felt like you had to run the gauntlet when entering. Sure it was less intimidating ….. But the middle restaurant had no barriers. It was possible to walk in between the tables, makes decision and choose a table without having to enter through a narrow entrance.
This might seem a very basic way in which to differentiate a restaurant. But the feeling of freedom and friendliness were enough to ensure the restaurant was very busy.
Of course a restaurant may choose to differentiate itself in other ways. For example it might be a restaurant that specialises in fish, or steak, or pizzas, or maybe it will vegetarian.
The important thing is not to be the same as your competitors.
Innovate Your Restaurant With Value Added
Some restauranteurs believe the way to differentiate themselves is by price. True people want value but that doesn’t necessarily mean they want the cheapest. The public often see cheap as also meaning nasty.
If you do try to compete on price it can be a race to the bottom. Someone always thinks they can understand you, even if that means they eventually go bust and join the restaurants that fail.
And adding little extras to the dishes can also help. This needn’t be expensive ingredients. It can be as simple as making the dishes look more beuatiful by adding flowers or colourful ingredients.
And of course if your staff are doing their job well the customers will enjoy much better customer experience. Overall customer experience can be more important than the food alone.
Complacency Kills Restaurants – Another One of the Reasons Restaurants Are Successful or Fail?
When things are going well don’t take your foot off the accelerator. Once you start coasting your competitors will soon catch you up and could overtake you.
The wise entrepreneur is always looking for the next thing that will keep them Infront of their competitors. It might be posting photos on social media, adding new dishes, using apps to allow guests to interact with you easier, or even running competitions. Not all of these ideas will suit your place, some might even have to be avoided, as every business is different and what works for one could be totally wrong for another. But you need to keep moving for forward.
Closely Watch Your Competitors
I said earlier you should try to be the same as your competitors. And I stand by that. But that’s not to say you shouldn’t observe what they do and carefully consider what works for them, what doesn’t and why not. By learning from others you can adapt their strategies and tactics and come up with ideas that better suit your business. What you are doing is using other people’s actions to gain valuable insights into the market place. As Sun Tzu is often quoted, “Keep your friends close and enemies even closer”, (though some attribute this to Petrarch I agree with sentiment).
You can learn from the triumphs and mistakes of friends and competitors.
15 Reasons Restaurants Fail
- Inexperienced owner
- Owner doesn’t work/get involved in running the business
- Insufficient start-up capital
- Inadequate customer service
- Poor competitor knowledge
- Wrong Location
- Not enough competition
- Poor restaurant marketing
- No PR
- Inconsistent offer
- Poor inventory
- Poor staff management
- Sloppy presentation
- No advertising
- A lack of Passion for the business
I’ll explain these reasons in more detail as I update this post over the next few months.
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