Running a restaurant business is not for the faint of heart. According to a report, about 60% of restaurants fail within the first year. From the upside, it might seem impossible to believe that many restaurants fail, especially when you see that new restaurants are churning out beautiful content and ads in your face on Instagram, you get to think, “Oh, this industry must be so profitable”.

Well, you might be right. But more often than not, the competition is very tough, and if you want to start big and spend heavily on marketing, not to mention that your meals must be affordable and delicious, surviving in the first year, counting on just Instagram algorithm might not be enough.

This article aims to explain the top 5 reasons why many restaurants fail and the best solution to the challenges many restaurants face.

Why many restaurant businesses fail!

1. Getting started with the wrong reason-

    

   Many restauranteurs start out with the wrong reason. Some start out because they think “Food is a good business and everyone has to eat” while some also get into the space because they think it is very profitable. The truth is, these reasons are partially true but they shouldn’t be the whole reason for starting a business. Not having a problem you want to solve will help you get started on the wrong foot. If you want to start any business for that matter, not just a restaurant business, you must know why you want to go into the business. This way, you can prove that you have identified a problem, and your business is the solution to that problem. Your “why” gets you moving even when things are tough in the business. This often happens within the first 3 years of your business. Knowing why you started a restaurant will help you navigate the tough competition and set your brand apart from others.

2. Selling to “everyone”-

    

   Targeting everyone as your customer is one easy way to fail as a restauranteur. From the onset of your idea conception, you should be able to identify the people you want to sell your menus to. The competition is tough, and choosing to sell to the same people will only make things hard for you, especially if you are a new business. Knowing your target market is crucial to know why you are in business. Before designing your menu, you need to answer the following questions:

• Who are you selling to?

• What are their problems/frustrations?

• What are your goals?

• What are your target customers’ characteristics/lifestyles?

• What is their income range? etc.

1. Wrong Location-

   Setting up in the right location is as strategic as your other plans in growing your business. Your location plays a huge role in the visibility and accessibility of your restaurant. For example, opening a restaurant in a remote location will have more sales challenges than opening one in a populous and contemporary location. The latter gets more visibility and opportunities for customers to engage. 

2. Poor customer service-

    

   Customer experience is the heartbeat of a restaurant business. If your customer often complains about your service even if your menu is delicious, soon enough, they will abandon you and go elsewhere where they are treated right. Making sure your customers give you good reviews starts with how you treat them. Your staff treatment also reflects on your customers; what this means is to be able to get your staff to treat your customers well, your staff must also be treated with respect because they are the ones interacting with your customers directly.

3. Poor business management-

   Nothing destroys a restaurant business faster than a poor management system. Many restaurants today are still operating in the pen-and-paper style. This approach gives room for theft and poor management. Pen and paper style not only allows for theft which slowly or eventually kills the business but also doesn’t allow for reporting and real-time data analysis of the business. It also won't show you the position and health of your business.  It is easier to start a restaurant than to keep it alive and healthy hence, restaurateurs must be willing to integrate tools to curb theft, manage resources and get data for making better business decisions.

How HighTable Helps

HighTable is Africa’s leading SaaS system for restaurants and hospitality businesses. With HighTable, you can receive orders, get an integrated POS system, manage reservations, view customers' feedback, and have access to real-time data analytics for your restaurant business.