Uncovering Top Reasons Why Most of the Restaurants Fail!

Uncovering Top Reasons Why Most of the Restaurants Fail!

Restaurant Industry is one of the most dynamic industry, If I talk about restaurant industry growth in India, it values for 31% of the consumption basket according to By Mr Rohit Malhotra who is a Business Head of Barcelos India. As per the report published by NRAI, annual sales in the restaurant industry are USD 783 billion and annual food and beverage purchases are predicted to be at USD 279 billion. (Source)
Also Read: Pro Tips to Make a Restaurant Business Successful in 2020

After all these growth and development…still, 60% of restaurants fail in the first year and 80% closed down within five years of operation. (I’m sure you’re thinking why is it so?)
See what happened, starting a restaurant is quite easy but running it is not a piece of cake for everyone. The problem with this industry people is most of them still run business typically and avoid using technology, I mean why so?

Uncovering Top Reasons Why Most of the Restaurants Fail!


If there are certain restaurants technology systems such as POS, CRM, and other management and automation tool simplifying operational and managerial task then why they are still relying on the same process of recording data on sheets, taking feedback on papers and so on.. it costs excess food budget, lengthy process, more waiting times, and poor management.
Also Read: Importance of CRM in Restaurants

The best way to overcome the failure is to know the reasons behind those failures and try to not to repeat.
We have researched several restaurants who started well but somehow closed down after some times. So let’s dig into what are the actual reason that makes a well-established restaurant closed down in a very less-time.
Also Read: AI -Technology That Re-shaping the restaurant Industry

1. Inexperienced Owner

This is an influential factor into a restaurant success, I agree that people learn after practice but that doesn’t mean that you entered in the market without any information about the relevant industry.
Before starting a restaurant, make sure to do homework and get prepared you for the real battle.
Here are tips for becoming a successful restaurant owner.
If as an owner you are not much knowledgable then Hire a manager who has immense knowledge in a similar field. Get the help of restaurant technology to track accurate business reporting and sales stats.

2. Poor Management System

Inadequate management system leads to weak operations and fewer customer engagements. Most of the restaurants fail to put a balance various operational and management task, this happens because of the lack of communication among all staff members.
For this, hire properly-learned restaurant staff and management and train them well!
Get tips on how to hire an excellent restaurant staff

3. Selection of the wrong location

Location plays an important role in your restaurant success. Restaurant fails because of selecting a location with a less targeted audience, poor management, bad parking system and all. Walk-in traffic generates 50% of restaurant revenues so don’t forget to make revenue from the people passing by your way. Many good establishments are known for shutting down only because of poor location.
Get Tips on Selecting the right location for the restaurant (Point No. 4)

4. Weak Marketing

In our previous article, we already explain the importance of marketing for a Restaurant success, not enough marketing can be a reason for your Restaurant failure. Go for personalised marketing campaigns that target the right audience in the right way.
Get Free Restaurant Marketing Tips to focus in 2020

Participate in local food festivals to showcase your speciality, This is the best way to advertise among thousands of local people.

5. Unsatisfactory Customer Services

Repeat customers are the backbone of any business who usually bring new customer which we called word of mouth or referral marketing. CRM is important for a restaurant because it provides insights into customers who are truly loyal to you. Providing desired services improve positive online reviews.

6. Large & Confusing Menu

A complex menu is not just misleading to people but it’s difficult to maintain. It is difficult for the chef to prepare such a variety of dishes also, it decreases customer satisfaction if it would take time to deliver.

The restaurant industry is challenging, but on the other side, it’s quite rewarding. With an experienced staff, strong Restaurant management and smart use of Technology you can surely touch the sky. We are very sure that your Restaurant will face huge Success 🙂

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