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  • Writer's pictureMaya

New in Town? Avoid Restaurant Failure with these 5 Tips

Ever noticed that the trendy new restaurant down the street only stays for a few months? Then a juice bar takes its place, then a brunching diner, and then a fancy sit-down dinner spot. The food service industry is a precarious marketplace that leads many owners to restaurant failure if they can’t excel.

Defenses Against Restaurant Failure

In fact, the National Restaurant Association estimates the average restaurant failure rate at 30%, although many statistics report it even higher. Between low profit margins, high employee turnover, great operational costs and a global pandemic on top of it all, 110K restaurants closed in 2020. Here’s how to make sure the same thing doesn’t happen to yours.

5 Defenses Against Restaurant Failure

1. Contend with Economic Downturn

COVID-19 caused unprecedented distress for the entire restaurant industry. Sales fell $240B in 2020 and we’re still contending with the damages a year later. Restaurants now rely on new business models, staff changes and advanced technology. Fortunately, these adaptations have given some business enough capital to survive the pandemic thus far. Moving forward, budget and plan carefully for potential financial obstacles so as to make it through 2021 unscathed.

2. Standout Concept

With ample competition around, new restaurants need to stand out to survive. Find the particular niche you can fill to draw in customers. If you’re doing the same thing as five others on your street, why should patrons choose you over them?

If you’ve got a contemporary concept or plan to follow a lot of food and decor trends, customer service becomes key. Their experience determines how they view your restaurant in comparison to similar ones nearby. Target your core audience and find out exactly what they want, or what’s lacking from their experiences elsewhere, and fill in that gap to avoid restaurant failure.

3. Staff Management

Your restaurant is only as good as your staff, especially since they’re the go-between for consumers and the business. Good mentorship inspires harder workers, but there are additional ways to encourage them that improve productivity, such as superior benefits or increasing their pay. This also reduces the astronomical employee turnover rates plaguing the industry. Consider team-building exercises or events, such as treating the front of house to dinner, to strengthen coworker relationships and streamline how they work together. Superior businesses start with better staff management.

4. Preparation and Skill

Business acumen doesn’t come to you overnight. To most effectively avoid restaurant failure, you need to hone that skill as well as your understanding of the ins and outs of a restaurant. This information tells you what resources your staff needs to excel and how best to satisfy guests. If you don’t have experience in either department, train to learn it or hire people who have the missing knowledge you need. Business partners are great to have by your side when you’re launching a new venture.

5. Invest in Marketing

Setting your brand apart from others means telling a good story. How did you get where you are today? What will you do moving forward to ensure you evolve with the industry, especially as we move past COVID-19? Communicating a compelling backdrop to your services sets the scene for the promotions you come up with next.

Just as importantly, where do you launch campaigns? Get on the social media your loyal followers frequent in their spare time. Optimize your website for an easy ordering process and use email newsletters to send targeted ads straight to your customers’ inboxes.

Cure to Restaurant Failure

The Cure to Restaurant Failure

Moving forward, adaptability will still be the most useful tool in your arsenal. We now know how everything can change with no warning. Even as we seem to shift toward a new normal, we still can’t predict what will happen next. Smart planning and flexibility are key to meeting the future as it comes, whether it’s through cutting costs or investing in new technology.


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